Northern Star Agriculture V. Morgan & Banks Developments Pty. Limited [2007] NSWSC 2

PARTIES : NORTHERN STAR AGRICULTURE v. MORGAN & BANKS DEVELOPMENTS PTY. LIMITED

COUNSEL : Plaintiff: G.E. Underwood/T.W.L. Stuart Defendant: R.R.I. Harper, SC./A. Gee

SOLICITORS : Plaintiff: Leys Law Firm Defendant: Toltz La Hood

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

NORTHERN STAR AGRICULTURE v. MORGAN & BANKS DEVELOPMENTS PTY. LIMITED JUDGMENT 1 HIS HONOUR: Before the Court is a notice of motion to extend the operation of caveat number AB772532D, pending further order of the Court. 2 A summons and notice of motion were filed in this Court on 15 December 2006 supported by an affidavit by the solicitor for the plaintiff, Mr. Victor Clonda, sworn 14 December 2006. 3 On 15 December 2006, an order was made by Palmer, J., by consent, for the operation of the caveat to be extended to 10 January 2007. 4 On 10 January 2007, the proceedings were listed before me as vacation Duty Judge. Mr. G.E. Underwood of counsel, with Mr. T.W.L. Stuart of counsel, appeared on behalf of the plaintiff. Mr. R.R.I. Harper, SC., with Mr. A. Gee of counsel appeared on behalf of the defendant. 5 On 10 January 2007, the plaintiff sought and obtained leave to file in court an amended summons and an additional affidavit of Mr. Victor Clonda sworn 8 January 2007. 6 Mr. Harper opposed the amended application, insofar as it sought interlocutory injunctive relief from proceedings as he was not in a position to meet the amended claim. Accordingly, the application for injunctive relief was stood over to a date to be fixed (subsequently agreed to be 25 January 2007).

Plaintiff's affidavit evidence 7 The plaintiff moved upon the affidavit of Mr. Victor Clonda sworn 14 December 2006. 8 The caveat was lodged on 14 September 2005. A notice to caveator of proposed lapsing of the caveat was subsequently served on the plaintiff by the defendant on or about that date. 9 Mr. Clonda stated in his affidavit (paragraph 13) that he is aware from correspondence between the parties and their solicitors that the defendant wishes to sell the subject property and that he was aware that it had entered into a Call Option with a company, Smart Oasis Pty. Limited, dated 8 November 2006. 10 On 9 November 2006, the defendant served a notice on the plaintiff in respect of a Right of First Refusal pursuant to clause 15.3 of the Agreement. 11 I understand that a further Call Option was subsequently entered into with Smart Oasis Pty. Limited and that it is entitled to exercise the option by Friday 15 January 2007.

Factual matters 12 The land, which is the subject Development and Profit Share Agreement dated 11 December 2003 entered into by the plaintiff and the defendant is an area of some eight hectares and is the whole of the land contained in Folio Identifier 1/1074784. The land has development approval for 270 resort-style twin key units. 13 The Agreement regulates the rights and obligations of the plaintiff and defendant in respect of the development of the land. 14 The parties to the defendant include the plaintiff (described as "NSA"), Morgan & Banks Development Pty. Limited (described as "MBD") and Morgan & Banks Investments Pty. Limited (described as "MBI"). 15 The Agreement records that MBD, the defendant, is or was to become the legal owner of the property. The Agreement also records that in consideration of NSA (the plaintiff) introducing the defendant to the Property and Project ("PP"), the defendant wished to appoint to NSA "to assist it to facilitate a development of the Property and to pay NSA a fee equal to 50% of the Project Profits on the terms of this document". 16 The Agreement contains operative provisions set out in clauses 1 to 20. 17 By clause 2.1, the defendant agreed to "contribute the Property to the Project". By clause 2.2, it was required, inter alia, to provide all capital required for the project and it would fund all project expenses and provide its expertise to the project. 18 Clause 2.3 recorded that NSA "will contribute its expertise to the Project by way of its membership of the PCG and use its best endeavours to assist MBD on the success of the project". 19 Clause 2.4 provided "MBD is, and will continue to be, the full legal owner of the property until such time as contracts for the sale of the Lots to individual purchasers are entered into and completed. Subject to clause 7, no interest in the Property is created in favour of the NSA by this document". 20 The Project Control Group (described as "PCG") is established by clause 4.2. the PCG had responsibility for the matters specified in Schedule 1 to the Agreement. 21 All decisions in relation to the Project were to be made by the PCG as agent for the plaintiff and the defendant. Its decisions as decision making body were binding upon both the plaintiff and the defendant insofar as the decision related to the property and the project. 22 By clause 5.5, the defendant was required to contribute to the project any funds required for the acquisition of the property and associated costs and any funds required to service the project debt and ongoing operational and capital expenditure of the project. 23 Clause 7 of the Agreement was entitled "undertakings and caveatable interest". 24 By Clause 7.3, the defendant agreed to reimburse, on the date that it completed its purchase of the property, contributions made to the project by the plaintiff. Payments to be made in this respect to the plaintiff were detailed in Schedule 2 of the Agreement. 25 The provisions of the Agreement relating to "caveatable interest" are central to the present application and they are set out below:- Caveatable interest 7.5 MBD agrees that this document gives the NSA a caveatable interest in respect of the Property and upon the subdivision of the Property into Lots, against the title to each of the Lots. 7.6 The NSA may therefore lodge a caveat against the title to the Property and upon the subdivision of the Property into Lots, against the title to each of the Lots to protect its interest under this document. Withdrawal of caveat 7.7 The NSA must withdraw its caveat against the title to a Lot in order to facilitate the sale of the Lots. The NSA must also withdraw its caveat against the title to the Property or a Lot (as applicable) if this agreement has been terminated by MBD in accordance with its rights under this document. 26 The provisions as to the term and as to termination of the Agreement are to be found in clause 13. Clause 13.1 provides:- Subject to the terms of this document, this document commences on its date and continues until MBD or any related Body Corporate no longer owns any part of the Property unless otherwise agreed between NSA and MBD and all Project Expenses have been paid and all Project Profit has been received and applied in accordance with the terms of this agreement. 27 Clause 13.2 provides for termination, in particular, in cases of breach or the entry into any composition or arrangement with creditors (13.2.4) or in event of fraud or serious wilful misconduct. 28 Clause 15 provides for a right of assignment and a right of first refusal. In brief, clause 15.2 provides that the defendant may transfer its rights and obligations under the Agreement together with the property or any part of it that has not been sold as a lot to a related Body Corporate. 29 Clause 15.3 provides that if the defendant proposes to sell the property to a third party, "MBD must first offer to sell the Subject Property to NSA by written agreement specifying the terms of proposed of (sic) sale including the sale price for the Subject Property. The offer remains open for acceptance by written notice for 21 days after the date the notice is given". 30 It is unnecessary here to refer to the detail of clauses thereafter appearing in the agreement other than noting the definitions and interpretation provisions in clause 20.

The evidence for the defendant 31 The defendant relied upon the affidavit of Graham Leonard Brand, sole director of the defendant, sworn 22 December 2006. Objection was taken to the affidavit on the grounds of relevance. 32 The subject matter of the affidavit may be subdivided into eight parts as follows:- (1) Pre-contract negotiations (paragraph 4 to 11) (2) Draft contracts (paragraphs 12 to 17) (3) The Development and Profit Share Agreement (paragraphs 18 and 19)

(5) Purchase and financing of the property by the defendant (paragraphs 22 to 31)

(6) Proposed sale of the property (paragraphs 32 to 48)

(7) Call options (paragraphs 49 to 56) (8) Financial accounts of the defendant for the year ended 30 June 2006/period ended 31 October 2006 (paragraphs 57 and 58). 33 In paragraphs 32 and 33 of the Agreement, it is stated that by the middle of 2005 it was clear to both the plaintiff and the defendant that it was not economically viable for the property to be developed in accordance with the Development Approval or the subsequent Development Application and that the plaintiff and the defendant had therefore entered into discussions with a view to ending the Agreement and the defendant selling the property. 34 In paragraphs 57 and 58 of the affidavit, reference is made to the financial accounts of the defendant for the year ended 30 June 2006 and for the four months ended 31 October 2006. It is stated that a sale of the property at $11 million will result in a loss to the defendant of approximately $1.5 million after allowance for expenses such as commissions on sale. 35 I will return to the question of the admissibility of the evidence of Mr. Brand.

The plaintiff's submissions 36 Mr. Underwood relied upon the plaintiff's written outline of submissions which identified the essential factual matters and the relevant provisions of the Agreement. He drew attention to clause 19.7 which stated that the parties acknowledged that in agreeing to enter into the document it had not relied on any representation, warranty or other assurance except those set out in the document. 37 The plaintiff submitted that it held an equitable charge pursuant to the Agreement which entitled it to maintain a caveat. 38 Reliance was placed upon the provisions of clause 7.5 which was said to give the caveatable interest claimed in respect of the property and following subdivision against the title to each of the lots thereby created. 39 Reference was made to authorities concerning the grant of an authority to lodge a caveat as carrying, by implication, the grant of such an estate or interest in land affected by the caveat as necessary to resist its removal: Crampton v. French (1996) ANZ Conv. R. 156 and Cradock v. Scottish Provident Institution (1893) 69 LT 380 at 382 per Romer, J. 40 It was submitted that the grant of an authority to lodge a caveat carries with it by implication the grant of such an estate or interest in the land affected by the caveat as is necessary to resist its removal, relying in that respect, upon Crampton (supra). 41 Mr. Underwood also referred to the observations of the Court of Appeal (Mahoney, Priestley and Meagher, JJA.) in Trancone v. Aliperti (1994) 6 BPR 13,291 wherein the principle was applied that "whosoever grants a thing is deemed also to grant that without which the grant itself would be of no effect". 42 It was said that a grant by the defendant to the plaintiff of an authority to lodge a caveat carried with it by implication the grant of such an estate or interest in the land affected by the caveat as is necessary successfully to resist its removal. Reliance was also placed upon the observations of Griffiths, CJ. in Butler v. Fairclough (1917) 23 CLR 78 at 91.

The defendant's submissions 43 Mr. Harper relied upon the defendant's written outline of submissions supplemented by oral submissions. 44 The two essential grounds for resisting the application were, firstly, that the caveat was said to be bad in form and, secondly, that there was no caveatable interest. 45 As to the question of form, it was submitted that the description in the schedule to the caveat of "an equitable interest in the land" pursuant to clause 7 of the Development and Profit Share Agreement was insufficient to specify the nature of the interest claimed by the caveator. Specific reliance was placed upon the observations made by Campbell, J. in Hanson Construction Material v. Vimwise Civil Engineering (2006) NSW Conv. R. 56,137, in particular, at 59,633 and Circuit Finance Pty. Limited v. Crown & Gleeson Securities Pty. Limited (2006) NSW Conv. R. 56,143 per Brereton, J., in particular, at 59,682 to 59,684. 46 Whilst Mr. Underwood disputed the contention that the caveat was bad in form, he sought, in the event that it was determined that the caveat was defective, to have a caveat granted in terms of MFI 1. 47 The defendant submitted that, putting the plaintiff's case at its highest, clauses 7.5 and 7.6 should be construed as impliedly granting an equitable charge. It was further submitted that if the Court did find an implied grant of a charge, there could be no caveatable interest unless the charge actually secured some debt or money. 48 In this latter respect, it was contended on behalf of the defendant that there was no evidence from the plaintiff that any amount is owing to it pursuant to the agreement. It was observed that there was no existing debt which could be secured by a charge. Mr. Harper, accordingly, submitted that the most reasonable construction of the Agreement was that the parties intended a charge may arise "at some time in the future if some profit was made in which the plaintiff could share" (paragraph 24). 49 Reliance was placed upon observations of White, J. in Redglove Projects v. Ngunnawal Local Aboriginal Council [2004] NSWSC 880 at [20]. I will refer to those observations later in this judgment. 50 Mr. Harper also relied upon the observations of Hodgson, J. (as he then was) in Composite Buyers Limited v. Soong (1995) 38 NSWLR 286 at 288:- "In my opinion, what is necessary is that there be an interest in respect of which equity will give specific relief against the land itself, whether this relief be by way of requiring the provision of a registrable instrument, or in some other way giving satisfaction of the interest claimed by the caveator out of land itself, for example, by ordering the sale of land and payment out of the proceeds of an amount in respect of which the caveator has a charge." 51 In summary, it was submitted that, if the Court did find an implied grant of a charge, there could be no caveatable interest unless the charge actually secured some debt or money. It was contended that there was no evidence from the plaintiff that any amount is owing to it pursuant to the agreement, that there was no dispute that the defendant contributed all the purchase price of the property and there was no existing debt which could be secured by a charge. Accordingly, it was submitted, there was no "interest in respect of which equity will give specific relief against the land itself" or "satisfaction out of the land itself" in the words of Hodgson, J. in Composite Buyers (supra). 52 It was further contended that the most reasonable construction of the Agreement is that the parties intended that a charge may arise at some time in the future if some profit was made in which the plaintiff could share.

Principles 53 In an application for an extension of a caveat under s.74K(2), the onus lies on the caveators to satisfy the Court that their claim "has or may have substance" and that the statutory discretion to extend should be exercised: Lyndove Pty. Limited v. Anese & Ors (1989) NSW Conv. R. 55,478; Sanwa Australia Leasing Limited v. Makrides & Ors (1988) NSW Conv. R. 55,424 and Vella & Anor v. Aliperti & Anor (1995) NSW Conv. R. 55,750 per Santow, J. (as he then was) at 55,772. 54 The reason for the onus is because the registered proprietors have a prima facie right to deal freely in their land: Vella (supra) at 55,772. 55 It is sufficient for the caveators to establish that a claim of substance may be raised after the caveator has had the opportunity of discovery, inspection and interrogatories, particularly where the caveator's position will be irretrievable after the registration of a competing dealing: Vella (supra) at 55,772. 56 It is well established that the considerations that arise in exercising this statutory discretion contained in s.74K are much the same as those which will arise in an application for the grant of an interlocutory injunction. Accordingly, the caveator must establish both that his or her or its claim raises a serious question to be tried, and that the balance of convenience favours the retention of the caveat pending a trial to substantiate the interest claimed: Vella (supra) at 55,772. 57 The Court may require an undertaking as to damages to be given as a condition of the grant of an order for extension of a caveat under s.74K(5). 58 The threshold question is whether the caveator has established that his or her or its claim "has or may have substance".

Analysis 59 In undertaking the required analysis to determine the issue of "caveatable interest" the following matters must be considered:-

(a) Whether on the construction the whole of the Development and Profit Share Agreement dated 11 December 2003 an equitable charge was granted over the subject property.

(b) If such an equitable charge was granted, what was the nature of such charge?

(c) Subject to the answers to those questions, what did the equitable charge secure? 60 In relation to the question of whether an equitable charge was created, I note the following:-

(a) It has been said that "to constitute a charge in equity by deed or writing, it is not necessary that any general words of charge should be used. It is sufficient if the Court can fairly gather from the instrument an intention by the parties that the property therein should constitute a security: Cradock v. Scottish Provident Institution (1893) 69 LT 380 at 382 per Romer, J." .

(b) An equitable charge for a debt is a security whereby only a right to payment of the debt out of the property is conferred by the owner of the property to the holder of the security: Avco Financial Services Limited v. White (1977) VR 561, 563 per Gillard, J.

(c) It is necessary to gather from the contents of the Development and Profit Share Agreement, in particular, clauses 7.5 and 7.6 thereof, what the parties to the agreement intended and, in that respect, whether the property referred to in clause 7.5 should constitute a security.

(d) It is noted that clause 7.5 does not in terms use words such as "as further security for Project Profit" .

(e) The bare statement in an agreement conferring a caveatable interest in respect of a property does not necessarily create a charge or security. 61 In Kingstone Constructions Pty. Limited v. Crispel Pty. Limited (1991) 5 BPR 11,987, Young, J. (as he then was) considered similar issues. In that case, an agreement, apparently prepared without the benefit of legal advice, recited that the caveator and the registered proprietor "jointly will develop and build 14 townhouses … of a particular property". Under the agreement, the caveator was to pay (and did pay) the registered proprietor $300,000. The registered proprietor would, at its own expense, develop the property to a position where the caveator could commence to build. The caveator would then commence building 14 dwellings on the site and on a specified date the registered proprietor would pay the caveator $230,000 or 32% of actual construction costs, whichever was the lesser. 62 Clause 7 of the Agreement provided "it is acknowledged by [the registered proprietor] that [the caveator] will have a caveatable interest in Tilba". 63 It was submitted on behalf of the registered proprietor that the caveator had no interest in the land at all. On that question, Young, J. dealt with the question by observing, in part:- (a) That it would be correct to say that in general terms a naked agreement to confer "a caveatable interest" on another person would create no interest in land (at p.11,988).

(b) The question was whether, on the construction of the whole of the agreement, an equitable charge was granted over the subject land and, if so, what was the nature of such charge.

(c) If there was an equitable charge, then the next problem was what did the equitable charge secure? (at p.11,989). 64 In Kingstone Constructions, there was no doubt at all that the caveator had paid over $320,000. Young, J. accepted the submission that, having regard to the whole of the agreement, the parties must have intended that the document would confer an equitable charge, that being the only interest in land which could conceivably be granted. 65 The contrary argument that had been put on behalf of the registered proprietor in that case was that the surrounding circumstances tended to show that what the parties intended was that when the caveator actually commenced building works and had converted its own materials into fixtures which would form part of the land then, and only then, was there to be an acknowledgement that the caveator had an interest in the land. This was a similar line of argument that was put by Mr. Harper, SC. in the present proceedings. Young, J. held that there was insufficient admissible material before him to make any finding on that matter. 66 Accordingly, he proceeded upon the basis that there was a sufficiently strong arguable case on the material before him of an equitable charge. The next question arose, what did the equitable charge secure? 67 It was significant in that case (in contrast to these proceedings) that each party supplied capital and each would receive profits when the developed land was sold. If the agreement proceeded, then the equitable charge would secure the monies that would be due to the caveator under the agreement, namely, the share of profits and the contribution towards building costs. In that case, similarly to the present case, the agreement did not continue to fruition. There, the agreement was terminated for alleged breach. 68 The evidence before me includes that of Mr. Brand in his affidavit sworn 22 December 2006 in paragraphs 32 and 33 which, for the purposes of the present application, I consider to be admissible, although on a final hearing, it may suffer from defects, at least as to form. I also consider that his evidence as to the financial position of the project (paragraphs 57 and 58) to be admissible. 69 That evidence tends to be supported by email correspondence and other documents to be found in Exhibit GLB-1 to the affidavit of Mr. Brand between pp.191 and 230. 70 The effect of that evidence is that the parties no longer intend to develop the property and no issue, in that respect, was raised by Mr. Underwood on this application. In other words, the evidence does support the conclusion that the parties reached a stage whereby the property was to be sold and not developed under the Agreement, the remaining questions being, inter alia, at what price and to whom. 71 Under the Agreement, the plaintiff was to receive remuneration or fees in two forms. The first was a fee for its participation in the Project Control Group (PCG) established by clause 4.2 of the Agreement. Under clause 4.15 for its contribution to the PCG, the plaintiff and the defendant "shall be remunerated (and become an expense to the Project) at $5,000 per month plus GST and their respective nominees to the PCG shall be reimbursed for the travel and accommodation expenses incurred in performance of their duties as members of the PCG …". There was no evidence of any outstanding fees due under clause 4.15. 72 The second form of remuneration payable under the Agreement was "Project Profit". The expression is defined in the Agreement (clause 20.1) as meaning "… the net profit of the Project from time to time as determined using the measurement criteria contained in Accounting Standards applied in Australia". 73 The term "project" is defined in clause 20.1 as meaning "… the purchase and development of the Property as residential and/or tourism land and sub-division and sale as Lots and the refurbishment and leasing of the club facilities on the Property" (emphasis added). 74 In the circumstances disclosed in the evidence, it is clear that the parties are not proceeding with such "development" of the property by reason of financial considerations. In such circumstances, there will be no "Project Profit". Accordingly, no fee can or will arise by reason of the decision taken by the plaintiff and the defendant not to proceed with the development, that is, no fee in terms of clause 5.2 of the Agreement which described the plaintiff's fee as "being 50% of the Project Profit". When so understood, if clause 7.5 did create an equitable charge, the problem earlier adverted to arises, that is, what did the equitable charge secure? There having been no financial contribution made by the plaintiff (it was reimbursed its initial costs associated with the acquisition as detailed in Schedule 2 to the Development and Profit Share Agreement) no prospective profit has or could materialise such as to be capable of being the subject of the security under any equitable charge created. 75 I do not consider that the conclusion expressed above is affected by the fact that there is no clear evidence that the Development and Profit Share Agreement has been terminated. Clause 13, as earlier noted, contains provisions relating to termination by written notice. As Barrett, J. observed in Business Acquisitions Australia Pty. Limited v. Renshall [2006] NSWSC 1238:- "21. It is, of course, possible for a contract to come to an end even though there is neither repudiation and acceptance nor a supervening contract that puts an end to it. The parties may, by conduct, abandon or abrogate the contract: see, for example, Somers v. The Commonwealth (1918) 25 CLR 144; DTR Nominees Pty. Limited v. Mona Homes Pty. Limited (1978) 138 CLR 423 …" 76 Although the agreement may not have been formally terminated, it is, by reason of the evidence I have referred to earlier, clear that the parties have reached the position where they have agreed to abandon the proposed development envisaged by the Agreement. 77 I turn to the plaintiff's reliance upon the provisions pertaining to the right of first refusal set out in sub-clauses 15.3 to 15.5. 78 Clause 15.3 provides:- "Except if clause 15.2 applies, if MBD proposes to sell the Property to a third party, MBD must first offer to sell the Subject Property to NSA by written notice specifying the terms of proposed of (sic) sale including the sale price for the Subject Property. The offer remains open for acceptance by written notice for 21 days after the date the notice is given." 79 In the plaintiff's written submissions, it was contended that the purported notice given pursuant to clause 15.3 was defective on the following basis:-

(a) The proposed contract with Smart Oasis Pty. Limited has terms which are more favourable to it than the terms offered to the plaintiff in the Notice in three respects:- (i) the proposed contract with Smart Oasis does not include the rights and obligations imposed on the plaintiff and defendant in the Agreement; (ii) the deposit to be paid by Smart Oasis Pty. Limited in the proposed contract (in clause 33.1) (affidavit of V. Clonda sworn 14 December 2006, p.5(a)) is more favourable than the deposit of $1,100,000 to be paid by the plaintiff in the Notice; (iii) the completion date in the proposed contract with Smart Oasis Pty. Limited allows 14 days to complete whereas the time period in the Notice to the plaintiff is fixed at 14 February 2007 (pursuant to clause 15(4)) of the Agreement). 80 The plaintiff has claimed that it is entitled to restrain the defendant from entering into and/or completing its proposed contract with Smart Oasis Pty. Limited. 81 Whilst in his oral submissions Mr. Underwood indicated that he would not, on this application under s.74K, rely upon the submissions concerning the allegedly invalid notice pursuant to clause 15.3 (appearing at p.5 and following of the written submissions), there was later reference by him to this aspect of the matter. I will, accordingly, deal with the matter below. 82 In the defendant's submissions, the terms of clause 15.3 conferring a right of first refusal on the plaintiff does not create a caveatable interest. Attention was drawn to some authorities that establish that once a right of pre-emption has been triggered, an equitable interest is created, eg., Jonns v. Kim Seong Tan [1999] NSWSC 648 at [9] and following. 83 It was further submitted, however, that with the right of first refusal in clause 15.3 having been triggered, any equitable interest which thereby arose could only subsist for a period of 21 days after which it must be taken to have lapsed. The 21 day period for the purposes of clause 15.3 expired on 30 November 2006 at the latest. 84 The defendant acknowledged that a term in an agreement that a party may lodge a caveat can be construed as a implied grant of a charge and that the usual authority cited in this respect is Trancone (supra). That case, however, concerned a loan agreement. It is unnecessary for me to here set out the analysis of the judgments of Mahoney, Priestley and Meagher, JJA. to be found in the judgment of White, J. in Redglove (supra). It is sufficient, for the purposes of dealing with the contention that a caveatable interest existed by reason of provisions of clauses 15.3 and 15.5 and the alleged failure by the defendant to act in accordance with those provisions to refer to and adopt the reasoning and approach of White, J. recorded in paragraph [26] of his Honour's judgment in Redglove (supra) in which he stated:- "26. However, Mahoney, JA. cited no authority and gave no reason for this part of his judgment. With respect, I do not think it is correct. There have been numerous instances where the Courts have held that no equitable estate or interest in land is created by an express or implied promise not to deal with the land except in conformity with a contract. The fact that equity will enforce the negative promise by injunction does not transmute a purely personal claim into a proprietary interest. Equity does 'nothing more than give the sanction of the process of the Court to that which is already in the contract between the parties' ( Doherty v. Allman (1878) 3 AC 709 at 720) …" 85 I have, in this respect, not disregarded the terms of clause 7.3 of the Development and Profit Share Agreement. Whilst it is doubtful that the terms of such a provision in an agreement such as arises in this case is sufficient by its terms to create an equitable charge, the further point remains, to which I have earlier referred, namely, the problem as to what any such equitable charge secured. In this latter respect, the plaintiff's interest (it not being a financial contributor to the project) was a prospective profit share in the event that the development was to proceed which, as earlier stated, will no longer be the case. No other interest in terms of remuneration to the plaintiff by way of fee or otherwise arose under the terms of the Development and Profit Share Agreement. 86 Even assuming that grounds existed for the grant of an injunction, that as White J. also observed in Redglove, does not create an equitable interest which does not otherwise exist (at [27]). 87 Finally, I will deal with the submission that the caveat is bad in form. As earlier noted, the caveat claims to be based upon "an equitable interest in the land" pursuant to clause 7 of the Development and Profit Share Agreement. 88 The defendant contended that such a description is insufficient to specify the nature of the interest claimed by the caveator and relied in this respect upon the decisions referred to in paragraph [45] above. 89 In Hanson Construction Material v. Vimwise Civil Engineering (supra), Campbell, J. held that the requirement of the Real Property Regulation 2003 that a caveat "specify the prescribed particulars" of the nature of estate or interest claimed was not adequately met in that case which purported to describe the nature of the estate or interest in the land claimed as "equitable interest". 90 Campbell, J. further held that the dispensing power contained in s.74L of the Real Property Act 1900 (NSW) was one which merely excused defects of form. The failure to specify the nature of the interest, in as fundamental a way as occurred in that case, was more than a defect of form (at [34]). 91 Similarly, in Circuit Finance (supra), Brereton, J. observed that the caveat described the nature of the interest claimed merely as "an equitable interest". His Honour referred to and applied the approach taken by Campbell, J. in Hanson Construction Material (supra). His Honour referred to the specific provisions contained in s.74F(1), (2) and (5) that authorise the lodgment of a caveat and to the provisions of the Real Property Regulation 2003, in particular, clause 7 and Schedule 3. In light of these provisions and those contained in s.74H(1)(b) and s.74K(2), Brereton, J. stated that they make clear that the characterisation and description of the nature of the estate, interest or right claimed by caveator, is more than a mere formal requirement of the provisions of the Act relating to caveats. Rather, they go to the heart and substance of the operation of those provisions. Without the estate, interest or right claim being described, neither the Registrar General nor a person reading the caveat can know, for the purposes of s.74H(1)(b) whether a dealing would affect the estate claimed (at [21]). 92 Mr. Underwood provided a re-drafted form of caveat (marked as MFI 1). Although that document was not intended as a concession or admission as to any inadequacy in the description of the caveat, the position remains that, in my opinion, the caveat in question is defective in failing to properly particularise and identify the estate or interest in the land claimed. The dispensing power in s.74L is not available to cure such defect for the reasons stated by Campbell, J. in Hanson Construction Material (supra). 93 I have had regard to the more recent decision of Barrett, J. in Business Acquisitions Australia Pty. Limited v. Renshall (supra) in which a different outcome resulted from that in the cases of Hanson Construction Material (supra) and Circuit Finance (supra). Barrett, J. held, inter alia, at [29] that in that case the description of the estate or interest was "a more precise description". It was described by reference to two particular concepts: "charge" and "entitlement to lodge caveat". Barrett, J. held that the word "charge" does not entail the same imprecision as "equitable interest". It was a term that had a generally understood legal connotation as a security interest in property or a right to resort to property for satisfaction. 94 I, accordingly, conclude that the plaintiff, as caveator, who has the onus of establishing the grounds for an extension of the caveat under s.74K(2), has not established that it has a arguable case as to a caveatable interest in the property. Additionally, the caveat relied upon does not sufficiently describe the nature of the estate or interest claimed. Further, such failure is not merely a failure to comply strictly with the requirements of the Real Property Act and the Regulation relating to the form of caveats, but is a substantial failure to comply with those requirements in an essential way. 95 In the circumstances, I cannot be satisfied that the caveator's claim has, or may have, substance and I am bound by s.74K(2) to dismiss the application for an order extending the operation of the caveat. 96 Yesterday, I made orders in relation to the amended notice of motion and indicated that I would publish my reasons today. These are those reasons. As an extension of the caveat was also sought in the amended summons, the formal orders of the Court are as set out below.

Orders 97 Accordingly, the order I make is that the amended summons and the amended notice of motion, insofar as they seek an order that the operation of the plaintiff's caveat No. AB772532D be extended is dismissed. 98 I will hear the parties on the question of costs. (SUBMISSIONS ON COSTS) 99 The plaintiff is to pay the defendant's costs. **********

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