Plaintiff/First Defendant by Counterclaim v First Defendant/Plaintiff by Counterclaim

PROPERTY - Caveat - Appeal against orders of Associate Judge - Transfer of Land Act 1958 (Vic), s 90(3) - Error in determining that the balance of convenience favoured removal of caveats before trial - Purchaser's caveatable interest dependent on validity under contract of sale - Validity conceded in summary judgment application - Validity to be determined at trial - Appeal allowed.

1 This is an appeal from orders made by an Associate Judge on 17 June 2022 giving effect to a ruling dated 2 June 2022.[1] Those orders gave partial summary judgment[2] in favour of the first defendant/plaintiff by counterclaim (Parwan) in respect of the proceeding commenced by the plaintiff/first defendant by counterclaim (Hooper).

2 The proceeding concerns Hooper's claim for specific performance of a contract of sale of land (the contract of sale) in which he has an interest as purchaser. Parwan is the registered proprietor and vendor. At the time the contract of sale was entered into, the parties also entered into a lease agreement (the lease agreement) permitting Hooper to occupy the land that is the subject of the contract of sale.

3 The contract of sale and the lease agreement between Parwan and Hooper were both for a part of the overall title held by Parwan (the purchased area). The contract of sale contained a special condition that the vendor use its best endeavours to obtain registration of a plan of subdivision creating a separate title for the purchased area. Parwan had not obtained this registration when it defaulted on its loan to the Commonwealth Bank of Australia (the bank), which held a mortgage over Parwan's title. The bank appointed receivers of the Property who intend to sell the whole of the Property with vacant possession in order to discharge the mortgage.

4 Hooper had lodged a caveat protecting his interest under the contract of sale (purchaser's caveat). Hooper expended funds improving the Property, and the parties entered into a deed of charge in his favour. Hooper has lodged a caveat based upon this deed (charge caveat). Parwan's counterclaim seeks, amongst other things, orders removing the caveats pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (the Transfer of Land Act). Hooper seeks maintenance of his caveats and orders that Parwan perform its contractual obligations to obtain separate title and complete settlement.

5 Upon their appointment the receivers gave notice to Hooper that the contract of sale was at an end because it was void for uncertainty and was incapable of being performed. They also informed Hooper that he was in breach of the terms of the lease agreement and reserved Parwan's right to seek possession. The receivers subsequently provided a notice terminating the lease agreement (the termination notice). The validity of the termination notice is disputed by Hooper in the proceeding.

6 The summary judgment application concerned only the issue that the contract was incapable of being performed and therefore that there was no real prospect of Hooper obtaining an order in the nature of specific performance. Parwan obtained summary judgment on this basis. Consequent upon that conclusion the Associate Judge determined that the balance of convenience warranted removal of the caveats. Parwan also sought and was granted summary judgment on the issue of validity of the termination notice.

7 The Registrar of Titles did not participate in the hearing before the Associate Judge nor the appeal, and took a position in accordance with the principles in R v The Australian Broadcasting Tribunal & Ors; ex parte Hardiman & Ors.[3]

8 The evidence before the Associate Judge on the summary judgment application comprised:

(a) one affidavit by Ross Andrew Blakeley (one of the receivers appointed) sworn 10 December 2021 and its exhibits;

(b) two affidavits of Sarah Jane Rogers (solicitor acting for the receivers) sworn 15 March 2022 and 21 March 2022 and their exhibits;

(c) one affidavit of Benjamin Harold Hooper sworn 19 February 2022.

10 On 16 December 2015, Parwan became the sole registered proprietor of the property at 2-80 Browns Road, Parwan VIC 3340 (more particularly described in volume 08614 folio 990) (the Property).

11 On 30 November 2015, to fund the acquisition of the Property, Parwan entered into a loan agreement with the bank. Pursuant to the loan agreement the bank provided Parwan with an $850,000 facility and received security in the form of a mortgage over the Property (the mortgage). On 16 December 2015, the bank became the registered mortgagee on title.

12 On 21 October 2016, Parwan and Hooper entered into the contract of sale in respect of the purchased area. The contract of sale provides, among other things, that:

(a) the purchase price is $900,001;

(b) a deposit of $1 is payable by Hooper;

(c) settlement is due on 21 March 2018 or 14 days after Parwan gives notice in writing to Hooper of registration of the plan of subdivision; and

(d) the contract of sale is subject to a lease between Parwan and Hooper.

13 As to the subdivision and creation of a separate title, the contract of sale provided:

7.1.1 Settlement of this contract is conditional upon the Plan being registered by the Registrar of Titles under the Subdivision Act 1988 (Vic) within 18 months from the Day of Sale.

7.1.2 The Vendor must, at the Vendor's sole expense, use its best endeavours to cause the Plan to be prepared and registered.

If the subdivision had not occurred by 21 April 2018, then Hooper had the following rights:

7.1.3 ... the Purchaser may at any time after the expiration of the period of 18 months but before the plan is registered avoid this Contract in writing to the Vendor. If this occurs the Deposit and all other money paid by the Purchaser under this Contract will be refunded in full to the Purchaser in addition to any compensation that the Purchaser may be entitled to from the Vendor in respect of any costs, fees, or other expenses paid or incurred by the Purchaser in relation to or arising out of this Contract.

14 Hooper paid the $1 deposit the same day that the contract of sale was signed. He and Parwan entered into the lease agreement for a period of 24 months from 21 October 2016. The lease agreement provides that, unless terminated in accordance with the Residential Tenancies Act 1997 (Vic), the lease will continue as a periodic tenancy.

15 On 18 May 2017, Hooper lodged the purchaser's caveat with dealing number AN846531P over the Property claiming an interest as purchaser.

16 The Property was not subdivided by 21 April 2018, and settlement of the contract of sale did not occur. Neither party took any action at that time to vitiate the contract of sale or do anything to suggest that it was no longer on foot.

17 On 1 June 2018, Parwan executed the charge deed in favour of Hooper to be secured by way of equitable charge over the Property. The charge deed charges to the Property the sum of $350,000, which is said to reflect an agreement as to the value of improvements made by Hooper.

18 On 20 July 2018, Hooper lodged the charge caveat with dealing number AR265272Q over the Property claiming an interest as chargee based on the charge deed with an absolute prohibition on dealings.

19 Sometime after July 2018, Parwan defaulted on the loan, and on 13 March 2020 the bank appointed receivers (the receivers). Jason Ta, a director of Parwan, informed Ross Blakeley 'that Hooper was occupying the property and that he [Ta] was in negotiations with Hooper in relation to the purchase of the property'.[4] The receivers requested information about Hooper's occupancy status on an understanding that the purchase was still under negotiation. In response, Parwan confirmed the existence of a contract of sale and written lease agreement, and provided copies of the documents to the receivers.

20 By letter dated 20 May 2020, the lawyers for the receivers wrote to Hooper's lawyers at the time. Relevantly, that letter stated:

The contract of sale is effectively an "off the plan" contract. The title to Contract Property has not yet been created and for the reasons given below we do not consider that Property can be subdivided at this time to create a separate title for the Contract Property.

21 The lawyers set out their reasons in the letter:

2. Contract of Sale - not enforceable and void due to uncertainty

Until such time as a draft plan of subdivision is prepared, a planning permit is obtained for the subdivision, and the plan of subdivision is registered, the Contract Property[5] cannot be transferred by Parwan to Ben Hooper.

The Property is located in the Green Wedge Zone. Parts of the Property are located in the Rural Conservation Zone, subject to an Environmental Significance Overlay and within an Area of Aboriginal Cultural Heritage Sensitivity.

Land in the Melton City Council Green Wedge Zone can be subdivided, but there is a formula for working out how many and how big each lot can be. When the Property is subdivided, there must be one large primary lot with secondary lots being between 1 ha to 5 ha.

Under the Contract, the Contract Property has an area of approximately 11 ha.

Accordingly, due to the restrictions imposed in the planning scheme, the Contract Property cannot be created. Even if the Contract is valid, which is not admitted, it's incapable of being performed and is frustrated. The Contract is unenforceable against Parwan and is at an end.

We note that no draft plan of subdivision is attached to the Contract, as would usually occur. In our view, this creates an immediate issue of uncertainty as the Contract Property has not been clearly identified and delineated. The Contract Property is also unenforceable against Parwan for lack of certainty.

Under the planning scheme applicable to the Land, the Land is capable of subdivision in to separate lots which would enable separate titles to be issued for the Purchased Area, however, it has been expected for some time that amendments to the planning scheme would come into effect which would allow a more comprehensive subdivision to be undertaken. At the time of entry into the Contract of Sale it was anticipated that the amendments to the planning scheme would be completed within the period of my tenancy.[6]

23 There was no evidence that Parwan or the receivers had taken any steps towards obtaining a plan of subdivision under the contract of sale.

24 In further correspondence the receivers alleged that the purchaser's caveat and the charge caveat were impeding a refinance by the Parwan director,[7] and again demanded their removal.

25 On 16 February 2021, the receivers applied under s 89A of the Transfer of Land Act for removal of the caveats on the basis that Hooper did not have the interests claimed.

26 On 25 March 2021, Hooper filed a writ claiming against Parwan (among other things):

(i) Hooper has a valid contract of sale against Parwan (and now its receivers); and

(ii) the caveats are valid and must be maintained on the register.

(b) An order for specific performance of the contract of sale by the receivers.

(c) An order restraining the receivers from selling the Property until final hearing and determination of this proceeding.

27 By notice dated 7 July 2021, Parwan gave Hooper the termination notice, pursuant to s 91ZZB of the Residential Tenancies Act 1997 (Vic) (the Residential Tenancies Act), which stated that the receivers intended to offer the Property for sale with vacant possession immediately after the termination date of 13 September 2021.

28 Section 91ZZB of the Residential Tenancies Act provides:

• (1) A residential rental provider may give a renter a notice to vacate rented premises if the premises are immediately after the termination date to be sold or offered for sale with vacant possession.
• (2) If a residential rental provider has entered into a contract of sale of the rented premises and the contract of sale is subject to one or more conditions which, if not satisfied, entitle a party to the contract to terminate the contract, the residential rental provider, within 14 days after the last of those conditions is satisfied, may give a renter a notice to vacate the rented premises.
• (3) If a residential rental provider has entered into a contract of sale of the rented premises which is not a contract of sale of the kind referred to in subsection (2), the residential rental provider, within 14 days after the contract of sale is entered into, may give a renter a notice to vacate the rented premises.
• (4) A notice under this section must specify a termination date that is not less than 60 days after the date on which the notice is given.

29 Shortly thereafter, on 13 July 2021, Parwan filed its defence and counterclaim claiming against Hooper (among other things):

(a) A declaration that the contract of sale is void for uncertainty.

(b) A declaration that the contract of sale is not amenable to specific performance.

(c) Declarations that the caveats cannot be maintained and that Hooper, or alternatively by s 90(3) of the Transfer of Land Act the Registrar of Titles, remove them.

(d) A declaration that the termination notice validly terminates the lease and that Parwan is entitled to vacant possession.

(e) A declaration that the receivers be able to sell the Property free from Hooper's claims under the contract of sale and equitable charge.

(f) An order that the net sale proceeds, after payment of the bank's claims, including the receivers' costs and interest, be paid into court pending determination of Hooper's claims over that fund.

30 On 13 September 2021, Hooper filed a reply and defence to Parwan's counterclaim. He did not vacate the Property.

31 By summons dated 10 December 2021, Parwan made an application for summary judgment in the proceeding, pursuant to ss 61, 62 and 63 of the Civil Procedure Act 2010 (Vic) (the Civil Procedure Act).

32 Parwan pleaded three reasons why it could not specifically perform the contract of sale:

(a) First, because the contract of sale was void for uncertainty.[8]

(b) Second, because the Property had not been and was not at the time capable of being subdivided so that it could be transferred to Hooper.[9]

(c) And third:

(i) because the property was subject to a mortgage that was registered on 16 December 2015 (prior to the contract of sale);

(ii) the mortgagee was not given notice of and did not consent to the contract of sale;

(iii) the mortgagee would not consent to the sale to Hooper; and

(iv) Parwan was insolvent and did not have funds to discharge the remainder of the debt secured by the mortgage at any settlement of the contract of sale.

33 For the purposes of the summary judgment application, Parwan conceded that the contract of sale is valid. Accordingly, the Associate Judge proceeded on the basis that 'the key battleground therefore concerned the issue of whether or not the Contract of Sale is amenable to or capable of specific performance'[10] for the reasons pleaded in (b) and (c) above.

34 The Associate Judge granted judgment for Parwan against Hooper and made orders:

(a) dismissing Hooper's claim for an order for specific performance of the contract of sale by the receivers; and

(b) dismissing Hooper's claim for an order restraining the receivers whether by their agents, servants or contracts, from selling or attempting to sell, or otherwise dispose of, the purchased area until final hearing and determination of this proceeding.[11]

35 The Associate Judge also granted judgment for Parwan in respect of the counterclaim and made orders:[12]

(a) declaring that the contract of sale is not amenable to specific performance;

(b) declaring that the termination notice validly determined the lease agreement giving Parwan an entitlement to vacant possession of the Property including the purchased area;

(c) giving Parwan possession of the Property including the purchased area;

(d) that pursuant to s 90(3) of the Transfer of Land Act, Hooper attend settlement of the sale of the Property and take all steps necessary to remove the purchaser's caveat and the charge caveat, and directing the Registrar of Titles remove them from the register in the event that Hooper fails to do so.

(e) that the net sale proceeds (after payment of the mortgagee's claims under the mortgage, including the receivers' costs and all interest) be paid into court subject to further order or agreement between the parties.[13]

36 Essentially the Associate Judge found that Hooper's claim for specific performance has no real prospect of success. She identified two 'fundamental matters' upon which Hooper's prospects of success in obtaining specific performance turned. The first was whether or not the Property could be subdivided and a title created for the purchased area. The second was whether settlement of the contract of sale was possible given the bank's attitude to settlement in circumstances where the purchase price in the contract of sale was insufficient to discharge Parwan's liability under the mortgage.

37 Relevant to the first consideration, her Honour stated at [58] to [60]:[14]

[58] Dealing first with the question of subdivision, special condition clause 7.1 of the Contract of Sale provides that settlement is conditional on Parwan subdividing the Property within 18 months from the day of sale. The clause also requires Parwan, at its own expense, to use its best endeavours to cause the plan to be prepared and registered. Subdivision is yet to occur such that the Property remains intact and it is therefore not possible to transfer the Purchased Area alone.

[59] Despite Hooper's contention that Parwan can effect subdivision through the applicable planning scheme, no evidence regarding any such scheme has been adduced. Rather, the weight of the evidence favours the view that the Receivers do not consent to the sale of the Purchased Area, such that Parwan refuses to perform its obligations under the Contract of Sale to effect the subdivision so as to be able to sell the Purchased Area to Hooper. The evidence also makes plain that CBA, the appointer of the Receivers, does not consent to the Contract of Sale. CBA's position in this respect is confirmed by a letter addressed to the Receivers by Mr Eric Hampton of CBA, dated 3 December 2021, stating that CBA 'does not consent to the sale of part of the [P]roperty to Mr Hooper'. For the avoidance of doubt, the phrase 'part of the [P]roperty' in that letter is a reference to the Purchased Area.

[60] On the one hand, Parwan's unwillingness to set the process of subdivision in train and, more broadly, CBA's firm resistance to the sale pose a significant barrier to the performance of the Contract of Sale. On the other hand, it cannot be right that Parwan can simply refuse to perform its obligations under the Contract of Sale, being to effect the subdivision, and then rely on its own non-performance or breach as a barrier to specific performance.

38 Relevant to the second consideration, her Honour stated at [63] to [64][15]:

[63] It is common ground that the Mortgage was first in time and takes priority over any interest of Hooper as purchaser under the Contract of Sale. The evidence is that the purchase price due under the Contract of Sale (being $900,000.00) is insufficient to satisfy the balance of the Mortgage, under which an amount of $1,165,058.00 was owed as at 3 December 2021. This figure would be subject to any interest and costs that have accrued since this time.

[64] That being the case, and in view of the reality that performance of the Contract of Sale will require a discharge of the Mortgage from CBA in circumstances where CBA is not likely to be paid out from the sale proceeds and does not consent to the sale, it cannot be said that the Contract of Sale is specifically performable.

[65] Taken together, but with the emphasis being on the fact that settlement of the Contract of Sale will not be able to occur as the Mortgage will not be discharged at settlement, these barriers are such that Hooper's claim for specific performance of the Contract for Sale has no real prospect of success.

40 The reasons then turned to the applications to remove the purchaser's caveat and the charge caveat. The Associate Judge treated the summary application as if it included applications to remove caveats under s 90(3) of the Transfer of Land Act.[17]

41 In substance her Honour approached the question of the caveats in accordance with the test in Piroshenko v Grojsman ('Piroshenko');[18] that is, that the onus lay on Hooper as caveator to demonstrate a prima facie case that he had the claimed interest in land and that the balance of convenience warranted its retention until trial.[19]

42 As Parwan had conceded (for the purpose of the summary applications) that the contract of sale was valid, and given that the charge deed's validity was not contested, in each case the only issue was where the balance of convenience lay.

43 As to the purchaser's caveat, the Associate Judge considered six relevant factors. Her Honour considered that three factors were neutral in balancing convenience. These were:

(a) the absence of a contract of sale to a third party;

(b) that Hooper remained in possession; and

(c) the prospect of potential enforcement proceedings against Hooper and Parwan by the local council over alleged breaches, which is 'on hold' while the present proceeding is on foot.

44 Her Honour found that the fourth factor - that the contract of sale was not specifically performable at the time - weighed against maintaining the caveat, as this meant damages would be available as a remedy for breach of the contract of sale in lieu of specific performance.[20]

45 Her Honour found that the fifth factor - that the net proceeds of funds from any sale would be preserved by payment into court - did not necessarily weigh in favour of removal of the caveat as Parwan contended. Her Honour stated that a purchaser's interest in land is characterised as being commensurate with the availability of specific performance. Therefore she concluded that whatever the nature of Hooper's interest under the contract of sale that could not be specifically performed, the preservation of funds does not necessarily weigh in favour of removal of the caveat.

46 The sixth factor was that during the hearing Hooper proposed an undertaking to pay into court or into a trust account the difference between the purchase price under the contract of sale and the amount owing to discharge the mortgage. Hooper's counsel described this as in addition to the 'usual undertaking as to damages'.[21] Her Honour noted that the proposed undertaking was ambiguous, went beyond matters raised at the hearing or on the pleadings and its efficacy was open to question, as there was little or no evidence of Hooper's capacity to pay. Her Honour concluded that the proposed undertaking did not tip the balance of convenience in Hooper's favour.

47 As to the purchaser's caveat, her Honour concluded:

the balance of convenience favours its removal from the title of the Property. This is because the presence of the Mortgage, coupled with the strong evidence that the settlement proceeds due under the Contract of Sale will not be sufficient to discharge the Mortgage, along with the attitude of the CBA, presents as a fundamental barrier to an order for specific performance of the Contract of Sale being obtained.[22]

48 Accordingly, it is clear that the unavailability of a remedy of specific performance was largely determinative of the balance of convenience.

49 Again, considering the charge caveat, Parwan conceded that the interest was valid for the purpose of the summary application, such that only the balance of convenience fell for consideration. Although Hooper contended that damages would be an inadequate remedy, her Honour disagreed. She stated:

any prejudice that Hooper may face by virtue of the removal of the Charge Caveat is ameliorated by payment of the sale proceeds into Court by Parwan following sale of the Property.[23]

50 In reaching this conclusion, her Honour noted relevantly that:

[t]he parties have not tendered any evidence regarding the value of the Property, and there is no evidence that the sum secured by the Charge Caveat is unlikely to be of such magnitude that it cannot be covered by the surplus proceeds paid into Court following sale of the Property.[24]

51 With respect to the lease agreement, her Honour found that the evidence showed the receivers intended to sell the Property upon determination of the present proceeding, and that the reason it had not yet been sold was because of the presence of the caveats on title. Her Honour concluded that the termination notice had the effect of validly terminating the lease agreement.[25]

52 An appeal from a decision of an Associate Judge is no longer a hearing de novo. An appeal is brought under r 77.06 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), and an appellant must show that the Associate Judge has made an error of law in order to succeed. [26]

53 Hooper advances six grounds by which he contends the Associate Judge erred in finding that his claim for specific performance had no real prospects of success, that the caveats should be removed from the register, and that the lease agreement concerning the Property had been validly terminated.[27]

54 Those grounds, as amended at the hearing of this matter to reflect the matters raised in the written submissions, are:

(a) That the Associate Justice did not apply the correct test in concluding that the relief sought by the plaintiff had no real prospect of success, but rather determined matters of controversy as if they were the subject of a trial (Ground 1).

(b) By considering the attitude of the receivers and the bank, the Associate Justice erred by failing to consider that Parwan, as the party in default of its obligations under the contract of sale, was seeking to take advantage of the state of things produced by its own wrongdoing and is therefore not in equity or otherwise entitled to relief (Ground 2).

(c) That the conclusion that the contract of sale was not amenable to specific performance was erroneous. This ground overlapped with Ground 1 and particularised a number of ways that the error manifested itself, including that there was binding authority that a court will consider specific performance of a contract that requires a vendor to obtain subdivision (Ground 3).

(d) That the conclusion that settlement could not occur was erroneously based upon consideration that the bank was withholding consent and was not consistent with the correct test for summary judgment (Ground 4).

(e) That the Associate Justice erred in making orders pursuant to s 90(3) of the Transfer of Land Act either because there was no such application before the Court or because the discretion miscarried for reasons argued under the earlier grounds (Ground 5).

(f) That the Associate Justice erred in concluding that the termination notice was valid when such a right could only be exercised by Parwan placing itself in breach of its obligations under the contract of sale (Ground 6).

55 The decision to summarily dismiss a proceeding, claim or relief is discretionary.

56 The test for the grant of summary judgment under s 63 of the Civil Procedure Act is satisfaction by the Court that:

a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

57 The test, and the approach to be taken in its application, are set out in the joint judgment of Warren CJ and Nettle JA in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd:[28]

(a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a "real" as opposed to a "fanciful" chance of success;

(b) the test is to be applied by reference to its own language and without paraphrase or comparison with the "hopeless" or "bound to fail test" essayed in General Steel;

(c) it should be understood, however, that the test is to some degree a more liberal test than the "hopeless" or "bound to fail" test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;

(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[29]

58 While Neave JA agreed with the majority, her Honour was concerned that an 'undue emphasis' on caution might not reflect the liberalisation of the test by the legislature in introducing s 63, but noted that nevertheless, a court would have regard to the fact that 'if granted, it will deprive the relevant party of the opportunity to pursue their claim or defence'.[30]

59 The caution attending disposition of proceedings without an adjudication on the merits is informed by the observations of Kirby P (as he then was) in Wickstead v Browne:[31]

Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence.

John Dixon J relied on these observations in the context of a summary judgment application,[32] concluding that one of the principles to be applied is as follows:

(5) The power to order summary dismissal is to be exercised with great care, as a trial upon evidence of issues raised is the well settled approach to the determination of litigation. When proceeding on a summary application to assess the prospect of success, a judge ought to feel confident that an assessment can be properly made of whether the overarching purpose is facilitated on dismissal of the impugned claims.[33]

60 There was no dispute between the parties as to the test to be applied in an application under s 63 of the Civil Procedure Act. Her Honour set out the applicable legislative provisions and case law.

61 Specific performance is a discretionary equitable remedy.[34] It is available for the enforcement of contracts. Any question of invalidity of the contract of sale that may itself affect the availability of equitable relief was put to one side by the concession made by Parwan in the summary judgment application. A valid contract disposing of an interest in land is frequently a circumstance where damages are said to be an inadequate remedy and specific performance is considered.[35] Hooper did not seek damages as an alternative remedy. Parwan did not contest the summary judgment on the basis that damages would be an adequate remedy,[36] but on the basis that the equitable relief would necessarily be refused as a matter of discretion.

62 Any appeal of a discretionary decision is conducted in accordance with the principles in House v The King:[37]

If the judge acts upon a wrong principle, if he or she allows extraneous or irrelevant matters to guide or affect him, if he or she mistakes the facts, if he or she does not take into account some material considerations, then his or her determination should be reviewed and the appellate court may exercise its own discretion in substitution for his or hers if it has the materials for doing so.

63 Parwan's defence to the claim for specific performance raises two relevant matters that cumulatively were relied on to show that the contract of sale was 'not amenable to specific performance'[38] and therefore Hooper had no real prospect of obtaining the relief sought:

(a) the land is not capable of subdivision under the Melton Planning Scheme;[39] and

(b) the bank's title is indefeasible: the mortgage could not be discharged on settlement and Parwan otherwise does not have the funds to discharge the remainder of the debt and as a result settlement could not occur.[40]

For these two reasons Parwan submitted that the effect of any order granting specific performance would be futile and so the equitable relief should be refused.

64 The question for the Associate Judge therefore was whether Parwan had established that Hooper had no real prospect of obtaining the discretionary relief sought because of either or both of these two matters. Parwan bore the onus of establishing that the granting of the relief sought had no real prospect of success.

65 Equally, there was no dispute as to the applicable principles in an application to remove caveats. As Piroshenko makes clear, the summary procedure of s 90(3) of the Civil Procedure Act is analogous to an interlocutory injunction.[41] The court considers whether there is a serious question to be tried that the caveator holds the claimed interest in the land and where the balance of convenience lies. The only relevant consideration was that of the balance of convenience.

66 Hooper's primary case is that Parwan was in default under the contract of sale and ought not be permitted to rely on that default to resist equitable relief sought by a purchaser not in default.

67 Hooper submitted that a purchaser's claim for specific performance, where the purchaser is not in default under the contract, will generally be amenable to that relief in the absence of particular considerations against a grant of the discretionary remedy. I.C.F Spry writes in his textbook on equitable remedies:

When proceedings are brought, not by the vendor, but by the purchaser, entirely different considerations apply. Here there is not the case of a party in breach attempting to force deficient performance on the other side; rather there is the case of the innocent party requiring the party in breach to perform at least such of his obligations as he can. Hence the balance of justice or injustice is commonly found to incline considerably more clearly towards the grant of specific performance. Indeed, in cases of this nature, a purchaser is, in the absence of special discretionary considerations, granted specific performance... [42]

68 Hooper submitted that he had undertaken improvements to the land and was likely to be entitled to an order compelling performance of the contractual obligations that the receivers said they do not want to perform. In Hooper's submission, the situation he finds himself in is no different to almost any other claimant seeking specific performance of a contract for the sale of land purchased from an unwilling vendor.

69 Hooper submitted that the Associate Judge erred in concluding that, because Parwan had refused to perform its obligations under the contracts, specific performance was not available. Hooper submitted that it was for Parwan, resisting an order for specific performance, to satisfy the Court that subdivision cannot be obtained and therefore that the discretionary relief of specific performance would likely be refused. Hooper submitted that in the absence of Parwan adducing evidence that the land was not capable of subdivision, her Honour was wrong to conclude that specific performance was unavailable.

70 As to the indefeasible title of the bank barring settlement of the contract of sale, Hooper submitted that both the receivers' and the bank's present attitudes were immaterial considerations. Hooper submitted that if matters progressed to the point of settlement, then the ability to discharge the mortgage at that time would present a very different factual situation - principally that Parwan would hold more than one title to the Property. Parwan did not lead any evidence that the receivers could not otherwise discharge the mortgage liability, whether from sale of the remainder of the Property or by refinancing with the balance of the Property retained as security. Indeed, the evidence established that the likely value of the Property without subdivision was estimated to be worth $1,700,000,[43] comfortably in excess of the mortgage liability.

71 In substance Hooper submitted that the possibility of subdivision and the ability to settle the contract of sale upon subdivision both raised contested questions of fact, the resolution of which would be relevant to the discretionary decision of whether or not to withhold an entitlement to specific performance in favour of a purchaser under a valid contract. In Hooper's submission, the Associate Judge effectively determined these matters of controversy between the parties as if at trial, as illustrated in particular by paragraph [59] of her Honour's reasons and the reference to the weight of evidence.

72 Hooper submitted that specific performance is not precluded in principle by a need to obtain subdivision of title,[44] and nor is the consideration that a purchaser has bought land for subdivision or development a basis for refusing specific performance.[45]

73 Hooper accepted that the remedy may not be granted in circumstances where specific performance would require a continuing supervisory role by the court, but submitted that Parwan had not discharged its onus to show that the degree of supervision that might be required was such that the relief would be refused. Hooper submitted that the specific performance is directed at achieving a result (the registration of title) rather than an ongoing activity or contract for personal services and there is nothing to suggest that the receivers as professionals would not act in accordance with any order for specific performance.

74 In relation to the removal of the two caveats, under Ground 5 Hooper submitted that as Parwan did not make any application under s 90(3) of the Transfer of Land Act, the Associate Judge erred in granting relief pursuant to that provision.

75 Hooper's substantive argument under Ground 5 was that, in exercising the discretion to remove the caveats, the Associate Judge made two errors:

(a) First, because the interests under the contract of sale and pursuant to the equitable charge were shown to be more than prima facie rights (they were conceded to be established rights for the summary application), removal was not warranted prior to trial.

(b) Second, in considering the balance of convenience, that the errors in the approach as to the availability of specific performance of the contract of sale outlined above also led to error in determining where the balance of convenience lay pending trial.

76 Hooper relied on the principle that a person cannot take advantage of the existence of a state of things which that person has themselves produced.[46] Hooper referred to Blakeley's evidence that the receivers intend to sell the Property with vacant possession as soon as possible. In Hooper's submission, where Parwan had conceded that the contract of sale was valid for the purposes of the summary application, this would place the receivers in breach of their obligations, rendering the termination notice invalid. In effect the validity of the termination was linked to the validity of the contract and so is a matter to be addressed at trial. Hooper submitted that the receivers could not be permitted to take advantage of a state of affairs brought about by their own breach of the contract of sale which, at least until trial, has to be presumed as valid.

77 Parwan's submissions recognised its obligations under the contract of sale but disputed the availability of the remedy for any breach of that contract.

78 As to the availability of specific performance, Parwan submitted that the only relevant evidence of the likelihood of obtaining the subdivision could come from Hooper, who provided no evidence of the relevant planning scheme, nor any expert evidence from a town planner as to the likelihood of the plan of subdivision being approved. In Parwan's submission, her Honour's finding that Hooper adduced no evidence to support the contention that subdivision could be effected was sound reasoning in support of her conclusion that specific performance was unavailable.[47] In Parwan's submission, her Honour's conclusion that the Court would likely be required to exercise a supervisory role in the steps to obtain subdivision and her observation that the approval of any plan of subdivision rested with third parties were also sound findings that demonstrated Hooper's lack of a real prospect of success.[48]

79 Parwan submitted that the issue of whether completion of the sale could occur in the face of the bank's position was relevant. In Parwan's submission, its own breach in signing the contract of sale was relevant, and completing the sale, which could not discharge the mortgage, meant that any remedy for specific performance would be futile. Parwan relied on Tito v Waddell [No 2] ('Tito')[49] as authority for the proposition that courts will refuse to make orders that would be useless. Parwan submitted that in in Tito the following were all relevant matters that in combination meant there was no real prospect of Hooper's desired remedy being ordered:

(a) Hooper paid a $1 deposit of $1 and carries no further burden until completion.

(b) The steps to obtain subdivision incur a cost and there is no guarantee that the subdivision would be registered.

(c) There would be a shortfall between sale price and outstanding mortgage so that the vendor could not deliver clear title.

(d) Hooper did not lead evidence that he was ready, willing and able to perform his obligations under the contract.

80 Parwan submitted that the real question for the appeal is whether the Associate Judge properly considered the availability of the discretion to grant the relief. Parwan contended that she did.

81 Parwan also submitted that the Associate Judge also properly considered the question of the caveats by the proper and separate application of the test in Piroshenko.

82 For the reasons that follow I have come to the conclusion that the grant of summary judgment is attended by error in finding that relief in the nature of specific performance had no prospect of success.

83 The reasons correctly identify the two questions raised by the summary judgment application: (1) whether or not the Property can be subdivided; and (2) whether settlement of the contract of sale is possible.[50] Her Honour concluded that 'taken together', a negative answer to both questions meant that an order for specific performance had no real prospect of success.

84 Dealing with the first question, I accept Hooper's submission that the contractual requirement that the purchased area be subdivided to allow settlement to occur does not, as a matter of principle, mean that specific performance would not be available. In Pianta v National Finance & Trustees Ltd,[51] Pianta as vendor was negotiating to sell to the respondent as potential purchaser and the question was whether there was a binding contract between Pianta and the respondent at the time Pianta purported to sell to a third party. While the outcome was that no binding contract had been executed, Barwick CJ observed that had there been a binding contract for the sale of land in existence, the fact that the potential purchaser was buying for the purpose of subdivision and sale was not a ground upon which a decree for specific performance should be refused.[52] The fact that the binding contract in this case was conditional upon subdivision is similarly not in itself a ground to refuse specific performance. The discretion to do so is to be exercised on the facts as found.

85 In Rehins Pty Ltd v Debin Nominees Pty Ltd (No 2),[53] which the plaintiff sought to rely on, Murray J of the WA Supreme Court exercised his discretion to grant a series of orders in the nature of specific performance to compel the vendor to do all that was necessary to obtain approval of the subdivision and, subject to obtaining the necessary approval, settle the performance of the contract. In considering the relief, Murray J observed that for a purchaser, a contract for the sale of land was a 'classic example of a contract where damages is regarded as an inadequate remedy for breach and specific performance will be ordered if it is otherwise available'.[54] As to the question of continuing supervision, simply the defendant still had to receive approvals and the clearance of conditions, and still had to lodge a final subdivision plan, did not lead Murray J to conclude that the degree of continuing supervision would be a basis for refusing the relief. Murray J was also not convinced that granting the relief would condemn the parties to a continuing association. These determinations were made after a hearing on all disputed facts.

86 In Tito, specific performance of an agreement to replant lands was refused for a number of reasons, including as a matter of discretion that damages would be a more appropriate remedy because of a number of practical considerations. Parwan says that in principle this matter is no different as the receivers would require funding for the work and there is no guarantee that a plan would be registered. In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia,[55] orders for specific performance were challenged as requiring involvement of the court in 'constant supervision' of continued conduct. The High Court said:

However, questions of degree rather than absolute restrictions upon the scope of curial relief are involved....What is significant is the acceptance by the House of Lords that the concept of 'constant supervision by the court' by itself is no longer an effective or useful criterion for refusing a degree of specific performance.[56]

87 In this case it was a matter of contested fact as to whether the Property could be subdivided. The obvious inference would be that the contracting parties at the time they entered into the contract held a belief that it could be subdivided. There was no evidence from Parwan's director to the contrary. Hooper gave evidence of his continuing belief that the subdivision could occur and an explanation for some delay by Parwan. The receivers refused to take any steps to do so once appointed because they considered the contract to be void. The evidence does not permit any finding about Parwan or Hooper's conduct prior to the appointment of the receivers That might be relevant to the granting or withholding of discretionary relief.

88 Parwan has pleaded that the contract is void for uncertainty because the purchased area is not sufficiently identified and no plan of subdivision is contained in the contract of sale. Those matters must be put to one side as matters for trial given the concession made in the application by Parwan. It was for Parwan to show that the Melton Planning Scheme did not permit subdivision of the Property to create a separate title of approximately 11Ha[57] for the purchased area. The evidence led by Parwan conceded that the Property located in the Green Wedge Zone can be subdivided according to a formula.[58] There was no evidence of the formula itself nor of any inability to subdivide in accordance with that formula. Apart from an assertion by the receivers in the letter of 20 May 2020 that the planning scheme prohibited a subdivision as proposed, there was no evidence that the subdivision cannot occur. To the extent that reference is made to restrictions imposed in the planning scheme, there was no evidence as to the nature or relevance of those restrictions. The evidence rose no higher than that Parwan had taken no step, and was refusing to do so, demonstrating only a breach of contract.

89 Before the Associate Judge, Parwan's written submissions did not address the first question of the capacity of the Property to be subdivided. Nor did the oral submissions address the issue other than to observe that the contract of sale was contingent upon the subdivision of the Property.[59] Her Honour clearly articulated the issue.[60] Hooper submitted that the receivers should be taking steps to subdivide. Parwan submitted only that the contract was not capable of specific performance because the sale of the purchased area would be insufficient to discharge the bank's mortgage and so the bank's indefeasible title would preclude the remedy of specific performance.[61] Parwan did not further address the question. In response to a specific enquiry from her Honour -

none of that explains why steps haven't been taken by the defendant or there's no evidence of anything being done by the defendant to fulfil its obligations under the contract in respect of the subdivision of land[62]

Parwan again submitted that steps to subdivide would be futile because of the bank's intention to withhold consent.[63]

90 While it may be, as the reasons conclude, that Parwan's unwillingness to set in train the process of subdivision does present a significant barrier to settlement, that unwillingness is itself irrelevant to the question of whether subdivision can be obtained. As her Honour observed:

..it cannot be right that Parwan can simply refuse to perform its obligations under the Contract of Sale, being to effect the subdivision, and then rely on its own non-performance as a barrier to specific performance.[64]

91 Given the factual contest on this question, coupled with the discretionary nature of the relief sought, caution must be taken before concluding that subdivision cannot occur, especially given the absence of evidence before the court. The observations in her Honour's reasons at [59] do not refer to the absence of evidence on this question by Parwan, rather they refer to the absence of evidence from Hooper that Parwan can effect subdivision. They correctly observe that the weight of evidence points to a refusal by Parwan to perform its obligations. In my view a fair reading of the reasons indicates the approach is one of balancing whether as a matter of discretion the relief might be granted, rather than whether, on uncontested facts or as a matter of legal principle, the subdivision could not occur.

92 The second question is whether the bank's prior indefeasible title and its refusal to consent to the sale unless its mortgage is discharged meant Hooper had no real prospect of obtaining specific performance. This was the battleground upon which Parwan focused in the application. There was no dispute that the bank's mortgage was first in time, nor that the amount owing by Parwan was greater than the purchase price for the purchased area. Her Honour accepted that this issue posed the greater barrier to Hooper's prospects of success. On its own her Honour found that this was sufficient to say that the contract was not specifically performable.[65]

93 This is undoubtedly correct if the proceeds from the contract of sale of the purchased area were the only means of discharging the mortgage. But that premise is false. The mortgage is secured by the whole of the Property. The sale is conditional upon the Property being subdivided into two or more titles, all of which are capable of being sold (including the contract of sale to Hooper) in discharge of the mortgage. Hooper's submission is that on the evidence relied on by Parwan the Property without subdivision is valued around $1,700,000 - an amount that exceeds the mortgage liability. The critical question is not whether the discharge can occur from the contract of sale from part of the Property created by a new title but from the sale of the Property overall.

94 I am satisfied that on this question her Honour fell into error. The prospect of success was analysed on the basis that the settlement of the purchased area could not discharge the mortgage which has priority. That is clearly correct as a matter of mathematics. However, as Hooper submitted, the question is to be asked on the basis that settlement will only occur because the subdivision has been registered. Parwan did not address the situation where it would remain the registered proprietor of the balance of the Property after subdivision, nor its inability to discharge its mortgage by the sale of the balance of the Property or otherwise. This error is also demonstrated by the approach taken in paragraph [65] of the reasons where her Honour took the two negative answers together, or in combination when assessing the prospect of success. The question of the bank's attitude to the discharge of its mortgage was to be approached on the basis that the subdivision can or could occur such that the contract of sale could settle with Parwan holding title to the balance of the Property.

95 Assuming the valid contract of sale for the purpose of the summary application, Parwan could not and did not attempt to show that specific performance was not a legally available remedy to Hooper. It attempted to show that factually the remedy was likely to be refused, to the standard of having no real prospect of success. The factual dispute as to whether subdivision was possible and what supervision might be required to compel Parwan's best endeavours to obtain it were not addressed in Parwan's evidence. Therefore I am satisfied that Hooper has made out the overlapping Grounds 1 and 3.

96 Ground 2 raises the question of weight given to the fact that Parwan, in default of its obligations under the contract of sale, is seeking to take advantage of the state of things it has created. This was a relevant factor for the exercise of discretion to deal with a dispute summarily and would remain a relevant issue at trial. It may also be a circumstance relevant to whether s 64 of the Civil Procedure Act might be relied on although this was not an argument raised before her Honour. It is not necessary in light of my conclusion at [94] to deal specifically with Ground 2.

97 The remaining grounds deal with the orders regarding the caveats and the lease. I propose making some brief observations only because, as can be seen from the reasons, the factor of greatest influence in her Honour's approach to determining the balance of convenience was her conclusion that specific performance was not available.

98 Hooper submitted that because there was no application for relief pursuant to s 90(3) of the Transfer of Land Act before the Court, the orders removing the purchaser's caveat and the charge caveat were erroneous. I do not accept this submission. An application for removal of a caveat is analogous to an interlocutory injunction sought pending trial. It is hardly surprising that this relief was sought in the summary judgment application notwithstanding the summons did not set this out.

99 The manner in which the hearing was conducted made clear that the orders under s 90(3) of the Transfer of Land Act were sought as part of what was necessary, in substance, to permit Parwan to sell the Property. Parwan commenced its application at the hearing identifying the matters sought to be dealt with summarily including the validity and maintenance of the purchaser's caveat and the maintenance of the charge caveat. These were declarations sought by Hooper in his statement of claim and the relief sought by Parwan in its defence and counterclaim. Further, in the course of oral argument Parwan's counsel identified that the application was brought to remove the caveats under s 90(3) of the Transfer of Land Act.[66] In oral submissions Hooper's counsel also addressed the question of the removal of the caveats,[67] and implicitly accepted that the question was before her Honour. The absence of an originating procedure specifying relief pursuant to s 90(3) of the Transfer of Land Act is explicable by the way in which Hooper commenced his proceeding seeking declaratory relief, the effect of which would be to maintain the caveats on the Register. All parties proceeded on the basis that, if the summary relief was granted, orders pursuant to s 90(3) might be needed to give effect to that relief.

100 The only issue for her Honour to consider was where the balance of convenience lay in maintaining or removing the caveats. The finding that the contract was not specifically performable weighed against maintenance and was the only relevant factor that did weigh in favour of removal. The dispute about Hooper's caveatable interest under the contract of sale turned on the validity of the contract of sale. This matter was expressly reserved to a trial. Accordingly, the Associate Judge erred in deciding to remove the caveats prior to trial - where the validity of the contract of sale will be determined in a hearing that considers all the relevant evidence.

101 I propose making orders allowing the appeal and vacating the orders of 17 June 2022 and dismissing Parwan's summons dated 10 December 2021. I will hear from the parties on the form of those orders and the question of costs of the appeal, and the future conduct of the proceedings.

[1] Hooper v Parwan Investments Pty Ltd (recs apptd) [2022] VSC 285 ('Reasons').

[2] Made by summons dated 10 December 2021.

[3] [1980] HCA 13; (1980) 144 CLR 13.

[4] Defendant, 'Affidavit of Ross Blakely' sworn on 10 December 2021 in Hooper v Parwan Investments Pty Ltd (Recs Appointed) S ECI 2021 00853 [21].

[5] Contract Property as defined refers to the purchased area.

[6] Plaintiff, 'Affidavit of Benjamin Hooper' sworn on 10 February 2022 in Hooper v Parwan Investments Pty Ltd (Recs Appointed) S ECI 2021 00853, [7].

[7] Affidavit of Ross Blakeley sworn on 10 December 2021, [28] exhibit RB-1 232.

[8] Defendant, 'Defence and Counterclaim' filed 13 July 2021 in Hooper v Parwan Investments Pty Ltd (Recs Appointed) S ECI 2021 00853, [6(a)].

[11] Orders of the Honourable Associate Justice Matthews in Hooper v Parwan Investments Pty Ltd (Recs Appointed) S ECI 2021 00853 made on 17 June 2022.

[14] Reasons (n 1) [58]-[61] (citations omitted).

[15] Ibid [63]-[64] (citations omitted).

[26] See Oswal v Carson [2013] VSC 355 [11] (Ferguson J); Boral Resources (Vic) Pty Ltd v CFMEU [2014] VSC 120 [10] (Digby J); EWC Payments Pty Ltd v Commonwealth Bank of Australia [2014] VSC 207 [12] (Elliott J) and Schreuders v Grandiflora Nominees Pty Ltd [2014] VSC 310.

[27] Plaintiff, 'Proposed Amended Notice of Appeal From Associate Judge' filed 29 August 2022 in Hooper v Parwan Investments Pty Ltd (Recs Appointed) S ECI 2021 00853.

[28] [2013] VSCA 158; (2013) 42 VR 27 ('Lysaght').

[31] [1992] NSWCA 272; (1992) 30 NSWLR 1, 5 [22].

[32] Ottedin Investments Pty Ltd v Potbury Developments Co Pty Ltd [2011] VSC 222; (2011) 35 VR 1, [18].

[34] As discussed in J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015), 20-005.

[35] Ibid 20-035. Contracts for disposition of interests in land are 'far more commonly that contracts of any other description the subject of orders for specific performance'.

[36] Defendant, 'Outline of Submissions' filed on 4 March 2022 in Hooper v Parwan Investments Pty Ltd (recs appointed) S ECI 2021 00853, [32].

[37] (1936) 55 CLR 499, [1].

[40] Ibid [6(c)] and Hooper (n 1) [44].

[42] I.C.F. Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (Lawbook Company, 9th ed, 2014) 311.

[43] Affidavit of Ross Blakeley sworn on 10 December 2021, exhibit RB-1 246.

[44] Rehins Pty Ltd v Debin Nominees Pty Ltd (No 2) [2011] WASC 168, [213] ('Rehins').

[45] Pianta v National Finance & Trustees Ltd [1964] HCA 61; (1964) 180 CLR 146, 151 ('Pianta').

[46] New Zealand Shipping Co v Societe des Ateliers et Chantiers de France [1919] AC 1, adopted in the High Court in Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 441-2.

[47] Defendant, 'Submissions in respect of the appeal' filed on 22 August 2022 in Hooper v Parwan Investments Pty Ltd (recs appointed) S ECI 2021 00853, [5].

[49] [1977] 1 Ch 107; 3 All ER 129.

[54] Ibid [213] citing Barwick CJ in Pianta (n 45) 151.

[55] (1998) 195 CLR 1 [78]-[80].

[57] Defence and Counterclaim (n 7) [6(b)].

[58] Affidavit of Ross Blakeley sworn on 10 December 2021, exhibit RB-1 230.

[59] Transcript of Proceedings, Hooper v Parwan Investments Pty Ltd (recs appointed) (Supreme Court of Victoria, S ECI 2021 00853, Associate Justice Matthews, 17 March 2022) 16.24-17.6 ('T (17 March)').

[60] Transcript of Proceedings, Hooper v Parwan Investments Pty Ltd (recs appointed) (Supreme Court of Victoria, S ECI 2021 00853, Justice Forbes, 31 August 2022) 31.15 ('T').

[61] Defendant's Outline of Submissions (n 35) [32].