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[2012] NSWSC 728
plaintiff. The court held that the plaintiff was entitled to a declaration that the relevant properties were charged under the costs agreements, and to a declaration concerning the fruits-of-action lien. It...
The court found that the costs agreements gave the solicitor a charge over the relevant properties, even though the defendants had not signed them. The clause covered any real property owned by the relevant defendants and allowed a caveat to protect the charge. The agreements were enforceable because both sides had acted on them: the solicitor provided legal services and the defendants made payments. The court also recognised a fruits-of-action lien and considered further caveats and extension of the existing caveat justified. The final order wording and costs issue remained to be settled.
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Patrick John Moloney, a solicitor, sought declarations that costs owed to him by Maria and Elio Coppola were secured by charges over specified properties. He also sought orders about caveats intended to protect those claimed interests. The underlying legal work concerned disputes arising from loan transactions. In those proceedings, the defendants achieved a substantial degree of success. [1]-[2]
No linked legislation citations have been extracted yet.
Two written costs agreements were central. The agreement dated 25 September 2009 was between Moloney and Maria Coppola. It concerned advice and representation in proceedings relating to loan and mortgage transactions involving her property, including the Colo Vale property. [7] The second agreement, dated 29 September 2009, was between Moloney and both defendants. It covered issues and proceedings relating to various loan and mortgage transactions concerning their properties, including proceedings brought by Fast Funds Pty Ltd. [10]
Clause E5 in each agreement said that costs remaining unpaid for more than 30 days after invoice would be secured against “any real property owned by you”. It also authorised the lodgement of a caveat to record the interest as security. [8] The defendants did not sign either agreement, although both agreements were signed by Moloney and provided to them. [12]
Moloney issued invoices for legal services during 2009 and 2010. He lodged caveats on the relevant titles on 5 August 2010. After lapsing notices were served, he commenced these proceedings. [14]-[18] The defendants later applied to have the costs agreements set aside. A costs assessor declined to set them aside and determined a fair and reasonable amount of costs; judgment was subsequently entered for Moloney for $268,836.03. [19]-[22]
Nicholas J addressed two central questions: whether E5 created an equitable charge, and whether the charge could be enforced despite the missing signatures. The judgment also dealt with the asserted fruits-of-action lien and the requested caveat orders. It did not finally settle all orders or the costs of the proceedings. [24], [42], [49]-[51]
The court first considered whether E5 identified the property sufficiently to create an equitable charge. It noted the general requirement that an agreement identify or specify the fund or asset from which a debt is to be paid or over which it is to be secured. [27] The defendants argued that the clause did not identify either the debt or the property with sufficient certainty, and that its relationship with clause E4 meant it did not show an intention to charge property. [26]
The judge rejected that construction. E5 referred to “any real property owned by you”. In context, that meant any property owned by the party or parties to the relevant agreement, rather than a particular parcel that had to be separately named in the agreement. [28] The clause therefore sufficiently identified the property by reference to ownership.
The court also rejected the argument that no charge or caveatable interest existed until costs had remained unpaid for more than 30 days. [29] It read E5 as creating an interest capable of protecting the solicitor against the possibility that costs would become payable and enforceable under the charge in the future. The second sentence, authorising a caveat, supported that reading because it contemplated recording the security interest. [30] On that construction, the 30-day period affected when costs could be enforced under the charge, not whether an interest capable of protection existed at all. The judge concluded that each agreement intended to create an equitable charge over the relevant defendants’ properties. [31]
The more difficult question arose from the defendants’ failure to sign. The judgment set out the relevant provisions of the Conveyancing Act 1919 (NSW). Section 23C(1)(a) requires a signed writing to create or dispose of an interest in land, subject to relevant exceptions. Section 54A addresses contracts for the sale or other disposition of land or an interest in land. Both provisions preserve the operation of the law relating to part performance. [32]
The court described part performance as requiring acts done under and by force of the contract that are unequivocally and in their own nature referable to an agreement of the kind alleged. It also noted that the circumstances in which the acts occurred must be considered. [33]-[34] The plaintiff argued that the agreements had been partly performed through continuing legal services and continuing instructions. The defendants answered that those acts related only to the legal-services and payment aspects, not to the land charge. [36]-[37]
Nicholas J treated each costs agreement as a composite transaction. The relevant question was not whether there had been a separate act specifically referable only to the charge clause, but whether the parties’ conduct was unequivocally referable to the agreement as a whole. [40] The evidence included invoices, payments towards legal costs, and the continued provision of legal services. [38] The judge found these acts unequivocally referable to the parties’ obligations under the costs agreements. [41] On that basis, part performance permitted enforcement of the charge notwithstanding the absence of the defendants’ signatures.
The plaintiff also claimed a solicitor’s fruits-of-action lien over properties preserved for the defendants as a result of the earlier proceedings. The defendants did not contest that claim at the hearing. [43] The judge therefore declared the plaintiff entitled to the lien as claimed.
Finally, the court considered caveats. It referred to the statutory restriction in s 74O of the Real Property Act 1900 (NSW) on lodging further caveats without leave in circumstances where an earlier caveat has lapsed or been withdrawn. [45] The judge found that caveats would protect the plaintiff’s equitable interest in properties the defendants had agreed to provide as security. The circumstances justified leave to lodge further caveats and extension of the Colo Vale caveat until further order. [46]-[48]
The judgment did not purport to change the general law of equitable charges or part performance. It applied the principles it identified to the wording and conduct in this dispute.
Before applying those principles, the court stated that a charge requires sufficient identification of the fund or asset securing the debt. It drew on Jackson v Richards for that proposition. [27] It then held that a clause referring to “any real property owned by you” could meet the identification requirement where the relevant property was ascertainable by identifying the owner or owners under each agreement. [28]
On part performance, the judgment stated the established test in terms of unequivocal acts referable to the alleged agreement, and emphasised consideration of the surrounding circumstances. [33]-[34] It also relied on the proposition from Fleming v Beevers that, where a contract is composite, part performance of its non-land aspects can be part performance of the transaction as a whole, including its land aspect. [35], [40] The practical significance of Moloney is its application of that approach to a solicitor-client costs agreement that included both legal-services obligations and a charging clause.
The decision therefore illustrates that the court may assess performance by looking at the whole transaction, rather than requiring conduct that relates exclusively to the land charge. It does not establish that any provision of legal services or any payment under any costs agreement will necessarily satisfy part performance. The judge reached the conclusion on the evidence and circumstances before the court. [38]-[41]
The judgment also distinguished the existence of a charge from the later point at which costs became enforceable under it. On its reading of E5, the charge created an interest capable of being protected against future non-payment, even though the clause referred to costs remaining unpaid for 30 days. [30] That is a construction of the particular clause, not a finding that all conditional charging clauses operate in the same way.
At [28], the judge explained that E5 covered “any real property owned by you”, rather than requiring the agreement to list each parcel by address or title. In plain English, the relevant property could be identified by asking who owned it and which agreement applied to that owner.
At [30], the court said that the clause gave the solicitor an interest in property that could be protected against the possibility that costs would become enforceable later. In plain English, the judge considered the caveat protection capable of arising before the 30-day non-payment period had actually expired.
At [40], the judge said: “It is the composite transaction of which part performance must be demonstrated, not that aspect alone which relates to land.” In plain English, the court looked at the parties’ performance of the complete costs agreement, including the legal work and payments, rather than demanding performance directed solely to the charge.
At [41], the court found that continued legal services and payments by the defendants were “unequivocally referable” to obligations under the costs agreements. In plain English, those actions were sufficiently connected to the agreements that the court accepted them as evidence that the parties acted on the agreements, despite the missing signatures.
At [48], the court concluded that the circumstances justified leave for further caveats because they would protect the plaintiff’s equitable interest. The judgment did not treat caveat relief as automatic: it assessed the circumstances and the interest to be protected.
The reasoning is most directly relevant where a written agreement has a charging clause over real property, but the person whose property is to be charged has not signed the agreement. The case is particularly informative where the agreement combines services or other obligations with a land-security term, and the parties have performed the non-land parts of the arrangement. [36]-[41]
It is also relevant where the charging clause refers generally to property owned by a party, rather than identifying particular parcels. The court treated that wording as sufficient in this case because the owner or owners were identified by the respective agreements and the properties were connected to those defendants. [28], [31]
The decision may be less directly comparable where the clause uses materially different wording, the property cannot be connected clearly to the party or agreement, or the parties’ conduct is equivocal or referable to some arrangement other than the alleged costs agreement. Those are not outcomes decided in Moloney, but they follow as factual questions from the court’s stated requirements of sufficient identification and unequivocal referability. [27], [33]-[34]
A caveat application also involves a distinct question from whether the underlying charge exists. Here, the court separately considered the statutory caveat context and concluded that the circumstances justified leave and continuation of the existing caveat. [44]-[48]
The supplied judgment contains no account of later decisions citing or applying Moloney. It therefore does not provide a basis for describing how subsequent courts have treated it, whether they have followed it, or whether they have limited its reasoning.
What can be said from this judgment itself is that Nicholas J relied on earlier authorities for the general principles. Jackson v Richards was cited in discussing the identification of the asset subject to an equitable charge. [27] Regent v Millett, Waltons Stores (Interstate) Ltd v Maher and Khoury v Khouri were cited for the part-performance test and the relevant statutory context. [33]-[34] Fleming v Beevers was applied to the composite-transaction analysis. [35], [40] Those authorities are part of the reasoning in Moloney; they are not evidence of later treatment of Moloney.
The judgment also cited Graham H Roberts v Maurbeth Investments Pty Ltd and C J Redman Construction Pty Ltd v Tarnap Pty Ltd in support of its discussion of a charge capable of protecting against future enforcement. [30] It referred to Grogan v Orr and Firth v Centrelink on the solicitor’s fruits-of-action lien, which was not contested by the defendants. [43]
Several matters were expressly left unresolved. The court did not decide the plaintiff’s alternative argument that the first defendant’s undertakings and agreements recorded in the consent orders created an enforceable charge, because its conclusion about the costs agreements made that unnecessary. [42]
The court did not finally settle the wording of the declarations and orders. It directed the parties to agree on final terms, after which the plaintiff was to bring in short minutes. [49] Nor did it determine costs. The judge gave a prima facie view that the defendants should pay the plaintiff’s costs, but invited submissions if the parties could not agree. [50]-[51]
The judgment also does not explain in detail how the charge and caveat interests were to operate against each different ownership arrangement or how competing interests, if any, would rank. Its declarations and caveat reasoning were directed to the particular properties and parties before it. [31], [44]-[48]
Finally, the judgment’s part-performance conclusion depended on the specific evidence of services and payments and on treating each agreement as a composite transaction. It does not resolve how the test would apply where the evidence of performance is different, or where the relationship between the service obligations and the charge is less integrated. [38]-[41]
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Judgment 1By summons filed 31 August 2010 the plaintiff seeks declarations that the interests of the first defendant in properties of which she is the registered proprietor and a joint registered proprietor are charged to secure the costs charged by the plaintiff under costs agreements between the parties. The plaintiff also seeks consequential orders for the grant of leave to lodge caveats over the defendants' properties pursuant to the charging clause of the costs agreements. 2The proceedings in which the plaintiff acted as solicitor for the defendants principally concerned disputes arising out of loan transactions involving the defendants which were determined by Slattery J on 14 May 2010 (Fast Funds Pty Ltd v Coppola & Ors; Coppola v Hall & Ors [2010] NSWSC 470). Final orders were made by his Honour on 24 August 2010. In the result, the defendants obtained a substantial degree of success. 3The defendants are presently indebted to the plaintiff for the balance of unpaid legal costs for which, on 31 January 2011, judgment was entered for the plaintiff in the sum of $268,836.03. The relief sought in these proceedings is to facilitate the recovery of this debt.
Background 4The first defendant is the registered proprietor of property known as "Airdale" ### ###, Colo Vale NSW comprising all of the land contained in folio identifier ##/### (the Colo Vale property). 5The first and the second defendants are the joint registered proprietors of the following land: (1)## ##, Concord NSW comprising all of the land contained in folio identifier ##/### (the first Concord property). (2)## ##, Coledale NSW comprising all of the land contained in folio identifier ##/### (the Coledale property). 6The second defendant is the registered proprietor of the following properties: (1)## ##, Concord NSW comprising all of the land contained in folio identifier ##/### (the second Concord property). (2)## ##, Stanmore NSW ## ##, comprising all of the land contained in folio identifier ##/### (the Stanmore property). 7By a written costs agreement between the plaintiff and the first defendant dated 25 September 2009 the plaintiff was instructed as follows: "B The work we have been instructed to do is: Advise and act on your behalf in respect to proceedings relating to various loan and mortgage transactions taken out with respect to your property including the property known as "Airdale" ## ## Colo Vale, NSW." 8Relevantly the agreement included the following provisions: "E4 On termination, we are entitled to retain possession of your papers and documents while there is money owing to us for our charges and expenses, unless and until security is provided for our costs. E5 Where any costs charged by us pursuant to this agreement remain unpaid and outstanding from the date of invoice for a period exceeding 30 days the payment of those costs shall be secured against any real property owned by you and charged with the payment of such costs. To facilitate the operation of this clause you hereby authorise the lodgement of a caveat recording the interest in the real property by way of security." 9Under the standard costs disclosure attached to the agreement, clause 3 provided an estimate of costs for obtaining injunctive relief to restrain the sale of property in the total amount of $16,000. 10By a written costs agreement between the plaintiff and the defendants dated 29 September 2009 the plaintiff was instructed as follows: "B The work we have been instructed to do is: Advise and act on your behalf in respect to issues and proceedings relating to the various loan and mortgage transactions entered into with respect to your properties including but not limited to Supreme Court proceedings brought against you by Fast Funds Pty Ltd." 11The agreement was otherwise in the same terms as the agreement of 25 September 2009 except that the estimate provided in clause 3 under the standard costs disclosure related to the preparation and filing of a defence to the statement of claim, and was in the total amount of $5,000. 12Both agreements were signed by the plaintiff and provided to the defendants. The defendants did not sign these agreements. 13On 24 June 2010 Slattery J made orders, inter alia, as to costs in the proceedings before him. 14During the period 30 October 2009 to 5 July 2010 the plaintiff issued tax invoices to the defendants for legal services rendered in relation to what was described as the injunctive proceedings in respect of the Colo Vale property and the judicial sale proceedings. 15During the period 15 February to 13 August 2010 the plaintiff issued tax invoices to the defendants for legal services rendered in relation to what was described as the common law division proceedings. 16On 5 August 2010 the plaintiff lodged caveats on the titles to the defendants' properties. The caveat over the Colo Vale property of which the first defendant is the registered proprietor claimed a charge pursuant to the costs agreement of 25 September 2009; the caveat over the first Concord property and the Coledale property of which the defendants are the joint registered proprietors claimed a charge pursuant to the costs agreement of 29 September 2009; the caveat over the second Concord property and the Stanmore property of which the second defendant is the registered proprietor claimed a charge pursuant to the costs agreement of 29 September 2009. 17On 18 August 2010 the plaintiff was served with a lapsing notice in respect of each caveat. 18By summons filed 31 August 2010 the plaintiff commenced these proceedings. On 8 September 2010 various orders were made by consent which included extending the caveat over the Colo Vale property until further order. The document which recorded the consent orders and filed on that day was signed by the defendants. The first defendant undertook to complete the sale of the Colo Vale property within three months, and to pay into court the greater of $100,000 or 50 per cent of the balance of the proceeds from sale after payment of any sum secured under any mortgages and the reasonable costs of sale. The first defendant also agreed to charge these monies with the payment of the plaintiff's costs outstanding following assessment. This property remains unsold by the first defendant. 19On 21 September 2010 the defendants applied under s 328 Legal Profession Act 2004 to have the costs agreements set aside. The amount of costs in dispute was $447,487.42. 20On 21 December 2010 the application was determined by a court appointed costs assessor, Mr R M Hamwood. He found that the costs agreements were provided to, and accepted by, the relevant defendants. He declined to set them aside. 21On 25 January 2011 the costs assessor issued a certificate of determination of costs. Relevantly, it included: "1 THE APPLICATION IS DETERMINED BY ... SUBSTITUTING FOR THE DISPUTED COSTS, AS A FAIR AND REASONABLE AMOUNT OF COSTS TO BE PAID TO THE .... COSTS RESPODNENT, THE SUM OF FOUR HUNDRED AND FOUR THOUSAND, FIVE HUNDRED AND FORTY SIX DOLLARS AND 91 CENTS ($404,546.91). Note 1 Credit is to be given by the ... costs respondent to the costs applicants ... for the sum of $136,262.97 paid on account. ... 2 [sic] THE COSTS APPLICANT/COSTS RESPONDENT IS TO PAY TO THE COSTS APPLICANT/COSTS RESPONDENT THE SUM OF TWO HUNDRED AND SIXTY EIGHT THOUSAND TWO HUNDRED AND EIGHTY THREE DOLLARS AND 94 CENTS ($268,283.94)." 22On 31 January 2011 judgment in the sum of $268,836.03 was entered for the plaintiff against the defendants. 23At the outset of the hearing the defendants sought to raise but later, correctly, abandoned a preliminary issue as to whether or not the costs agreements had been provided to them. 24The essential issues for determination are whether the agreements were intended to charge the properties as security for unpaid costs, and whether they were enforceable notwithstanding that they were unsigned by the defendants.
Equitable charge 25The plaintiff contended that under each cost agreement the terms of clause E5 operated to create an equitable charge. It was put that the clause, read in context of the whole agreement, and with regard to the surrounding circumstances, clearly identified the relevant debt and the property intended to secure it. 26The defendants disputed that the plaintiff's construction was correct. It was put that read in context with clause E4 which provided for a lien on termination whilst costs were unpaid, clause E5 did not evidence the intention to create a charge. They also submitted that clause E5 failed to identify with certainty either the debt or the property to be charged. It was also submitted that the clause did not operate to secure an interest in property at the time the agreement was made in that the charge was conditional upon costs remaining unpaid and outstanding for a period exceeding 30 days from the date of invoice. Accordingly, so it was put, the clause was ineffective to create an equitable charge over the defendants' properties. 27It is necessary for the creation of an equitable charge that the agreement between a debtor and his creditor sufficiently identifies or specifies the fund from which the debt is to be paid, or the asset over which it is to be secured. In Jackson v Richards [2005] NSWSC 630; (2005) 12 BPR 23,091 White J observed: "18 An agreement between a debtor and his creditor that the debt owing shall be paid out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it. (Rodick v Gandell (1852) 1 De GM & G 763 at 777, 778; 42 ER 749 at 754). However, for this principle to apply, there must be a specific fund from which the debt owing is to be paid. In Swiss Bank Corporation v Lloyds Bank Limited [1982] AC 584, Buckley LJ said (at 595): 'If the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset, the inference may be drawn, in the absence of any contra indication, that the parties' intention is that the creditor should have such a proprietary interest in the segregated fund or asset as will enable him to realise out of it the amount owed to him by the debtor.' 19 For such a charge to be created by an agreement to pay a debt out of a fund to come to the debtor, the parties must have agreed that the debtor would keep the fund separate from his other assets. (Moseley v Cressey's Co (1865) LR 1 Eq 405 at 409). 28In my opinion, upon its proper construction, the terms of clause E5 in each agreement unambiguously specifies the property which the parties intended should be provided as security for the payment of unpaid costs. The phrase "... those costs shall be secured against any real property owned by you" evidences the intention that the property to be charged was not confined to a particular (unidentified) parcel, but extended to any parcel of property which, under the agreement of 25 September 2009, was owned by the first defendant and which, under the agreement of 29 September 2009, was owned by the first and second defendants. 29Furthermore, I do not accept the defendants' submission that there is no charge under clause E5, and no caveatable interest, unless and until costs remain unpaid and outstanding for a period exceeding 30 days from the date of invoice. The question turns on the proper construction of clause E5, taken as a whole. 30In my opinion the interest in real property given by the clause does not depend upon it being established that at the time of lodgement of the envisaged caveat there was in fact an amount of costs unpaid under the agreement. The charge given by the clause extends to costs which remain unpaid after 30 days. It provides the plaintiff with an interest in the real property which he was entitled to protect against the possibility that costs would remain unpaid and outstanding, and enforceable under the charge in the future. The language of the second sentence namely "To facilitate the operation of this clause you hereby authorise the lodgement of a caveat recording the interest in the real property by way of security" effectively authorised the plaintiff at the time the agreement was made to lodge a caveat to record his interest in the real property by way of security. It is predicated on the basis that the existence of the charge is not dependent upon there being an amount of costs unpaid for over 30 days. In short, the clause gives to the plaintiff an interest in any property of the defendants which he is entitled to protect against the possibility that money will become enforceable under the charge at some future time. (cf: Graham H Roberts v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93; C J Redman Construction Pty Ltd v Tarnap Pty Ltd [2005] NSWSC 1011; (2005) 12 BPR 23,395, pars 28, 29, 30.) 31I accept generally the plaintiff's submissions on this issue. In this case, I find that clause E5 in each agreement was intended to create an equitable charge over, and an interest in, the various properties owned by the relevant defendant(s) which the plaintiff was entitled to protect by the lodgement of caveats. 32Under prayer 1 of the summons, the plaintiff seeks a declaration that the interest of the first defendant as the registered proprietor of the Colo Vale property, and her interest as a joint registered proprietor of the first Concord property and the Coledale property is charged to secure the costs charged by the plaintiff under the agreement between them of 25 September 2009. The claim raises the question whether the charge is binding and enforceable against the first defendant under an agreement which was not signed by her. Its determination requires consideration of the following provisions of the Conveyancing Act 1919 (the Act): "23C Instruments required to be in writing (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol: (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent thereunto lawfully authorised in writing, or by will, or by operation of law, ... 23E Savings in regard to secs 23B, 23C, 23D Nothing in section 23B, 23C, or 23D shall: ... (d) affect the operation of the law relating to part performance. ... 54A Contracts for sale etc of land to be in writing (1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged. (2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court. (3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900." 33A contract within s 23C(1)(a) or s 54A is enforceable only if part performance is established. This requires that there must be acts done under and by force of the contract that are unequivocally and in their own nature referable to some such agreement as that alleged (Regent v Millett [1976] HCA 40; (1976) 133 CLR 679, pp 682-683; Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 384, p 432; Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241, pars 16, 54, 83-86). 34The circumstances in which the acts were done are to be considered in order to consider whether the acts pass this test (Khoury par 17). 35Where there is a composite contract, in part disposing of land and in part having other effects, part performance of the latter aspects is capable of being part performance of the transaction as a whole and thus of the land aspect (Fleming v Beevers [1994] 1 NZLR 385, p 392). 36The plaintiff submitted that each of the agreements had been partly performed by the parties in that the plaintiff continued to provide legal services to the defendants, and the defendants continued to instruct him until the proceedings before Slattery J were concluded. Accordingly, it was contended that upon the application of s 23E(d) of the Act the agreements were enforceable although not signed by the defendant(s) as required by s 23C(1). In addition, without accepting that these proceedings were in respect of agreements for the disposition of any interest in land within s 54A(1), the plaintiff similarly submitted that part performance attracted the application of s 54A(2) so that the agreements were enforceable. 37In opposition, the defendants submitted that part performance was not established on the evidence and, hence, the charge was unenforceable. On my understanding, the defendants' submission was that, to the extent that the parties acted under the agreements, their performance was referable to that component relating to the provision of, and payment for, legal services, and not to the discharge of obligations under clause E5 under which a charge was given. It was argued that for the application of s 23E(d) and/or s 54A(2) it was necessary that performance be referable to a transaction which created an interest in land, and did not apply in this case in which performance was referable to agreements for the provision of, and payment for, legal services. 38In evidence were eight tax invoices sent by the plaintiff to the defendants for legal services rendered between 30 October 2009 and 13 August 2010 in respect of the proceedings before Slattery J. Although the actual amount is unclear from the evidence, it appears that the defendants made some payment to the plaintiff for costs which was taken into account by the costs assessor in ruling that credit should be given to them for the amount of $136,262.97 paid on account. Furthermore, the defendants accepted (T p 35) that payments had been made by them from time to time towards their legal costs. 39As to the application of s 54A(1), the effect of the costs agreement is for a charge over the defendants' land. They are agreements for the creation of a new, equitable interest in land and are agreements for the disposition of that interest. It is well established that an agreement for a mortgage or charge of land was within s 4 Statute of Frauds 1677 (UK) prior to the enactment of s 54A (Khoury par 5 per Handley JA; pars 44, 50, 60 per Bryson JA). 40The evidence establishes, and I find, part performance of the costs agreements by the parties, and each of them. Contrary to the defendants' submission, the question of part performance must be considered with regard to each agreement taken as a whole. It is the composite transaction of which part performance must be demonstrated, not that aspect alone which relates to land. With reference to these agreements it is unrealistic for the purposes of the doctrine of part performance to sever the aspect which involves the creation of the interest in land from the other aspect (Fleming p 392). Clause E5 relates to the charge over property, and is addressed to the consequence where costs remain unpaid. The work done by the plaintiff was under an agreement which provided him with protection by way of a charge against the possibility that the defendants left his costs unpaid and outstanding. 41I find that the acts done by the parties being the continued rendering of legal services by the plaintiff, and the making of payments by the defendants, are acts unequivocally referable to their respective obligations under the costs agreements. In the circumstances, the provisions of s 23E(d) and s 54A(2) operate to enable the plaintiff to enforce the equitable charge given under the costs agreements notwithstanding the fact that the defendants had not signed them. Accordingly, I find the plaintiff is entitled to a declaration in terms of prayer 1 of the summons. 42This conclusion renders it unnecessary to determine the plaintiff's alternative contention that an enforceable charge was created by the undertakings and agreements of the first defendant recorded in pars B and D of the consent orders of 8 September 2010. 43The plaintiff also advanced an alternative claim that he is entitled to a charge by way of a solicitor's "fruits of action" lien on the defendants' properties in respect of his unpaid costs. Reliance was placed on the principles explained in Grogan v Orr [2001] NSWCA 114, and Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, pars 33-44. The fruits of the litigation were the properties preserved for the defendants as an outcome of the proceedings before Slattery J. The entitlement of the plaintiff to the lien as claimed was not contested by the defendants (T p 65). In my opinion, the plaintiff is entitled to a declaration to that effect.
The caveats 44The plaintiff seeks an order under s 74K Real Property Act 1900 that caveat no. AF678121 lodged over the Colo Vale property be extended until further order. Also sought are orders under s 74O Real Property Act 1900 giving leave for the lodgement of caveats in respect of the first defendant's interest in the first Concord property and the Coledale property claiming interest under the charge given by the agreement of 25 September 2009, and for the lodgement of caveats in respect of the second defendant's interest in the first Concord property, the second Concord property, the Stanmore property, and the Coledale property, claiming an interest under the charge given by the agreement of 29 September 2009. 45Section 74O operates to restrict the lodgement of further caveats without the leave of the court if an earlier caveat lapses or has been withdrawn. 46As set out in par 16 above, on 5 August 2010 the plaintiff lodged caveats on the titles to the defendants' properties. Following the service of lapsing notices on 18 August 2010, the plaintiff commenced these proceedings. Under the consent orders made on 8 September 2010 the caveat over the Colo Vale property was extended until further order. Relevantly, the agreement incorporated in the consent orders included the following: "I This agreement is not in substitution for the rights of the plaintiff under the costs agreements or any lien at law or in equity the plaintiff may have and such rights are to continue." 47The defendants accepted (T p 59) that, subject to leave, the effect of clause I is to afford the plaintiff the right to lodge a caveat over any property of the defendants to protect his security under the costs agreements. 48In my opinion the circumstances of the case entirely justify orders giving leave to the plaintiff to lodge further caveats over any of the properties owned by the defendants, or either of them. The evidence establishes that the administration of justice in this case requires opportunity be afforded the plaintiff by the lodgement of further caveats to protect his equitable interest in the properties which the defendants agreed to provide. Consistently, the plaintiff is also entitled to an order extending the caveat over the Colo Vale property until further order. 49The parties should have the opportunity to agree upon the final terms of the declaration and orders to be made to give effect to these reasons, following which the plaintiff is to bring in short minutes of order. 50The question of costs remains outstanding. My prima facie view is that the appropriate order is that the defendants should pay the plaintiff's costs of these proceedings. However, absent agreement, the parties should have the opportunity to make submissions on the issue. 51The parties are directed to arrange with my associate by 4pm 9 July 2012 for the matter to be re-listed for the purpose of making final orders, and for the directions as to any argument as to costs.
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: 03 July 2012
Patrick John Moloney
Maria Coppola & Anor
(2002) 55 NSWLR 451
(2006) 66 NSWLR 241
(1976) 133 CLR 679
(1988) 164 CLR 384
The court held that the plaintiff was entitled to a declaration that the relevant properties were charged under the costs agreements, and to a declaration concerning the fruits-of-action lien. It held that leave should be given to lodge further caveats and that the caveat over the Colo Vale property should be extended until further order. The parties were to settle the final terms of orders; costs remained outstanding. [41]-[50]