Consideration
13Much that was the subject of submissions does not, given the foregoing lack of dispute, seem particularly relevant. Nevertheless the Court will deal with some of the matters, albeit extremely briefly.
14For reasons that may be clear to them, if not others, the applicants sought to submit that the Caveat created an interest in property. I am unclear as to the purpose of this submission. A Caveat operates, by virtue of the Real Property Act 1900, as a statutory injunction preventing the registration of dealings in property to which it applies without notice to the Caveator. The Caveat does not create an interest in property. It protects an interest in property that may otherwise have been created: see J & H Just (Holdings) Pty Ltd v Bank of NSW [1971] HCA 57; (1971) 125 CLR 546, per Barwick CJ. Further, and with great respect to Barwick CJ, it also gives notice of the claimed interest to those seeking to deal with the property: see Black v Garnock (2007) 230 CLR 438 at [76], per Callinan J.
15Further, to the extent that it is in dispute, I accept that the applicants have the required degree of urgency in seeking the removal of the Caveat, which urgency is brought about by the contracts of sale. No issue is taken in these proceedings that, in part due to the financial issues with which the applicants are faced, the sale was necessary.
16The Court accepts that the respondent has the onus of establishing that the Caveat should continue or not be removed: Buchanan v Crown & Gleeson Business Finance Pty Ltd [2006] NSWSC 1465 at [6], per Brereton J. Ordinarily, where the Court is required to consider whether a Caveat should remain on the register, the court will extend the Caveat if satisfied that the Caveator's claim has substance, or may have substance, and that the balance of convenience is in favour of the maintenance of the Caveat. In that respect, while recognising that the Court is exercising a statutory jurisdiction, the test is the same or similar to that for an interlocutory injunction: see Buchanan, supra; Eng Mee Yong v Letchumanan [1980] AC 331.
17Given that there is no dispute that the applicants executed the charge and mortgage, it is difficult to see how the applicants could submit that the respondent does not have a sufficiently arguable case for a Caveatable interest.
18The applicants do not, in these interlocutory proceedings, seek to establish their claim for relief under the Contracts Review Act or Australian Consumer Law. Nor do the applicants seek to establish an arguable case for relief under any such provisions. As a consequence, the charge and mortgage are extant and create an interest in the property that may be protected by the lodging of a Caveat.
19I turn to the balance of convenience. It is accepted by all of the parties, and the Court, that the balance of convenience favours a course that would allow the applicants to complete the contract for sale. However, the balance of convenience overwhelmingly favours the protection of the respondent by appropriate security.
20Some of the factors that have brought the Court to that view are that the final hearing will occur within a month or so of any substituted security; the lack of any real challenge in these interlocutory proceedings to the efficaciousness of the charge and mortgage; the acceptance that legal services have been rendered and that moneys are owed to senior counsel and should be paid out; and the existence of current security in the form of the charge and mortgage, which is sought to be replaced.
21The applicants rely upon the application of the principle adumbrated by Palmer J in Liberty Funding Pty Limited v Steele-Smith [2004] NSWSC 1100 at [25]:
"The usual way in which a mortgagor can obtain a discharge where a contingent liability remains secured under the mortgage is to pay into Court the amount of the contingent liability or a reasonable estimation thereof if the amount cannot be fixed with certainty. So, for example, where a mortgage or threatens proceedings for the taking of an account, the mortgagee is entitled to retain the security to recover the anticipated reasonable costs of such proceedings and the mortgage or may obtain a discharge either by providing alternative security for such costs or by paying into Court an amount equal to the probable reasonable costs of the proceedings". (References omitted.)
22I accept, with some possible qualifications, at least for present purposes only, that the foregoing approach should be applied as the test in determining the amount of security that should be ordered. However, it seems to me that the applicants misunderstand the foregoing reference by Palmer J to "the amount of the contingent liability". In this case, the applicants have agreed to a liability of up to $2 M, plus costs and interest. That is the amount of the contingent liability.
23Nevertheless, the amounts suggested by the respondent as being owed to it, leaving aside fees to senior counsel, have not been appropriately supported by evidence. During the course of directions hearing before the Chief Judge in Equity, the respondent suggested that the amount owing was $1.35 M. It seems, from a proper analysis of the discussion with the Chief Judge, that $1.35 M was an estimate of fees, not including fees to senior counsel. To that amount must be added the costs of recovery and possible interest.
24I do not intend to be precise. In accordance with the agreement between the parties, the Court will order that payment be made to senior counsel. Further, the Court will order security of a further amount to cover the estimated fees to the respondent and the fees to junior counsel, plus a buffer of $350,000 to cover the costs of recovery and interest. In other words, the Court will order security in the sum of $1.7 M together with the payments to senior counsel.
25The trial judge will have the capacity, at the conclusion of the hearing in February, to alter significantly the terms of any interlocutory order. As a consequence, these interlocutory orders will be in place for approximately one month or slightly more. At the moment, there is no undertaking by the respondent as to damages. In my view, for the short period for which these orders are likely to operate, there should be no requirement on the respondent to give any such undertaking and, in so doing, put themselves in a worse position than would be the case if the Caveat continued. In those circumstances, I will not order or require that the respondent give an undertaking as to damages, except in the unlikely event that the respondent causes the contract for sale not to complete by reason of its non-attendance at the notified completion appointment.
26The Court makes the following orders:
(1)The plaintiff withdraw the Caveat on payment of the Specified Amounts by settlement cheques (as defined in these orders) to be held in trust jointly by the solicitor for the plaintiff (as defined in these orders) and the solicitor for the defendants.
(2)The amount of $1.7 M so paid to the solicitor for the plaintiff as defined in these orders and the solicitor for the defendants be paid by those solicitors into a controlled money account.
(3)The amount so paid into a controlled money account and any interest on that amount not be paid out of that account other than with the consent of the parties or by further order of the Court.
(4)It shall be sufficient compliance with the requirement in order 1 that the payment be in cleared funds that the payment be by settlement cheque as defined in order 8.
(5)It shall be sufficient compliance with the requirement in order 1 that the plaintiff withdraw the Caveat that the plaintiff provide the defendants with a withdrawal of Caveat in exchange for cheques for the Specified Amounts.
(6)On the defendants giving the plaintiff no less than 48 hours' notice (excluding Saturday, Sunday and any public holiday) of the proposed place and time for completion of the Contract, the plaintiff or the solicitor for the plaintiff shall attend at that time and place for the purpose of exchange of the Caveat for the Payment.
(7)The Court notes the plaintiff's undertaking to pay damages to the defendants in the event that the plaintiff has been notified under order 6 of the proposed completion of the contract and the contract is not completed by reason of the failure of the plaintiff to provide a withdrawal of Caveat at completion.
(8)In these orders these terms (in any form) mean:
Bank A bank as defined in the Banking Act 1959 (Cth), the Reserve Bank or a State bank
The Caveat Caveat number AH9831 affecting the Property
Cheque A cheque that is not postdated or stale
The Contract The contract for the sale of the Property dated 27 October 2012 between the defendants as vendors and Sharon Tia Cooper as purchaser
The Payment The payment to the solicitor for the plaintiff and the solicitors referred to in order 1
The Property The property Folio Identifier 1/78239 known as 1 William Street Double Bay
Settlement Cheques Unendorsed cheques made payable to the person to be paid and drawn on its own funds by:
- A bank; or
- A building society, credit union or other FCA Institution as defined in Cheques Act 1986 (Cth)
That carries on business in Australia
Solicitor for the plaintiff A solicitor other than Georges Elias or the plaintiff itself, such solicitor to have been appointed, for the sole purpose of acting on behalf of the plaintiff in performing any functions under these orders, and to have confirmed acceptance of that appointment by notice in writing to the defendants no later than 16 January 2013
The Specified Amounts $1.7 M, plus the amounts prescribed in order 9
Withdrawal of Caveat A validly executed withdrawal of Caveat in the approved form for lodgement with the Registrar General