New Galaxy Investments Pty Ltd v Thomson & Ors - [2017] NSWCA 153 - NSWCA 2016 case summary — Zoe

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New Galaxy Investments Pty Ltd v Thomson & Ors

[2017] NSWCA 153

Court of Appeal (NSW)|2016-12-13|Before: Basten JA, Gleeson JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2016-12-13

Before

Basten JA, Gleeson JA

Source

Original judgment source is linked above.

Judgment (20 paragraphs)

[1]

Background

The Amended Statement of Claim pleaded the Vendors' claim for compensation as follows: "19. In the premises, [NGI's]: (a) lodgement of the caveats over the title of the Properties; and (b) failure and refusal to remove the caveats despite two requests from the [Vendors] was without reasonable cause in consequence of which the [Vendors], and each of them, have suffered pecuniary loss for which [NGI] is liable to compensate them pursuant to s.74P of the Real Property Act 1900 (NSW)." Particulars The [Vendors] have variously suffered, and continue to suffer, loss in the form of deprivation of the investment potential on $7.3m, being the sum they collectively would have received had settlement duly taken place on 22 July 2014. …"
In her affidavit of 24 September 2014, Ms Gai said that she first became aware on 22 May 2014 of GDI's intention to novate the Second Contracts to a party other than NGI. Between 3 July and 9 July 2014, Ms Gai received correspondence from Minter Ellison, whom she described as "my solicitors". Her affidavit continued as follows: "61. As a consequence, it became apparent to me, by virtue of the conduct of GDI, that it had no intention whatsoever to honour the short form deed, (which was the basis in which NGI advanced $6 million to the vendors) and novate the contracts NGI [sic]. Accordingly, I instructed my solicitors to take steps to ensure that NGI's interest is protected. 62. On 18 July 2014, I caused Francisco Gutierrez of Avondale Lawyers to forward correspondence to the solicitors for the vendors, GDI, and MVGDD in relation to the steps that we were taking to secure our interest."

[2]

Construction of s 74P(1)

Prior to its amendment in 1996, s 74P(1) of the RP Act conferred a right to compensation on a person who sustained pecuniary loss attributable to the actions of another person who (among other things) "wrongfully and without reasonable cause" lodged a caveat. Some of the authorities interpreting this provision considered that the word "wrongfully" imported a requirement that the caveator lodged the caveat deliberately knowing that it was not justified or otherwise for an improper purpose. [175]
The 1996 amendments removed the word "wrongfully" from s 74P(1) of the RP Act. In Mahendran v Chase Enterprises Pty Ltd, [176] Barrett JA approved the following passage from the judgment of Biscoe AJ in Natuna Pty Ltd v Cook [177] interpreting the expression "reasonable cause" in s 74P(1): "'Reasonable cause' for the lodgement of a caveat exists where the caveator has an honest belief, based upon reasonable grounds, that the caveator has a caveatable interest. In order to establish liability under s 74P, the onus is on Mr Cook to prove, first, that Natuna had no caveatable interest and, secondly, that Natuna did not have an honest belief based on reasonable grounds that a caveatable interest existed. As to the second issue, the test is partly subjective and partly objective. It is subjective in that it requires an examination of the caveator's actual belief and whether it was honestly held. It is objective in that it requires that the belief be held on reasonable grounds: see Lee v Ross (No 2) (2003) 11 BPR 20,991; [2003] NSWSC 507 at [21]-[23]; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 469-470 (CA); Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106; Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 at [61]. A caveator may have reasonable grounds on which to believe that it has a caveatable interest even though it is mistaken and it is ultimately held that it did not: Ceda Nominees Pty Ltd v Registrar of Title [1982] ANZ ConvR 524."
The Torrens legislation of other States has provisions similar to s 74P(1) of the RP Act in its current form. In Commonwealth Bank of Australia v Baranyay, [178] Hayne J said of the Victorian equivalent: [179]

the onus is on the claimant to show that the caveator acted without reasonable cause; [180]
it is not enough for the claimant to show that the caveator did not in fact have a caveatable interest;
the foundation for reasonable cause will often be, not the possession of a caveatable interest, but an honest belief on reasonable grounds that the caveator had such an interest; and
an ulterior motive may demonstrate a lack of reasonable cause even if the caveator had an honest belief based on reasonable grounds that a caveatable interest existed.

Hayne J found that the caveator, who had lodged a caveat on the faith of a written agreement for a lease, had an honest belief that he had an interest under the agreement (even though the purported lessor had no entitlement to grant a lease because of a prior mortgage). His Honour thought a question of reasonableness might ordinarily arise if a tenant claimed an interest against a mortgage without inquiring as to the mortgagee's consent. But the claimant (the mortgagee) had not shown that the caveat was lodged without legal advice. In the absence of further exploration of this issue, Hayne J was not prepared to find that the caveat had been lodged without reasonable cause.
Legal advice that the caveator was entitled to lodge a caveat may be of considerable significance in determining whether the claimant has established that the caveat was lodged without reasonable cause. [181] Even if the legal advice is incorrect, the fact that the caveator acted on the advice when lodging the caveat may preclude the claimant from establishing that the caveator lacked reasonable grounds for believing that he or she was entitled to lodge the caveat.
On the other hand, it has been said that a caveator does not necessarily absolve himself or herself of responsibility by taking legal advice. [182] It has been held in a New South Wales case, for example, that where a solicitor had no reasonable basis for advising the caveators to lodge a caveat, the caveators had no reasonable grounds for their belief that they were entitled to lodge a caveat. [183]
In Brogue Tableau, Buss JA of the Western Australian Court of Appeal cast doubt on the proposition that a client acts without reasonable cause in lodging a caveat if the solicitor giving advice to the client lacks reasonable grounds for the advice. [184] Buss JA expressed the view that the content and accuracy of legal advice must be evaluated with all other relevant facts and circumstances to determine the honesty and reasonableness of the caveator's asserted belief in the existence of a caveatable interest. [185] In my opinion, there is considerable force in this view. For present purposes, however, it is enough to say that the significance of the legal advice received by a caveator will depend on such matters as the completeness of instructions given to the lawyer, whether the advice has an arguable basis and the commercial or legal sophistication of the particular client.

[3]

The issue of reasonable grounds for belief

The primary Judge found that NGI neither had a reasonable basis for lodging the caveats nor an honest belief that it had a caveatable interest in the Properties. It is convenient to begin with the first of these findings.
The fact that NGI did not have a caveatable interest in the Properties when it lodged the caveats on 21 July 2014 does not establish that it did not have a reasonable basis for a belief that it was entitled to lodge a caveat. The question is whether there was sufficient evidence to justify the primary Judge's finding, bearing in mind that the Vendors and GDI bore the burden of proving the absence of a reasonable basis for any belief held by Ms Gai and Mr Geering on behalf of NGI.
It is important to appreciate that the caveats claimed an interest in the Properties by virtue of the payment of part of the purchase price payable under the Second Contracts. The interest, variously described as an equitable charge, lien and a resulting trust, was said to arise pursuant to the Short Form Deed. The caveats also stated that the sum of $6 million was paid in part performance of the Short Form Deed. The caveats purported to prohibit any dealing affecting the estate or interest claimed by the caveator, including any dealings by the Vendors.
Ms Gai's affidavit [186] indicates that by the second week of July 2014, in consequence of correspondence that had taken place, she formed the view that GDI had "no intention whatsoever" of honouring the Short Form Deed which was the basis on which NGI had "advanced" $6 million to the Vendors. Accordingly, so Ms Gai stated, she instructed her solicitors to take steps to ensure that NGI's interest was protected. Ms Gai's affidavit does not say whether she specifically instructed Mr Gutierrez to lodge a caveat as the means of protecting NGI's "interest". Mr Gutierrez did not give evidence as to why he considered it appropriate to lodge a caveat on NGI's behalf and what steps, if any, he took to satisfy himself that there was a reasonable basis for NGI claiming a caveatable interest in the Properties on 23 July 2014. Thus there was no evidence as to whether Mr Gutierrez formed the opinion that the payment by NGI gave it an interest in the Properties enforceable against the Vendors and, if so, whether he communicated that opinion to NGI. Similarly, there is no evidence as to whether Mr Gutierrez took any steps to ascertain whether the $6 million was paid pursuant to the Short Form Deed and whether the circumstances in which the payment was made gave NGI an interest in the Properties enforceable against GDI.
Ms Gai did not give evidence that she sought or received legal advice from Minter Ellison, Mr Gutierrez of Avondale or even Mr Geering before instructing Mr Gutierrez to protect NGI's "interest". Indeed her affidavit evidence rather suggests, if anything, that she gave those instructions without receiving any advice that there were grounds for NGI to lodge caveats. Mr Gutierrez did not give evidence as to the legal advice, if any, that he gave or the basis for any such advice.
There is nothing in the correspondence to suggest otherwise. The letters in evidence from Minter Ellison do not suggest that the firm was asked to advise as to whether NGI had interests in the Properties that would support the lodgement of caveats. Avondale's letter of 18 July 2014 informed GDI's solicitors that caveats had been (or were about to be) lodged. [187] The letter asserted that by virtue of the Short Form Deed, GDI held the Second Contracts on trust for NGI and claimed that the sum of $6 million was held in trust for NGI or, alternatively, that NGI held a first ranking charge over the Properties. But the letter did not state that Mr Gutierrez had given advice that NGI was entitled to the interests it claimed in the Properties.
In my view, the primary Judge was correct to conclude that NGI had no reasonable basis for any belief it may have had that it was entitled to lodge caveats prohibiting dealings by the Vendors. Ms Gai never claimed in her evidence that the Vendors knew that NGI was contributing $6 million (or any other sum) to the payment made on exchange of the Second Contracts. Nor is there evidence that NGI received advice that it was entitled to claim an interest in the Properties enforceable against the Vendors. In these circumstances, the primary Judge was right to be satisfied, on the balance of probabilities, that NGI did not have a reasonable basis for any belief that it was entitled to lodge a caveat claiming an interest over the Properties enforceable against the Vendors.
GDI's position in relation to the caveats is not identical with that of the Vendors. The primary Judge found that NGI did not pay the $6 million to the Vendors pursuant to the Short Form Deed but did so voluntarily in an attempt to preserve NGI's commercial involvement in what Ms Gai and Mr Geering still thought was a promising commercial project. The voluntary payment, from NGI's perspective, left open the possibility of the Second Contracts being novated to it by GDI. However at the time novation of the Second Contracts was not the only commercial possibility NGI had under consideration.
Ms Gai's evidence was that she instructed Mr Gutierrez to protect NGI's interest on the basis that NGI made the payment pursuant to the Short Form Deed. By the time the caveats were lodged, on the primary Judge's findings GDI had accepted NGI's repudiation of the Short Form Deed on 23 May 2014 and, in any event, neither NGI nor GDI wished to be bound by their contractual arrangements after that date. These findings would not necessarily prevent NGI's payment of $6 million to the Vendors in April 2014 having been made pursuant to the Short Form Deed (as the caveats claimed). Nor would they necessarily preclude a finding that Ms Gai, at the time the caveats were lodged, honestly believed on reasonable grounds that NGI was entitled to lodge the caveats. But it is not clear how NGI's claim to have reasonable grounds for believing that it had an interest in the Properties enforceable against GDI can be reconciled with the primary Judge's finding that by the time the caveats were lodged NGI had repudiated the Short Form Deed and that it no longer wished to be bound by the contractual arrangements. There was no evidence that either Ms Gai or Mr Gutierrez considered these questions.
The primary Judge found, without referring to Avondale's letter of 18 July 2014, that NGI lodged the caveats "without giving any thought at all to their validity". [188] This finding may have reflected his Honour's rejection of evidence given by Ms Gai and Mr Geering. However, Avondale's letter (upon which NGI's submissions placed no reliance) permits an inference to be drawn that Mr Gutierrez at least directed attention to whether NGI could lodge caveats and, if so, to the form the caveats should take. But in the absence of evidence from Ms Gai or Mr Gutierrez on the point, no inference can be drawn as to the content of any advice that may have been given. [189]
There is a more fundamental difficulty confronting NGI. The most that can be inferred from Ms Gai's affidavit and the terms of Avondale's letter is that she instructed Mr Gutierrez that NGI paid $6 million to the Vendors pursuant to the terms of the Short Form Deed. In fact, as the primary Judge found, the payment was not made pursuant to the Short Form Deed. As Ms Gai must have known, NGI made the payment voluntarily in order to avoid the Vendors terminating the Initial Contracts and to preserve NGI's commercial options with respect to the Turramurra Project.
As the decided cases show, the fact that a solicitor has given advice to a caveator does not necessarily absolve the caveator from responsibility or rebut an inference that the caveat was lodged without reasonable cause. In the present case the evidence supports a finding that Ms Gai did not give Mr Gutierrez full or accurate instructions as to the reasons NGI paid $6 million to the Vendors. Accordingly, even if Mr Gutierrez gave advice about NGI'S entitlement to lodge caveats forbidding dealings by GDI, he could not have done so on the basis of accurate instructions as to the circumstances in which the payment was made. Accordingly, the evidence establishes that NGI had no reasonable basis for any belief that it was entitled to lodge caveats claiming an interest in the Properties enforceable against GDI.
I should record that Mr Einfeld relied on the fact that on 12 March 2014 NGI's then solicitor, Mr Geering, advised both Ms Gai and Ms Lin that caveats should be lodged over the titles to the Properties. [190] The basis for Mr Geering's suggestion was not explained in the evidence. While the suggestion may, perhaps, have some bearing on whether Ms Gai believed several months later that NGI was entitled to lodge a caveat, it can have no bearing on whether NGI had reasonable grounds for lodging the caveats in July 2014.
The interests claimed in the caveats arose by reason of events occurring after March 2014, notably the rescission of the Initial Contracts, the entry into the Second Contracts and NGI's payment of $6 million to the Vendors. Whatever motivated Mr Geering to make his suggestion, it could not have been an analysis of NGI's rights in consequence of its payment of $6 million to the Vendors.

[4]

Honest belief

Since I have concluded that the primary Judge was correct to find that NGI did not have reasonable grounds for lodging the caveats, it is not necessary to consider his Honour's finding that NGI, through Ms Gai and Mr Geering, did not have an honest belief that it was entitled to lodge a caveat. Had it been necessary to address the issue, I would have rejected NGI's argument that the primary Judge denied it procedural fairness in making the finding and I would have been inclined to uphold the primary Judge's finding that the Vendors and GDI had established on the balance of probabilities that NGI did not have an honest belief that it was entitled to lodge a caveat.
The Vendors' pleadings, although incomplete, put in issue whether NGI had lodged the caveats without reasonable cause within the meaning of s 74P(1) of the RP Act. The meaning of the expression "without reasonable cause" is (and at the time of the pleading was) well understood to incorporate both subjective and objective elements. It would be an optimistic reading of the pleading, without the benefit of particulars, to confine it to an allegation that NGI lacked an objectively reasonable basis for lodging the caveats.
It is fair to say that the Vendors' final written submissions (which were adopted by GDI) lacked clarity on the issue of honest belief. Nonetheless, NGI's written submissions, although very brief, demonstrate that it understood it had to meet an argument that neither Ms Gai nor Mr Geering had an honest belief that NGI was entitled to lodge the caveats. In these circumstances, I think it was open to the primary Judge to consider and make findings on the issue of honest belief.
The intervention of Mr Gutierrez, whose independence was not in doubt, makes rather problematic the primary Judge's finding that the caveats were lodged without NGI "giving any thought at all to their validity". While there is no evidence as to the advice given by Mr Gutierrez, it perhaps overstates the position to conclude that NGI gave no thought at all to the validity of the caveats. However, in the absence of evidence from Ms Gai as to the basis of any belief she may have had, or from Mr Gutierrez as to the basis of any advice he may have given, I think the primary Judge's finding was right. Mr Einfeld did not submit that Ms Gai mistakenly believed, contrary to the facts, that NGI paid the $6 million pursuant to the terms of the Short Form Deed or that GDI authorised NGI to make the payment on its behalf. The primary Judge made no such finding. On his Honour's findings, there were discussions at various times between NGI and GDI as to whether the payment should be made to the Vendors as they were demanding. But at the conclusion of the critical meeting on 22 April 2014, Ms Lin told Ms Gai and Mr Geering to go away and if the Vendors wished to terminate the Initial Contracts "let them do it".

[7]

Second Judgment

The primary Judge was faced with a series of claims to the Court Fund. His Honour addressed these claims in the Second Judgment. The Vendors claimed to have an equitable charge over the Court Fund enabling them to enforce a judgment or order in their favour. [194] Accordingly, they sought payment from the Court Fund for the damages awarded in their favour against NGI.
GDI accepted that it was bound to pay $6 million to NGI, but maintained that it was entitled to set off against that liability its claims against NGI. [195] These claims included the damages and costs awarded against NGI. GDI also submitted that it was necessary to take into account MVGDD's unresolved Cross-Claim against NGI. If MVGDD's Cross-Claim succeeded, NGI might be liable to MVGDD for more than $9 million. [196] In that situation, GDI would be liable to indemnify MVGDD pursuant to cl 2(e) of the Novation Deed. [197]
NGI submitted that it was entitled to the whole of the Court Fund because it had paid $6 million to secure the Properties. Since that purpose had failed, it was entitled to be repaid that amount as moneys had and received. [198] Alternatively, NGI contended that it was entitled to a right of indemnity enforceable as a charge over the Court Fund. However, at the hearing on 22 May 2015, NGI did not object to the primary Judge making the order that the Court Fund be frozen pending further order of the Court.
Avondale filed a motion on 4 November 2015 seeking orders for payment out of the Court Fund, in priority to any other party to the proceedings of various amounts said to be due to Avondale by NGI on account of costs. This claim was based on a Deed of Charge between NGI as Chargor and Avondale as Chargee dated 6 February 2015 (Deed of Charge).
The primary Judge held that it was premature to order the disbursement of the moneys paid into the Court Fund. [199] His Honour accepted that the Vendors had succeeded in their claims, as had GDI and MVGDD. But success in the litigation did not convert them into secured creditors having a charge over the Fund. They were, therefore, unsecured creditors. [200]
The primary Judge considered that since the sum of $6 million paid by NGI to the Vendors had come from the Property Fund of which NGI was the trustee, that sum was trust property. However, that conclusion did not assist Avondale. The Deed of Charge between NGI and Avondale made it tolerably clear that any charge in favour of Avondale applied only to assets held by NGI in its own right and did not extend to trust assets. [201] Thus Avondale had a charge over NGI's own assets, but not over the Property Fund. Even if the $6 million had been impressed with a trust, Avondale's charge did not apply to the moneys.
In the alternative, Avondale's recourse to the assets of the trust was merely by way of subrogation to the trustee's right of indemnity and of exoneration from liability. It was arguable that Avondale, as a sub-chargee, had priority over other unsecured creditors of NGI such as the Vendors, but it was not necessary to decide that issue. [202]
In his Honour's view, the critical issue was what constituted the assets of the Property Fund at the date of the hearing. When NGI paid the $6 million to the Vendors, there was no mutual intention that the Vendors should become trustees of the moneys so paid. Nor did the Vendors ever constitute themselves trustees of those moneys. [203] Equally, GDI could not be regarded as a trustee of the moneys as it had never owed fiduciary duties to NGI and, even if such duties existed, GDI had not breached them. [204]
The primary Judge reached the following conclusions: [205] "[148] Once the monies were paid away to the [Vendors], without it [sic] being impressed with a trust, it became the [Vendors']. It was no longer NGI's money or the beneficiaries'. Upon rescission of the original contracts, of course, the [Vendors] were obliged to repay the $6 million to GDI. At this point there existed a chose in action. GDI was indebted to NGI, subject to its right of set-off. [149] GDI accepts that but for the order directing the monies be paid into Court it would otherwise have had an obligation to pay the monies to NGI. It may also be accepted that had that repayment occurred NGI would hold those monies afresh on trust for the beneficiaries subject to its right of indemnity under the terms of the deed. The monies in Court, however, cannot be characterised as an asset of NGI, nor are they any longer impressed with a trust. Avondale is left to enforce its charge according to its terms against other assets etc of NGI. On the other hand, once repatriated to NGI, had that occurred, the monies would, in my view, have in any event been beyond the reach of Avondale for the reasons stated. … [151] In my view the Court as custodian of the funds has a very wide discretion ultimately as to how the funds should be dealt with. It will no doubt take into account a number of factors so as to ensure the funds are properly administered. [152] Those factors include, but are not limited to: the extent to which NGI has a right to indemnity under the deed and/or the general law; whether NGI has any other assets; whether for any reason Avondale should rank ahead of other parties; and whether, if not, all claimants should be dealt with pari passu or on some other basis, to identify just a few. … [155] [B]ecause of the outstanding claims (in particular the cross claim), and set-off yet to be determined, it is clear that the time for payment out has not yet arrived. There are a number of steps to be taken including the appeal in the main proceedings which will or may have an impact on the potential demands on the funds. The competing claims have not yet fully crystallised and hence quantified. [156] The funds in Court should not, indeed cannot, be paid to anyone at present given the various extant issues. When all issues are determined the Court as custodian of the funds will be in a position to ensure they are properly administered, and all issues can be fully and finally determined. [157] For the time being, then, I am of the view no order can or should be made for the payment out of any funds to any party before the Court."
His Honour considered that a further reason for not ordering disbursement of the Court Fund was that any order should be stayed pending determination of the appeals.
Orders were made by the primary Judge on 21 April 2016. One of the orders made on that date dismissed Avondale's motion.

[14]

Avondale's interest in the Court Fund

Since NGI does not have a charge or lien over the Court Fund, Avondale (as it conceded) has no claim to priority over other claimants to the Fund based on the Deed of Charge. This is subject to the qualification that, as between NGI and Avondale, the latter claims priority over any entitlement NGI may have to be paid moneys from the Court Fund. At this stage, it is unclear whether NGI, whether in its capacity as trustee of the Property Fund or otherwise, will be able to claim any moneys from the Court Fund. If, for example, GDI is entitled to offset claims worth more than $6 million against NGI's entitlement to be paid that sum by GDI, any claim that NGI has to moneys in the Court Fund will be of no practical value.
As has been seen, the primary Judge dismissed Avondale's motion seeking an order for immediate payment of costs due to it by NGI out of the Court Fund. His Honour did so on the ground that Avondale could not establish that it had any interest in the sum of $6 million, even assuming it was trust property of which NGI was the trustee. That conclusion followed from his Honour's construction of the Deed of Charge between NGI and Avondale, which limited the charge to property held by NGI in its own right.
The primary Judge does not seem to have given consideration to whether the assets held by NGI "in its own right" included NGI's right of indemnity against the Property Fund in respect of liabilities incurred in its capacity as trustee. In my view, the primary Judge was correct to construe the Deed of Charge as applying only to interests held by NGI "in its own right". However, those interests include its right of indemnity.
The Deed of Charge defines the "Chargor" as NGI both in its capacity as trustee and in its own capacity. Recital C to the Deed of Charge records that the Chargor has agreed to grant to the Chargee (Avondale) the charge for the purpose of securing to the Chargee any moneys owing or payable to the Chargee on any account whatsoever.
Clause 4 of the Deed of Charge obliges the Chargor to pay in full the "Moneys Secured". This expression is defined to mean all money for which the Chargor may become indebted on any account whatsoever. Since the "Chargor" is defined to include NGI in its capacity as trustee of the Property Fund, it is clear enough that the Deed contemplates that NGI will incur indebtedness to Avondale in NGI's capacity as trustee of the Property Fund. This is hardly surprising, given (as I infer) that both Avondale and NGI were aware when the Deed of Charge was executed that Avondale was providing legal services to NGI in its capacity as trustee of the Property Fund.
This conclusion does not mean, however, that if NGI incurs legal fees in its capacity as trustee of the Property Fund, Avondale can enforce its charge directly against the assets of the trust. Clause 2.1 of the Deed of Charge creates a fixed charge in Avondale's favour over "all of the Assets and Undertaking of the Chargor". The expression "Assets and Undertaking" is defined to mean "all assets and undertaking of the Chargor whatsoever". This language is apt to include NGI's right of indemnity from the Property Fund which arises by virtue of its role as trustee. I do not think, however, that the language extends to the trust assets. NGI holds the legal title to these assets, but they are beneficially held by third parties. Clearer language would be required if the Deed of Charge is to be read as entitling Avondale to a security interest directly enforceable against the assets of the trust.
For present purposes, I do not think that the correct construction of the Deed of Charge matters. The relief sought by Avondale in the notice of motion dismissed by the primary Judge was the immediate payment out of moneys from the Court Fund. As the primary Judge concluded, the Court Fund does not comprise moneys held in trust for the Property Fund. NGI may ultimately be entitled to claim moneys held in the Court Fund but, if so, its entitlement will rest on its personal claim against GDI. It is unclear as yet whether NGI will be able to obtain any moneys from the Court Fund, if only because of the set offs claimed by GDI. Even if Avondale's charge applies to any portion of the Court Fund ultimately found to be payable to NGI, the Deed of Charge does not entitle Avondale to an immediate payment out of the Court Fund.
Avondale's Notice of Appeal seeks, among other orders, what amounts to a declaration that if the Court orders moneys to be paid out of the Court Fund to NGI, those moneys are subject to Avondale's charge. This order was not sought in Avondale's motion and was not the subject of submissions. The order should not be made.
Avondale's appeal should therefore be dismissed.

[16]

Second Judgment

The primary Judge described his findings on NGI's claim to a caveatable interest and the abandonment of the Short Form Deed as "stringent". [214] The reference to the findings concerning the Short Form Deed is to his Honour's conclusions (not challenged on appeal) that NGI's contentions were "implausibl[e]", "farfetched" and "speculative". [215] His Honour further stated that these findings "were provoked by what [he] saw to be a detailed appreciation of the facts". [216]
The primary Judge continued as follows: [217] "[39] In my view, NGI did not have a reasonable basis for lodging and maintaining those caveats on the facts and the law as I saw it. Likewise, I do not consider, given my findings, that there was any reasonable argument available to NGI in relation to the Short Form Deed. NGI knew much more about its own case than its opponents and, for that matter, the Court. Any interlocutory process to have the caveats removed, although one was mooted by MVGDD, was in my view not a satisfactory way to proceed. That is why, in all the circumstances, given the plight of the [Vendors], I regarded an expedited final hearing as essential. That was not capable of being achieved in its most desirable form because the evidence took longer than expected and the court had to adjourn for submissions. Common sense generally in circumstances such as these points to a quick final hearing. Hence I was disinclined to encourage an interlocutory application. [40] There was in my view plenty of time for NGI to carefully and reasonably consider its position. Apart from the proceedings there were at least two mediations, and yet NGI steadfastly clung to its contractual arguments, its caveats, and its demand for specific performance. [41] In all the circumstances I am of the view that NGI unreasonably lodged and persisted in asserting it had a tenable argument concerning the caveats. In addition, its contractual claim was hopeless bearing in mind the express terms of Ms Gai's email of 23 May 2014. In addition, it never did provide in any form a reasonable argument in response to MVGDD's argument on special condition 48. In each of those respects it persisted in arguments which were without merit and in that sense behaved unreasonably. [42] To the extent it is necessary to do, I agree with Brereton J in Arkbay Investments at [32] that a party found to have breached s 74P of the Real Property Act would, perhaps, for the reasons above, attract an order against it for indemnity costs. [43] It follows that the [Vendors], GDI and MVGDD are, in my view, entitled to their costs of the entire proceedings on an indemnity basis."

[20]

Endnotes

[2015] NSWSC 1176 ("Thomson").
(2007) 35 WAR 27; [2007] WASCA 179 at [69], discussing s 137(1) of the Transfer of Land Act 1893 (WA).
The provisions are set out by Sackville AJA at [146].
Real Property (Caveats) Amendment Act 1986 (NSW), which commenced in 1988.
(1990) 21 NSWLR 459 (Kirby P, Clarke JA and Waddell AJA).
(1963) 80 WN (NSW) 1463.
Being the language of Clarke JA in Beca Developments at 470C-D.
[1981] 1 NSWLR 106.
Bedford Properties at 108C-D.
Beca Developments at 475A-B.
Brogue Tableau at [82]-[84].
(1971) 125 CLR 546 at 552.
Real Property Amendment Act 1996 (NSW), Sch 1[19], commencing on 1 February 1997.
(2001) 204 CLR 461; [2001] HCA 15 at [99].
[2013] NSWCA 280; 17 BPR 32,733 at [52] (Barrett JA, Emmett and Gleeson JJA agreeing).
[2007] NSWSC 121 at [195].
See Morgan v John Fairfax & Sons Ltd (1991) 23 NSWLR 374 at 382G (Hunt AJA).
Thomson at [8].
Thomson at [7].
Thomson at [20].
Thomson at [27].
Thomson at [28].
The deed refers to 17 March 2013, but this is clearly an error.
Thomson at [42].
Thomson at [46].
Thomson at [300]-[301].
Thomson at [299] and [302].
Thomson at [276].
Thomson at [281].
Thomson at [378]-[380].
Thomson at [386].
(1959) 101 CLR 298.
Thomson at [370].
Thomson at [385].
Thomson at [385].
Thomson at [391].
Thomson at [394].
See [48] above.
The terms are set out at [200] and [201] below.
Mahendran at [54].
(1868) LR 4 Ch App 101.
Aberaman at 109-110.
Aberaman at 110.
Wythes v Lee (1855) 3 Drew 396; 61 ER 954; Rose v Watson (1864) 10 HLC 672; 11 ER 1187.
Thomson at [349].
[1902] 1 Ch 835 at 838 (Vaughan Williams LJ).
(1872) LR 5 HL 321.
Shaw at 338.
Shaw at 357-358.
(1864) 10 HLC 672; 11 ER 1187.
Thomson at [366] and [361] respectively.
Thomson at [236].
The circumstances in which NGI paid the $6 million to the Vendors' agent are detailed in the judgment of Sackville AJA at [179].
The full particulars of the estate or interest in the land claimed by the caveator, and the facts by which the caveator claimed its estate or interest in the land, are set out in the judgment of Sackville AJA at [200]-[201].
Sackville AJA at [257].
Meagher, Gummow & Lehane, Equity Doctrines & Remedies, 5th Ed, (2015), LexisNexis Butterworths, at [9-045]-[9-070].
Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 at 9-10 (Vaughan Williams LJ) and at 13 (Romer LJ): affirmed on appeal: Nottingham Permanent Benefit Building Society v Thurstan [1903] AC 6 at 10 (Earl of Halsbury and Lord Shand).
Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 at 10 (Vaughan Williams LJ)
Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652.
Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 at 236F (Lord Hoffmann); Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 at [84] (Jonathan Parker LJ).
Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 at [84] (Jonathan Parker LJ); Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652 (Hudson J).
Paul v Speirway Ltd [1976] Ch 220 (Oliver LJ).
Boodle Hatfield & Co v British Films Ltd (1986) NLJ 117; [1986] PCC 176 (Nicholls J).
Cid v Cortes (1987) 4 BPR 97,276 (Young J).
[2015] NSWSC 1176 at [390].
NGI has not applied for leave to appeal. On one view, it requires leave because the decision of the primary Judge was interlocutory: see at [395] below.
Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 (Primary Judgment) at [394], [644]-[649]. As will be seen, the Vendors were the Plaintiffs in the Equity Division proceedings, while GDI filed a cross-claim seeking compensation orders against NGI.
Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 (Second Judgment) at [43]. The Second Judgment also dealt with various claims to the Court Fund.
Neither the Appeal Books nor the Court file record that Avondale formally filed a notice of motion in the Equity Division proceedings. However, an affidavit read in support of Avondale's claim for relief set out the orders it sought in the proceedings. (The Court file includes an unstamped notice of motion to the same effect.)
Avondale does not appear to have filed an application for leave to appeal. However, the document styled "Amended Notice of Appeal" seeks an order that leave to appeal be granted.
Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 at 388 (Windeyer J); ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) (2012) 245 CLR 338; [2012] HCA 6 (ALH Group) at [12]-[13] (French CJ, Crennan, Kiefel and Bell JJ); Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 at [78] per curiam; Leveraged Equities Ltd v Goodridge (2011) 191 FCR 71; [2011] FCAFC 3 at [300]-[301] (Jacobson J, Finkelstein and Stone JJ agreeing).
ALH Group at [27]-[29]. The rescission or discharge of obligations may be express or implied: ALH Group at [31]-[32].
Hence the reference by Dixon J in Vickery v Woods (1952) 85 CLR 336; [1952] HCA 7 at 345 to novation requiring a "tripartite agreement involving a rescission of the [existing] contract".
Olsson v Dyson at 338.
Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395; [2006] FCAFC 40 at [32] (Finn and Sundberg JJ), approved in Leveraged Equities Ltd v Goodridge at [303]-[312].
Primary Judgment at [488]-[489].
Primary Judgment at [133].
Primary Judgment at [136].
Primary Judgment at [34].
Primary Judgment at [169].
Primary Judgment at [199].
Primary Judgment at [200].
Primary Judgment at [206].
Primary Judgment at [233].
Primary Judgment at [238].
Reproduced at [177] above.
Second Judgment at [5].
Primary Judgment at [273].
Primary Judgment at [294]-[295].
Primary Judgment at [418], [436].
Primary Judgment at [424].
Primary Judgment at [304].
Primary Judgment at [10]-[13].
Primary Judgment at [336].
Primary Judgment at [394].
Primary Judgment at [409].
Primary Judgment at [652].
Second Judgment at [124].
Second Judgment at [148]-[149].
Second Judgment at [132].
Second Judgment at [41]-[43].
Second Judgment at [160]-[162].
Primary Judgment at [103]-[104].
Primary Judgment at [23], [108].
Primary Judgment at [109].
Primary Judgment at [112].
Primary Judgment at [234]-[237].
Primary Judgment at [323].
Primary Judgment at [324].
Primary Judgment at [351].
Primary Judgment at [359].
Primary Judgment at [360].
Primary Judgment at [365]-[366].
Primary Judgment at [367].
Primary Judgment at [368].
Primary Judgment at [304].
See at [212] above.
Second Judgment at [6].
See Short Form Deed cl 1.2(g), reproduced at [160] above.
Short Form Deed cl 2.1.
Primary Judgment at [236].
Primary Judgment at [237].
See at [175] above.
[1990] FCA 54 at [13]-[14].
[1990] FCA 54 at [19], citing Ex parte Lord [1985] 2 Qd R 198 at 202 (Williams J). See also Woodman & Nettle: The Torrens System in New South Wales (Loose Leaf) at [74F 100 (26), (27)].
[1990] FCA 54 at [17].
(1983) 149 CLR 639; [1983] HCA 7.
Hewett v Court at 647 (Gibbs CJ).
Hewett v Court at 645-646.
(1923) 34 CLR 174; [1923] HCA 64 at 185.
(1808) 15 Ves 329 at 340; 33 ER 778 at 782.
(1864) 10 HLC 672 at 684; 11 ER 1187 at 1192.
Hewett v Court at 649.
Hewett v Court at 650. Deane J rejected the suggestion that an equitable lien can only arise under a contract of which specific performance would be granted: Hewett v Court at 664. Murphy J agreed: at 651.
Hewett v Court at 663.
Hewett v Court at 663.
Hewett v Court at 688.
Hewett v Court at 668.
(2014) 252 CLR 307; [2014] HCA 15.
Atco Controls at [22].
Atco Controls at [13]. One difference between an equitable lien over land and a mortgage is that a mortgage is created by contract, whereas an equitable lien arises by operation of law: Re Bond Worth Ltd [1980] Ch 228 at 251 (Slade J).
Atco Controls at [14].
Atco Controls at [31].
Atco Controls at [32], referring to Comcare v PVYW (2013) 250 CLR 246; [2013] HCA 41 at [15]-[16] (French CJ, Hayne, Crennan and Kiefel JJ).
See Quinn v Leathem [1901] AC 495 at 506 (Earl of Halsbury LC); Arinson Pty Ltd v City of Canada Bay Council [2015] NSWCA 199; 208 LGERA 418 at [65] (Campbell AJA, Basten and Meagher JJA agreeing).
Mr Geering had sent novation notices to the Vendors' solicitors in March 2014, purportedly pursuant to the terms of the Initial Contracts. The Vendors disputed the validity of the notices and no novation of the Initial Contracts to NGI ever occurred.
Rose v Watson at 1192, cited by Gibbs CJ in Hewett v Court at 645.
(1886) 34 Ch D 234 (Falcke). See K Mason, JW Carter and GJ Tolhurst, Mason & Carter's Restitution Law in Australia, (3rd ed 2016, LexisNexis Butterworths) at 835-840; J Edelman and E Bant, Unjust Enrichment, (2nd ed 2016, Hart Publishing) at 72-73.
Falcke at 241.
Falcke at 248. See also at 253 (Fry LJ).
(1908) 7 CLR 352; [1908] HCA 13 at 364 (Barton and Isaacs JJ agreeing).
[1995] WASC 484 (Lavery).
(2008) 232 CLR 635; [2008] HCA 27.
Lumbers at [80] (Gummow, Hayne, Crennan and Kiefel JJ). The exceptions include salvage in maritime law and some cases of necessitous intervention.
(1987) 162 CLR 221; [1987] HCA 5; see Lumbers at [86], [91]. As to the need for a request, express or implied, see O3 Capital Pty Ltd v WY Properties Pty Ltd (2016) 49 WAR 517; [2016] WASCA 82 at [71]-[78] per curiam.
Atco Controls at [48].
Chattey v Farndale Holdings Inc (1998) 75 P & CR 298.
Chattey v Farndale Holdings Inc at 304 (Morritt LJ, Kennedy and Potter LJJ agreeing).
Chattey v Farndale Holdings Inc at 305. For a similar case referred to by Mr Einfeld, see Middleton v Magnay (1864) 2 Hem & M 233; 71 ER 452 (Wood V-C); see also Levy v Stogdon [1898] 1 Ch 478 (Stirling J), affirmed [1899] 1 Ch 5 (CA), also relied on by Mr Einfeld, involved a lien created by the payment of a deposit in respect of the purchase of personalty. The party seeking to enforce the lien was the ultimate assignee of the purchaser's interest.
(1872) LR 5 HL 321 at 349-350.
[1954] VLR 567.
[1954] VLR 567 at 574-575.
McDonald v Isaac Construction Co Ltd [1995] 3 NZLR 612 at 616-618, citing ICF Spry, The Principles of Equitable Remedies, (3rd ed 1984, Lawbook Co,) at 80 (see now ICF Spry, Principles of Equitable Remedies, (9th ed 2014, Lawbook Co) at 89). See also Wilkinson v Clements (1872) LR 8 Ch App 96.
(1868) LR 4 Ch App 101.
Aberaman Ironworks v Wickens at 110.
Primary Judgment at [367].
For example, the equitable lien claimed by the assignee of a lease, where the assignee pays a deposit and subsequently rescinds the assignment by reason of the assignor's misrepresentations: Ryu v Lee (1996) 7 BPR 97,588.
Second Judgment at [6].
Clause 19.2.1 was subject to SC 48(vii), which stated that if the Second Contracts were novated, GDI agreed that the deposit of $1.51 million paid pursuant to the Second Contracts would become part of the purchase price under the novated contracts. The Second Contracts gave GDI as the purchaser the right to require the Vendors to novate the Contracts by new contracts with a "New Purchaser" and to rescind the Second Contracts (SC 48(i)).
Primary Judgment at [370].
Primary Judgment at [389], [391].
Primary Judgment at [392].
Primary Judgment at [393]-[394].
Primary Judgment at [394].
See Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 462-463 (Kirby P), at 474 (Clarke JA).
[2013] NSWCA 280; 17 BPR 32,733 at [52].
[2007] NSWSC 121 at [195].
[1993] 1 VR 589.
[1993] 1 VR 589 at 600-601, referring to s 118 of the Transfer of Land Act 1958 (Vic).
See Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 107 (Wootten J).
Bolton v Excell (Supreme Court (WA), 22 February 1993, unrep) at 12-13 (Owen J, Ipp J agreeing), cited in Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27; [2007] WASCA 179 (Brogue Tableau) at [92] (Buss JA).
Bolton v Excell at 14 (Owen J).
Lee v Ross (No 2) [2003] NSWSC 507; 11 BPR 20,991 at [33]-[38] (Palmer J).
Brogue Tableau at [98].
Brogue Tableau at [100].
Extracted at [322] above.
See at [198] above.
Primary Judgment at [394].
Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 (Handley JA).
See at [164] above.
Primary Judgment at [377].
Primary Judgment at [379].
Primary Judgment at [381].
Second Judgment at [47].
Second Judgment at [118].
Second Judgment at [55]-[56].
Reproduced at [193].
Second Judgment at [63].
Second Judgment at [123].
Second Judgment at [124]-[126].
Second Judgment at [129]-[132].
Second Judgment at [133].
Second Judgment at [147].
Second Judgment at [147]; Primary Judgment at [529].
Second Judgment at [148]-[149], [155]-[157].
Section 59(4) of the Trustee Act provides as follows: "A trustee may reimburse himself or herself, or pay or discharge out of the trust property all expenses incurred in or about execution of the trustee's trusts or powers."
Primary Judgment at [503]-[504]. The primary Judge said that on his understanding the damages in respect of each cause of action would be identical.
Second Judgment at [9].
Second Judgment at [132].
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 at 367 (Stephen, Mason, Aickin, Williams JJ).
Octavo Investments Pty Ltd v Knight at 367, 369-370; Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4 at 245-246 per curiam.
Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; 16 BPR 30,397 at [101] (Sackville AJA, Campbell JA agreeing).
Second Judgment at [134]-[136].
Second Judgment at [37].
Primary Judgment at [427], [435].
Second Judgment at [38].
Second Judgment at [39]-[43].
[2014] NSWSC 572.
Arkbay Investments at [16]-[17]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2017

Parties

Applicant/Plaintiff:

New Galaxy Investments Pty Ltd

Respondent/Defendant:

Thomson & Ors

Legislation Cited (6)

Real Property Amendment Act 1996(NSW)

Real Property (Caveats) Amendment Act 1986(NSW)

Transfer of Land Act 1893(WA)

Real Property Act 1900(NSW)

Trustee Act 1925(NSW)

Transfer of Land Act 1958(Vic)

Cases Cited (52)

Transfer of Land Act 1958 (Vic), s 118 Transfer of Land Act 1893 (WA), s 137 Cases Cited: Aberaman Ironworks v Wickens (1868) LR 4 Ch App 101 Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26; 16 BPR 30,397 ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) (2012) 245 CLR 338; [2012] HCA 6 Arinson Pty Ltd v City of Canada Bay Council [2015] NSWCA 199; 208 LGERA 418 Arkbay Investments Pty Ltd (In Liq) v Echelon Property Management Pty Ltd (No 2) [2014] NSWSC 572 Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 Bolton v Excell (Supreme Court (WA), 22 February 1993, unrep) Boodle Hatfield & Co v British Films Ltd (1986) NLJ 117 Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27; [2007] WASCA 179 Chattey v Farndale Holdings Inc (1998) 75 P & CR 298 Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; [1998] HCA 4 Cid v Cortes (1987) 4 BPR 97,276 Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Comcare v PVYW (2013) 250 CLR 246; [2013] HCA 41 Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 David Alan Thomson v Golden Destiny Investments Pty Limited [2015] NSWSC 1176 Davies v Littlejohn (1923) 34 CLR 174; [1923] HCA 64 Evandale Estates Pty Ltd v Keck [1963] VR 647 at 652 Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 Halifax plc v Omar [2002] EWCA Civ 121; [2002] P. & C. R. 26,377 Hewett v Court (1983) 149 CLR 639; [1983] HCA 7 Hill v Ziymack (1908) 7 CLR 352; [1908] HCA 13 Lavery v R & I Bank of Western Australia Ltd [1995] WASC 484 J&H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 Jones v Dunkel (1959) 101 CLR 298 Lee v Ross (No 2) [2003] NSWSC 507; 11 BPR 20,991 Leveraged Equities Ltd v Goodridge (2011) 191 FCR 71; [2011] FCAFC 3 Levy v Stogdon [1898] 1 Ch 478 Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; [2008] HCA 27 Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280; 17 BPR 32,733 Middleton v Magnay (1864) 2 Hem & M 233; 71 ER 452 Morgan v John Fairfax & Sons Ltd (1991) 23 NSWLR 374 Naismith v Smith [1954] VLR 567 Natuna Pty Ltd v Cook [2007] NSWSC 121 Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 Nottingham Permanent Benefit Building Society v Thurstan [1903] AC 6 O3 Capital Pty Ltd v WY Properties Pty Ltd (2016) 49 WAR 517; [2016] WASCA 82 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395; [2006] FCAFC 40 Paul v Speirway Ltd [1976] Ch 220 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 Quinn v Leathem [1901] AC 495 Re Bond Worth Ltd [1980] Ch 228 Re Kimberley NZI Finance Ltd v AR Barr Investments Pty Ltd [1990] FCA 54 Rose v Watson (1864) 10 HLC 672; 11 ER 1187 Ryu v Lee (1996) 7 BPR 97,588 Shaw v Foster (1872) LR 5 HL 321 State of New South Wales v Taylor (2001) 204 CLR 461; [2001] HCA 15 Stewart v Atco Controls Pty Ltd (In Liq) (2014) 252 CLR 307; [2014] HCA 15 Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 Thurstan v Nottingham Permanent Benefit Building Society [1902] 1 Ch 1 Vickery v Woods (1952) 85 CLR 336; [1952] HCA 7 Whitbread & Co Ltd v Watt (1902) 1 Ch 835 Wilkinson v Clements (1872) LR 8 Ch App 96 Wythes v Lee (1855) 3 Drewry 396; 61 ER 954 Texts Cited: K Mason, JW Carter and GJ Tolhurst, Mason & Carter's Restitution Law in Australia, (3rd ed 2016, LexisNexis Butterworths) ICF Spry, The Principles of Equitable Remedies, (3rd ed 1984, Lawbook Co) ICF Spry, The Principles of Equitable Remedies, (9th ed 2014, Lawbook Co) J Edelman and E Bant, Unjust Enrichment, (2nd ed 2016, Hart Publishing) Meagher, Gummow & Lehane, Equity Doctrines & Remedies (5th ed, (2015), LexisNexis Butterworths, at [9-075]-[9-115]) Woodman & Nettle: The Torrens System in New South Wales (Loose Leaf) Category: Principal judgment Parties: Matter No. 2015/370773: New Galaxy Investments Pty Ltd (Appellant) David Alan Thomson (First Respondent) Tracy Spencer (Second Respondent) Joseph Alonso (Third Respondent) Kaye Alonso (Fourth Respondent) John Wolfe (Fifth Respondent) Janyce Wolfe (Sixth Respondent) Malcolm Smith (Seventh Respondent) Katherine Smith (Eight Respondent) Pera Webb (Ninth Respondent) Maureen Theobald (Tenth Respondent) Golden Destiny Investments Pty Ltd (Eleventh Respondent) MV Golden Destiny Development (Turramurra) Pty Ltd (Twelfth Respondent) Yun "Louise" Lin (Thirteenth Respondent) Kristjan Geering (Fourteenth Respondent) Francisco Gutierrez trading as Avondale Lawyers (Fifteenth Respondent)

Solicitors: Websters Lawyers (New Galaxy) Fox & Staniland Lawyers (First to Tenth Respondents) Ren Zhou Lawyers (Golden Destiny) Kekatos Legal (MV Golden Destiny) Birchgrove Legal (Francisco Gutierrez) File Number(s): 2015/370773; 2016/10107 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2015] NSWSC 1176 and [2015] NSWSC 1929 Date of Decision: 21 August 2015 and 17 December 2015 Before: Sackar J File Number(s): 2014/228930

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The appellant, New Galaxy Investments Pty Ltd (NGI) lodged caveats over the titles of six properties at Turramurra (Properties), claiming an equitable interest in the Properties arising by reason of NGI's payment of $6 million to the registered proprietors (first to tenth respondents) (Vendors). On its case, NGI made a voluntary payment to the Vendors' agent because it expected to acquire title to the Properties by novation to it of the contracts of sale between the Vendors and the eleventh respondent, Golden Destiny Investments Pty Ltd (GDI). NGI's $6 million payment was not made at the request of the Vendors. There was no loan agreement between NGI and GDI, and NGI did not contend that the $6 million payment was a loan, or that the money was paid to or on behalf of GDI. The Vendors had entered into six contracts for sale with GDI on 17 December 2013 for a total purchase price of $15.1 million, with a deposit of $1.51 million and a completion date of 17 March 2014. Those contracts allowed for their novation to another purchaser. GDI subsequently entered into a deed with NGI (Short Form Deed) granting NGI a conditional right to have the contracts of sale novated to it simultaneously with their completion. The condition of the novation was that NGI obtain funding necessary to complete the contracts. NGI did not obtain the necessary funding. Further negotiations between the Vendors and GDI led to "new contracts" between the Vendors and GDI on 23 April 2014, which extended the date for completion, in return for an increase in the purchase price by $200,000, a part payment by GDI of the increased purchase price in the amount of $6.49 million and the release to the Vendors of the deposit of $1.51 million. The new contracts also allowed for their novation to another purchaser. Of the $6.49 million paid to the Vendors' agent, $6 million was paid by NGI and $490,000 was paid by GDI. The Vendors were unaware that NGI had paid the $6 million to their agent. After the new contracts were entered into, a dispute arose between NGI and GDI about the Short Form Deed, with each asserting that the other had breached or repudiated that agreement. GDI then nominated the thirteenth respondent, MV Golden Destiny Development (Turramurra) Pty Ltd (MVGDD) as the purchaser by novation under the new contracts, and the Vendors entered into contracts with MVGDD on 7 July 2014. The completion of the contracts between the Vendors and MVGDD was delayed by reason of the caveats lodged by NGI's solicitors on 21 July 2014. In proceedings in the Equity Division, the Vendors and GDI both sought compensation against NGI pursuant to s 74P of the Real Property Act 1900 (NSW) for pecuniary losses sustained by them by NGI's lodgment of the caveats, and NGI's subsequent refusal to remove the caveats when requested to do so. On the third day of the trial in the Equity Division proceedings, NGI agreed to withdraw its caveats and allow the completion of the contracts of sale between the Vendors and MVGDD. Following the completion of the contracts between the Vendors and MVGDD, the primary judge ordered that the $6 million received by the Vendors from NGI be paid into Court. The primary judge made a declaration that the caveats had been lodged and maintained by NGI without reasonable cause and ordered compensation be paid by NGI to the Vendors in the amount of $796,026.41. Assessment of compensation payable by NGI to GDI was deferred pending the determination of other claims the subject of GDI's cross claim against NGI. The primary judge found that NGI had no equitable interest in the Properties and therefore did not have a caveatable interest. His Honour concluded that GDI did not make payment to the Vendors as agent of NGI or in any manner that made NGI a sub-purchaser of GDI. The primary judge further found that NGI gave no thought at all to the validity of the caveats it had lodged, and that the objective evidence pointed overwhelmingly to there being no reasonable basis for their lodgment. The primary judge ordered NGI to pay the costs of GDI and MVGDD on an indemnity basis. NGI, by its appeal, sought to set aside the orders for compensation made by the primary judge, and the declaration that it had lodged and maintained its caveats without reasonable cause. NGI also challenged the order of the primary judge that NGI pay the costs of GDI and MVGDD on an indemnity basis. NGI's appeal was heard concurrently with an application for leave to appeal by Francisco Gutierrez trading as Avondale Lawyers (Avondale). Avondale were NGI's former solicitors and sought leave to appeal against the dismissal by the primary judge of their notice of motion seeking orders that amounts due to it for its costs of acting for NGI be paid in priority from the Court Fund. Competing claims were made against the Court Fund by NGI, GDI, the Vendors, MVGDD and Avondale. NGI claimed that it had a charge or lien over the Court Fund by reason of having paid the $6 million to the Vendors' agent. Avondale claimed that it had a security interest over any rights of NGI in respect of the Court Fund. The Vendors and GDI relied on money judgments in their favour against NGI in the Equity Division proceedings. MVGDD relied on an undertaking as to damages given by NGI as the price for maintaining its caveats. The NGI appeal Issues on NGI's appeal

[2007] WASCA 179

[1998] HCA 4

[2013] HCA 41

[1995] WASC 484

[2016] WASCA 82

[1990] FCA 54

(2012) 245 CLR 338

(1990) 21 NSWLR 459

(2007) 35 WAR 27

(1998) 192 CLR 226

(1991) 22 NSWLR 389

(2013) 250 CLR 246

(1923) 34 CLR 174

(1999) 47 NSWLR 473

(1983) 149 CLR 639

(1908) 7 CLR 352

(1971) 125 CLR 546

(1959) 101 CLR 298

(2011) 191 FCR 71

(2008) 232 CLR 635

(1991) 23 NSWLR 374

(2016) 49 WAR 517

(1979) 144 CLR 360

(1969) 120 CLR 365

(2006) 149 FCR 395

(1987) 162 CLR 221

(2001) 204 CLR 461

(2014) 252 CLR 307

(1952) 85 CLR 336

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Boensch as trustee of the Boensch Trust v Pascoe

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New Galaxy Investments Pty Ltd v Thomson & Ors

Zaps Transport (Aust) Pty Limited v Richland Express Pty Limited

Zhou v Li

Whether NGI had a caveatable interest in the Properties by reason of its payment of $6 million to the Vendors' agent; 2: Whether NGI had an honest belief on reasonable grounds that it had a caveatable interest over the Properties; 3: If the caveats were lodged without reasonable cause, whether the Vendors and GDI suffered losses attributable to NGI's wrongful lodgement of the caveats; 4: Whether any immediate disposition should be made from the Court Fund; 5: Whether the primary judge erred in ordering that NGI pay GDI and MVGDD's costs on an indemnity basis. In respect of (1); held per Sackville AJA, Gleeson JA agreeing, Basten JA dissenting: 1: The $6 million paid by NGI to the Vendors' agent was a voluntary payment made by NGI without the request (express or implied) or the knowledge of the Vendors. It was not contended by NGI that the payment was a loan to GDI or made at the request of GDI, and NGI was not in the position of sub-purchaser from GDI. No case was advanced by NGI against GDI founded on estoppel or subrogation. 2: NGI had no equitable lien over the Properties as against the Vendors arising from the voluntary payment which was made without the Vendors' knowledge or request (express or implied). Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234; Hill v Ziymack (1908) 7 CLR 352; [1908] HCA 13; Lavery v R&I Bank of Western Australia Ltd [1995] WASC 484; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15 considered 3: NGI had no equitable lien over the Properties as against GDI arising from a voluntary payment made directly to the Vendors' agent, not to or on behalf of GDI.Aberaman Ironworks v Wickens (1868) LR 4 Ch App 101; [2008] HCA 27; Naismith v Smith [1954] VLR 567; Shaw v Foster (1872) LR 5 HL 321 considered. In respect of (2); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 4: The Vendors and GDI had failed to establish that NGI did not believe that it had a caveatable interest in the land at the time it lodged the caveats. The Vendors and GDI therefore failed to establish that NGI had lodged or maintained the caveats without reasonable cause. Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280; 17 BPR 32,733 cited. In respect of (3); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 5: In view of the conclusion of the Court (by majority) in respect of (2) above, the Vendors and GDI were not entitled to compensation pursuant to s 74P of the Real Property Act 1900 (NSW). In respect of (4); held per Sackville AJA, Basten and Gleeson JJA not deciding; 6: No claimant to the Court Fund had established a right to immediate payment. There was no error in the primary judge's decision to order that the sum comprising the Court Fund be frozen until further order. In respect of (5); held per Basten JA, Gleeson JA agreeing, Sackville AJA dissenting; 7: The appellant's success on appeal means that the indemnity costs order at first instance should be set aside. The parties were invited to reach agreement as to the appropriate costs order at first instance and on appeal, failing which the issue of costs would be determined by the Court upon further application by the parties. The Avondale appeal Issues on Avondale's application for leave to appeal 1: Whether Avondale was entitled to an immediate payment out of the Court Fund as a result of its charge over NGI's assets to secure its costs. In respect of (1); held per Sackville AJA, Basten and Gleeson JJA agreeing 1: Since NGI did not have a charge or lien over the Court Fund, Avondale has no claim to priority over other claimants to the Court Fund based on the Deed of Charge granted to Avondale by NGI. Avondale was not entitled to any immediate payment from the Court Fund.