This application is another chapter in the long-running litigation concerning a property to which I will refer as the Chiswick Property. It has been the subject of a number of judgments at first instance and on appeal, in particular judgments of Slattery J of this Division.
The Chiswick Property was sold by Mr Robert Sebie ("Mr Sebie") to the plaintiffs in the present proceedings, Mr and Mrs Pham. I pass over a great deal of litigious history to record that the end result of that litigation was that the Chiswick Property was in fact transferred to Mr and Mrs Pham. The proceeds of sale were paid into Court. There is presently fixed for hearing before Sackar J in the new term an argument concerning the entitlement of various interested parties to those proceeds of sale. Those parties include Mr Sebie, ENA Development Pty Ltd ("ENA") which is the present applicant before the Court, Mr Sebie's ex-wife and Mr and Mrs Pham.
The application that has come before me in the Duty List is a notice of motion filed in Court today by ENA for the extension of a caveat which was lodged by ENA over the Chiswick Property on or about 23 April 2019 (to which, for reasons that will shortly become apparent, I will refer as the "Second Caveat").
ENA was represented before me today by Ms S Georgy, who, while legally qualified, does not hold a current practising certificate and described herself as providing consultancy services to ENA. There was no opposition from Mr B Zipser of Counsel, who appeared for Mr and Mrs Pham, to the Court granting Ms Georgy leave limited to today to appear for ENA.
It was common ground between the parties that the Second Caveat has lapsed. The application was sought to be brought urgently before me as duty judge yesterday, which on ENA's calculation was when the Second Caveat lapsed. The Court was not in a position to deal with the application yesterday. On Mr and Mrs Pham's calculation, the Second Caveat expired several days ago. Nothing turns on that, because the parties were content to conduct the present application on the basis that it was an application by ENA pursuant to s 74O(2) of the Real Property Act 1900 (NSW) (the "RPA") for leave to lodge a further caveat in substantially the same form as the Second Caveat.
The Second Caveat is reproduced as Annexure A to these reasons. Reproduced as Annexure B to these reasons is a caveat lodged by ENA against the Chiswick Property in January 2018 (the "First Caveat"). The two caveats are relevantly in exactly the same form and claim substantially the same interest. Some minor differences should be noted.
In the First Caveat the registered proprietor of the Chiswick Property is Mr Sebie. In the Second Caveat the registered proprietor of the Chiswick Property is Mr and Mrs Pham. So much reflects the sale to which I referred earlier.
The First Caveat claimed an estate or interest being that "ENA Development Pty Ltd has equitable estate (as an owner and mortgagee)" in the Chiswick Property. Somewhat curiously, given the transfer of the Chiswick Property from Mr Sebie to Mr and Mrs Pham, the Second Caveat claimed an estate or interest being "ENA Development Pty Ltd has an equitable interest (as an owner)" in the Chiswick Property.
ENA's interest in the Chiswick Property appears to arise by reason of arrangements allegedly made between it and Mr Sebie whereby ENA lent Mr Sebie the funds to purchase the Chiswick Property.
There are two insuperable difficulties which face ENA in its attempt to lodge, yet again, a caveat over the Chiswick Property.
The first difficulty is that the First Caveat, which, as I have recorded, is in substantially the same terms as the Second Caveat, was the subject of a fully contested application determined by Slattery J in Pham v Enterprise ICT Pty Ltd and Ors; Pham v Sebie (No 3) [2018] NSWSC 381. ENA was a party to the hearing which resulted in that judgment. The orders which were made on 26 March 2018 to give effect to that judgment included:
"5) Order pursuant to section 74MA of the Real Property Act 1900 that by 4pm on 29 March 2018 ENA remove the caveat which bears dealing number AN33247 (referred to as the "the Caveat" in these orders).
…
7) Pursuant to Real Property Act section 74O, ENA is restrained from lodging, or causing to be lodged, any further caveat or other dealing on the title to the Chiswick property."
It will be immediately apparent that the lodgment of the Second Caveat was in clear breach of the order made by Slattery J on 26 March 2018.
In fairness to Ms Georgy, when his Honour's order was drawn to her attention during the course of submissions by Mr Zipser of Counsel, Ms Georgy said that she was completely unaware that order had been made.
Ms Georgy has been unable to demonstrate any reason why the Court should revisit either his Honour's conclusions or the order that his Honour made removing the First Caveat and restraining ENA from lodging any further caveats over the Chiswick Property. That is sufficient to dispose of the present application because the Court will not grant ENA leave to do something that would be in breach of an existing order of the Court.
Second, a further impediment to ENA's application presents itself because the Chiswick Property has now been transferred to Mr and Mrs Pham. The short point is this: I am unable to see how ENA is able to assert an interest in the Chiswick Property which defeats the indefeasible title of Mr and Mrs Pham as its now registered proprietors, pursuant to s 42 of the RPA.
The case which Ms Georgy sought to advance on behalf of ENA flew in the face of the fundamental principle of indefeasibility of title under the RPA. She sought to overcome this issue by submitting that because the First Caveat had been on the title to the Chiswick Property, ENA would have the benefit of the exception to indefeasibility in s 42(1)(a) of "the estate or interest recorded in a prior folio of the register by reason of which another proprietor claims the same land".
That submission does not assist ENA for two reasons.
First, a caveat does not "record" an estate or interest in land. A caveat is a notice that the caveator "claims to be entitled to a legal or equitable estate or interest in land" (see s 74F(1) of the RPA). If it records anything, a caveat records the claim, not the estate or interest which is the subject of the claim.
Second, even if the first reason is incorrect, the exception to indefeasibility would not arise where the instrument (in this case the First Caveat) said to record the estate or interest has been removed by order of the Court.
Nothing I have said prevents ENA from advancing such arguments as it may wish before Sackar J in the new term concerning the priority of its claim to the proceeds of sale from the transfer of the Chiswick Property from Mr Sebie to Mr and Mrs Pham. However, quite apart from the effect of Slattery J's order set out in paragraph [11] above, ENA has failed to demonstrate on any basis - and certainly not on an arguable or prima facie basis - that it has an interest in the Chiswick Property now that it has been transferred to Mr and Mrs Pham, as opposed to an interest in the proceeds of sale from that transfer (a matter to be determined by Sackar J in the new term).
I will dismiss the notice of motion filed in Court on 17 December 2019.
Mr Zipser has applied for his clients' costs of that motion, including of today, on the indemnity basis. Ms Georgy has not been able to proffer any reason why that should not be the case.
This is an archetypal example of a case where indemnity costs should be ordered for at least two reasons.
First, the Second Caveat was lodged in breach of Slattery J's order.
Second, it should have been obvious to ENA, if properly advised, that its application either to maintain the Second Caveat or for leave to file a fresh caveat in substantially the same terms as the Second Caveat was doomed to fail, not least because of the substantive reasons set out by Slattery J in his judgment as to why the First Caveat should be withdrawn. In making that observation, the Court intends no personal criticism of Ms Georgy who does not appear to have been apprised of Slattery J's judgment or orders.
The orders of the Court are:
1. The notice of motion filed by ENA Development Pty Ltd in Court on 17 December 2019 is dismissed.
2. ENA Development Pty Ltd is to pay the plaintiffs' costs of and incidental to that notice of motion (including, for the avoidance of doubt, of the hearing today) on the indemnity basis.
Pham v Enterprise ICT - Annexure A_2019_12_19_11_15_28_723 (229 KB, pdf)
Pham v Enterprise ICT - Annexure B_2019_12_19_11_15_54_349 (310 KB, pdf)
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Decision last updated: 19 December 2019