Robert Whitton as Trustee in Bankruptcy Estate of Steven Leonard Watton v Watton

Background

1. The factual and procedural background was uncontroversial. The applicant acknowledged the accuracy of what had been stated by the primary judge at [5]-[18]. His Honour's careful description of the events preceding the litigation, and the course of the proceedings in the Supreme Court, may conveniently be reproduced verbatim. "The plaintiff and her former spouse, Mr Watton, began residing in the Rouse Hill property in 2001. Mr Watton was the registered proprietor of the property. The plaintiff and Mr Watton married in September 2005 and separated a year later in September 2006. The parties entered into a Binding Financial Agreement at the time of their separation which, inter alia, required Mr Watton to transfer his interest in the Rouse Hill property to the plaintiff. Notwithstanding their separation, the parties then jointly obtained a 'consumer loan' from Liberty Financial in January 2007 in the amount of $460,000. The lender took a registered mortgage over the property. On 12 November 2007 the defendant was appointed as the trustee of Mr Watton's bankrupt estate pursuant to a sequestration order made by the Federal Magistrates Court of Australia. The bankruptcy expired on 12 November 2010. On 5 May 2011 the plaintiff lodged a caveat over the property which claimed an equitable interest in the property by virtue of 'paying the monthly mortgage repayments on the property since March 2007'. Nothing of relevance then occurred until the defendant became registered as the proprietor of the property in August 2015 pursuant to s 90 of the Real Property Act 1900 (NSW). On 16 September 2015 the defendant's solicitors, Piper Alderman, wrote to the plaintiff, asserted that she had no caveatable interest, and demanded that the caveat be withdrawn within 14 days. The letter foreshadowed an application for preparation of a Lapsing Notice pursuant to s 74J of the Real Property Act. The plaintiff's solicitors responded on 14 October 2015, stating that she had 'been contributing the entire amount of the monthly repayments payable under the Facility since January 2007 to the present date', estimated to be in the amount of $466,198.12. The plaintiff maintained that she had a valid caveatable interest in the property either as beneficial owner pursuant to the Binding Financial Agreement, as a beneficiary under a constructive trust, or as the holder of an equitable charge. In a letter dated 21 June 2016, the defendant's solicitors asserted that the Binding Financial Agreement, and the transfer of property it required, were void. The defendant also requested documentary evidence of the plaintiff's contributions to the property. The letter again foreshadowed an application for the preparation of a Lapsing Notice in respect of the plaintiff's caveat. The plaintiff's solicitors thereafter provided loan account statements from Liberty Financial which were said to support the plaintiff's claim to an equitable interest in the property. The defendant's solicitors responded on 2 September 2016, stating that the loan account statements did not demonstrate that the plaintiff had provided the funds used to make the mortgage repayments, and seeking further evidence that the repayments came from the plaintiff's funds. A Lapsing Notice application was again foreshadowed. After two further requests from the defendant for evidence, the plaintiff's solicitors stated on 21 October 2016 that they did 'not presently have the documents sought by your client' and considered the defendant's request to be oppressive as no alternative hypothesis as to the source of the mortgage repayments had been put forward. The plaintiff's solicitors again stated on 11 November 2016 that the plaintiff could not 'provide the perfect document trail' sought by the defendant, and invited the defendant to make an offer to settle the proceedings. Under cover of a letter dated 22 December 2016, the defendant then served a Lapsing Notice dated 16 December 2016. On 12 January 2017 the plaintiff commenced the proceedings, and obtained orders by consent extending the operation of the caveat. On 27 January 2017 the operation of the plaintiff's caveat was extended until final determination of the proceedings. A timetable for pleadings was set. The plaintiff failed to file a Statement of Claim within the stipulated time, and instead sought a number of extensions of time from the defendant. On 13 April 2017 the plaintiff's solicitors provided draft Federal Court pleadings to the defendant's solicitors, stating that they believed the appropriate forum was the Federal Court. The plaintiff sought the defendant's views on that matter. The defendant responded on 22 May 2017, agreeing that the Federal Court was the proper forum for the plaintiff's substantive claims. The proceedings in this Court were listed for directions before the Equity Registrar on 25 May 2017. On 24 May 2017 the plaintiff's solicitors wrote to the defendant's solicitors indicating that they would inform the Court of the parties' view that the Federal Court was the appropriate forum. The letter also included the following: Further to the above, we will be seeking an order that the existing order of the Supreme Court of New South Wales which continues the operation of the caveat until the final determination of the Federal Court proceedings [sic]. We propose this regime on the basis that it would appear that subsection 74J(1)(a) of the Real Property Act 1900 (NSW) explicitly refers to an order of the 'Supreme Court' and it is not evident that the Federal Court of Australia would have power to make a like order. The operation of the caveat was extended until further order on 25 May 2017. On 16 June 2017 the defendant's solicitors enquired as to the status of the draft Federal Court pleadings which had been provided in April. The plaintiff confirmed that the Statement of Claim was the 'final draft document' proposed to be filed. The defendant's solicitors sent a letter to the plaintiff's solicitors on 18 August 2017 which included the following: Your client's claims could only ever have been brought in the Federal Court of Australia, by reason of s 30 of the Bankruptcy Act 1966 (Cth). Nevertheless, you commenced proceedings in the Supreme Court of New South Wales, perhaps on the mistaken assumption that only the Supreme Court has jurisdiction to make orders extending a caveat under the Real Property Act 1900 (NSW). Yet it is well established that the Federal Court can make orders extending and, indeed, withdrawing a caveat under the Real Property Act 1900 (NSW), by reason of s 79 of the Judiciary Act 1903 (Cth): see for example Ipandco (Australia) Pty Ltd v Australian Technology Park Precinct Management Ltd [2003] FCA 1322 at [1] per Hely J. Similarly, in relation to the Family Court, Auricchio & Auricchio and Ors (No. 2) [2014] FamCA 240 at [31]. … Accordingly, your client should never have commenced proceedings in the Supreme Court of New South Wales. Those proceedings should be discontinued and there should be an order that your client pay our client's costs of those proceedings. … Your client should proceed to file its proceedings in the Federal Court of Australia without delay, if that is what it is advised to do. With respect, it is not for the writer to advise your client or comment on the procedural pathway by which your client seeks relief. That said, whatever your client is advised to do should be done with due expedition, and in any event within fourteen (14) days of this letter. … Furthermore, should you agree to an order disposing of the Supreme Court proceedings with costs payable to our client, then our client will undertake not to seek to enforce that costs order until the final resolution of the proposed proceedings in the Federal Court. On 1 September 2017 the plaintiff's solicitors stated that 'we have today lodged our clients [sic] Application and Statement of Claim, in the form provided to you in draft, and are currently waiting for same to be processed by the Federal Court of Australia.' That email annexed a letter which included the following: Despite your contention, that our client's claim could only be brought in the Federal Court of Australia by reason of s 30 of the Bankruptcy Act 1966 (Cth), your client, unreasonably, took it upon himself to file a Lapsing Notice of our client's caveat on 22 December 2017 [sic], three days prior to Christmas, on the assumption that our client would not respond nor oppose same over the holiday period. Given the circumstances, both counsel and our staff were nonetheless required to return from leave early, in order to respond to your clients [sic] lapsing notice (a notice that could have been brought at any other time in the many years since your client's appointment as trustee). Further, the parties had been in discussions at that time to settle the matter, and in spite of those discussions your client issued the Lapsing Notice. In the circumstances of the issue of the Lapsing Notice, it was entirely reasonable and indeed appropriate that our client approach the Supreme Court to [sic] with respect to the Lapsing Notice. Any contention to the contrary is unmeritorious. We will oppose any application for costs in the Supreme Court proceedings. … Accordingly, there is no need for the parties to waste further costs in having the caveat extended in the Federal Court, and our client's interests are protected by the extension granted by the Supreme Court. That extension should continue until the final determination of the proceedings. The defendant's solicitors made two further requests on 8 and 19 September 2017 for sealed copies of the documents filed at the Federal Court. On 19 September the plaintiff's solicitors responded, stating that the documents had been lodged on 1 September with a Financial Hardship Application for waiver of the filing fee, which application was subsequently refused. On 3 October 2017 the plaintiff served sealed copies of a Federal Court Application and Federal Court Statement of Claim filed on that day."
2. On 13 October 2017, the trustee in bankruptcy filed a notice of motion seeking that the proceedings be dismissed. Probably from then, and certainly by its return date before the primary judge on 20 October 2017, it was common ground that there should be an order that the caveat continue for a period of time. The transcript records that the hearing commenced thus: "LIPP [counsel for Ms Watton]: As I understand it, the defendant is content for the caveat to continue in operation pending determination of the Federal Court proceedings? HARTFORD-DAVIS: That is right."
3. However, that agreement did not prevent disputation. The trustee in bankruptcy maintained that no interlocutory relief as was granted could be given in circumstances where the Supreme Court lacked jurisdiction to grant final relief. As it was put: "HARTFORD-DAVIS: Our submission is that your Honour can't make [an order that the caveat be extended until the Federal Court proceedings are determined] under s 74K if no final relief is being sought here or could be sought here. That's what - HIS HONOUR: Your underpinning argument is that it's an abuse of process? HARTFORD-DAVIS: In effect."
4. The trustee in bankruptcy was willing for a more limited order extending the caveat to be made, and also was prepared to consent to an injunction in the Federal Court. However, Ms Watton was concerned that the Federal Court might not have power to extend a caveat, and was also concerned to protect her position against third parties, who might be unaware of an injunction.
5. The primary judge gave brief ex tempore reasons for his decision: "HIS HONOUR: It was submitted by the defendant that it was not open to the Court to make any further order under s 74K of the Real Property Act, including any order varying the existing order made under that section, in circumstances where the plaintiff no longer seeks final relief in this Court in vindication of the interest claimed in the caveat. In my view, not only was it not inappropriate for the plaintiff to commence the proceedings in this Court (a matter accepted by the defendant), I do not consider that the circumstance that the final relief being sought by the plaintiff is now to be sought in the Federal Court of Australia and not this Court gives rise to any circumstance amounting to an abuse of process. Moreover, notwithstanding the principles which apply to the making of orders under s 74K, which are akin to those which apply to the making of interlocutory injunctions, I do not think that the fact that final relief is not sought in this Court precludes the making of an order under s 74K. That may well be a circumstance which, in many cases, would lead to the conclusion that no such order should be made, but I do not think that is the position in the present case."
6. His Honour then heard the parties on the papers as to costs. His Honour's exercise of discretion started with the fact that Ms Watton had proposed the course ultimately ordered since 24 May 2017, which had continued to be opposed by the trustee, such that the costs should reflect Ms Watton's success on the point that was ultimately determined: at [25]. (In fact, as the primary judge observed, Ms Watton had provided draft Federal Court pleadings as early as 13 April 2017.) His Honour then took into account three matters which might favour a different exercise of discretion. The first was that the proceedings had otherwise been dismissed, the second was that the trustee contended that proceedings should always have been commenced in the Federal Court, and the third was that there had been delay in commencing proceedings in the Federal Court: at [26]-[30]. In relation to the first matter, his Honour did not regard the order which was made as determinative, because the central matter in dispute was the caveat. In relation to the third matter, his Honour also did not regard Ms Watton's delay as sufficiently egregious or causative of prejudice as to warrant her being disentitled of costs. In this Court, the second matter was said to give rise to a question of principle, and his Honour's reasons addressing it may conveniently be reproduced in full: "The second matter is the defendant's submission that the proceedings should always have been commenced in the Federal Court. I am unable to accept this submission. Section 74J of the Real Property Act contains a statement that, where a Lapsing Notice is issued, the caveat will lapse unless an order extending the operation of the caveat is "obtained from the Supreme Court" and lodged with the Registrar-General within 21 days. Although it may sometimes be possible for a caveator to proceed to a federal Court and obtain interlocutory relief to protect its position, I do not think it was at all unreasonable for the plaintiff in the present case to come to this Court given the clear words of the section. That is all the more so because the defendant served the Lapsing Notice on 22 December 2016, three days prior to Christmas. Although there may be good reasons why the lapsing notice was served on that date, that course should be avoided wherever it is possible to do so. It had the result that the 21 days available to the plaintiff fell in the midst of the holiday period, which would have made obtaining instructions and commencing proceedings more difficult. That circumstance further persuades me that it was reasonable and appropriate for the plaintiff to commence proceedings in this Court. I do not share the defendant's view that there is 'no doubt' that the Federal Court has power under s 74K of the Real Property Act to extend the operation of a caveat. As the plaintiff observed, the jurisdiction of the Federal Court was common ground between the parties in Ipandco (Australia) Pty Ltd v Australian Technology Park Precinct Management Ltd (supra) (see at [1]). The plaintiff also observed that Leroy v Koutavas, in the matter of Koutavas (No 2) (supra) concerned s 74MA of the Real Property Act rather than s 74K. I note that the orders in that case were also made with the consent of all active parties. Barrett J did not express any view on the matter in Jones v Daniel (supra), although did refer to In the marriage of Stevens (1991) 15 Fam LR 51. Of course, the provision of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) relied upon in that case (s 4(2)) to give the Family Court jurisdiction under s 74K is of a type that has been held to be unconstitutional, and has been repealed. In my view, the apparent absence of any authority which conclusively establishes the Federal Court's jurisdiction under s 74K further indicates that the plaintiff acted reasonably and appropriately in initially seeking relief in this Court.
7. Those were the circumstances in which the primary judge ordered the trustee in bankruptcy to pay Ms Watton's costs of the proceedings.
8. The primary Judge did not refer to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (Cross-Vesting Act). However s 6 of the Cross-Vesting Act contains provisions relevant to the exercise of jurisdiction by the Supreme Court of a State in relation to a "special federal matter". This expression is defined in s 3(1) to include: "(e) a matter that is within the original jurisdiction of the Federal Court by virtue of section 39B of the Judiciary Act 1903; being a matter in respect of which the Supreme Court of a State or Territory would not, apart from this Act, have jurisdiction."
9. Section 6 of the Cross-Vesting Act relevantly provides as follows: "(1) If: (a) a matter for determination in a proceeding that is pending in the Supreme Court of a State or Territory is a special federal matter; and (b) the court does not make an order under subsection (3) in respect of the matter; the court must transfer the proceeding in accordance with this section to the Federal Court or a court mentioned in paragraph (2)(b). … (2) If the court orders that a proceeding or part of a proceeding be transferred, the proceeding or part of the proceeding must be transferred: (a) if the matter for determination in the proceeding is a matter mentioned in paragraph (a), (b), (c) or (e) of the definition of special federal matter in subsection 3(1) - to the Federal Court; or … (3) The Supreme Court may order that the proceeding be determined by that court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceeding other than reasons relevant to the convenience of the parties. (4) Before making an order under subsection (3), the court must be satisfied that: (a) a written notice specifying the nature of the special federal matter has been given to the Attorney‑General of the Commonwealth and the Attorney‑General of the State or Territory where the proceeding is pending; and (b) a reasonable time has elapsed since the giving of the notice for the Attorneys‑General to consider whether submissions to the court should be made in relation to the proceeding. … (6) In considering whether there are special reasons for the purposes of subsection (3), the court must: (a) have regard to the general rule that special federal matters should be heard by the Federal Court or a court mentioned in paragraph (2)(b), whichever is appropriate in the particular case; and (b) take into account any submission made in relation to the proceeding by an Attorney‑General mentioned in subsection (4). … (8) Nothing in this section prevents the court granting urgent relief of an interlocutory nature if it is in the interests of justice to do so. (9) Where, through inadvertence, the Supreme Court of a State or Territory determines a proceeding of the kind mentioned in subsection (1) without: (a) the court making an order under subsection (3) that the proceeding be determined by that court; or (b) a notice mentioned in subsection (4) being given; nothing in this section invalidates the decision of that court."
10. The trustee accepted in this Court that the primary judge had jurisdiction pursuant to s 6(8) of the Cross-Vesting Act at least to make the orders by consent on 12 and 27 January 2017 extending the caveat.
11. After filing and serving a notice of intention to appeal, on 19 February 2018 the trustee filed a summons seeking leave to appeal the order as to costs. Almost three months later, on 7 May 2018 the trustee filed an amended summons seeking leave to appeal not only from the costs orders, but also from the orders made on 20 October 2017 extending the operation of the caveat. The amended draft notice accompanying the amended summons incorporated Ground 4A as follows: "4A. Further to Ground 4, the Primary Judge erred on 20 October 2017 in exercising the power under s 74K of the Real Property Act 1900 (NSW) so as to extend the operation of the caveat until the determination of Federal Court Proceedings NSD1718/2017." This Ground must be read with Ground 4 of the draft notice of appeal, which is as follows: "4. The Primary Judge acted upon a wrong principle in extending the operation of the caveat under s 74K of the Real Property Act 1900 (NSW), and that error of principle infected the costs discretion because of his Honour's perception (J[25]) of what 'event' the costs order should follow."
12. At the same time the trustee filed the amended summons he filed "Applicant's (Updated) Written Submissions" elaborating on Grounds 4 and 4A: "This case merits appellate intervention because the Primary Judge's costs discretion was underpinned by an important error of principle, raising difficult issues concerning federal jurisdiction. This was a 'special federal matter', within the meaning of s 6 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth): see eg Mateijan v HTT Huntley Heritage Pty Ltd (2016) 111 ACSR 277 at [27] per Gleeson and Leeming JJA and Emmett AJA. In the absence of special reasons and notice to the Attorneys-General, as required by s 6(3)-(4) of the Cross-Vesting Act, the Primary Judge was required to transfer the matter to the Federal Court before taking any step in the nature of interlocutory relief (s 6(1) of the Cross-Vesting Act). In the absence of compliance with s 6 of the Cross-Vesting Act, the Primary Judge lacked power to grant relief under s 74K of the Real Property Act 1900 (NSW) (RPA), extending the subject caveat pending the outcome of the Federal Court proceedings. This was an error of public importance, which is embedded in the exercise of his Honour's costs discretion (since it conditioned his Honour's view of the 'event' which the costs order should follow)."
13. The Court heard from the parties on all the issues: the trustee's application for leave to file an amended summons seeking leave to appeal and an amended draft notice of appeal; Ms Watton's objections to this Court's jurisdiction, and the substantive appeal. The Court indicated that it would address the issues in its reserved judgment.

This Court's jurisdiction

1. The first question for determination is jurisdiction. That turns on whether s 7(5) of the Cross-Vesting Act is engaged, because that federal law subtracts from this Court's jurisdiction to hear and determine an appeal brought pursuant to s 101 of the Supreme Court Act. Subsection 7(5) provides: "(5) Subject to subsections (7) and (8), where it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory (not being a proceeding to which subsection (6) applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by: (a) the Full Court of the Federal Court or of the Family Court, as the case requires; or (b) with special leave of the High Court, the High Court."
2. One of the Acts specified in the Schedule is the Bankruptcy Act 1966 (Cth), and it is well settled that s 7(5) applies to applications for leave to appeal: see Bramco Electronics Pty Ltd v ATF Mining Electrics Pty Ltd (2013) 86 NSWLR 115; [2013] NSWCA 392 at [49] and the authorities there cited. Hence, if a matter for determination in the trustee's application for leave to appeal is a "matter arising under the Bankruptcy Act" then both of the commands in subsection (5) apply, and the appeal must be instituted in and determined by the Full Court of the Federal Court.
3. The requirements of subsection (5) are qualified by subsections (7) and (8), which provide: "(7) Where: (a) the Full Court of the Supreme Court of a State or Territory commences to hear a proceeding by way of an appeal; and (b) before the Court determines the proceeding, it appears to the Court that the proceeding is a proceeding to which subsection (5) applies; the Court shall, unless the interests of justice require that the Court proceed to determine the proceeding, transfer the proceeding to the Full Court of the Federal Court or of the Family Court, as the case requires. (8) Where the Full Court of the Supreme Court of a State or Territory: (a) determines a proceeding to which subsection (5) applies as mentioned in subsection (7); or (b) through inadvertence, determines a proceeding to which subsection (5) applies; nothing in this section invalidates the decision of that court."
4. Ms Watton's written submissions raised an objection to this Court's jurisdiction to hear and determine the trustee's application for leave to appeal. In his oral submissions on Ms Watton's behalf Mr Golledge (who appeared with Mr Lipp) contended that it was no longer necessary to determine the objection to jurisdiction because this Court had "commence[d] to hear [the] proceeding by way of an appeal" within the meaning of s 7(5) of the Cross-Vesting Act. Mr Golledge further submitted that having commenced to hear the proceeding, it should in the interests of justice determine the whole of the proceeding.
5. This Court heard full argument from Mr Hartford-Davis on behalf of the trustee before calling on Mr Golledge. It is possible that the course of the hearing enlivened s 7(7)(a) of the Cross-Vesting Act but it is not necessary to decide that question. The command in s 7(7) is to transfer the proceeding (relevantly) to the Full Court of the Federal Court unless the interests of justice require this Court to determine the matter. Further, s 7(7) qualifies s 7(5), which states the basic rule that the proceedings shall be instituted only in and shall be determined only by the Full Court of the Federal Court.
6. The legislative scheme underlying s 7 is that appeals in matters arising under the federal Acts specified in the Schedule will be determined exclusively by federal appellate courts, save in circumstances where the interests of justice require a State appellate court to determine the appeal, or in cases of inadvertence. The administratively convenient course taken in this Court in no way suffices to satisfy the heavy burden of showing that the interests of justice require this Court to determine it.
7. Accordingly, the question is whether s 7(5) applies to the present application for leave to appeal. Ms Watton submitted that although the costs order was not a matter arising under the Bankruptcy Act, the question whether the order extending the caveat was within power was such a question. When confronted with the propositions that appeals lie only from orders, and the trustee sought only to challenge the order as to costs, Ms Watton responded that it was necessary to determine whether there was power to extend a caveat in order to review the exercise of discretion as to costs: "GOLLEDGE: The determination of the appeal might involve a number of matters. The argument has been put based on s 27 is one of the matters that your Honours are asked to determine in ruling upon, not only whether the caveat order should be set aside if they were allowed to argue for that point, but also whether the discretion miscarried. McCOLL JA: Discretion as to costs? GOLLEDGE: To costs because they say it was informed by an erroneous decision on the substantive point about extension of a caveat. So even if the claim to leave that order in place is abandoned they still seek to challenge as really the principal ground upon which costs are opposed that underlying argument."
8. Contrary to Ms Watton's submissions, s 7(5) is not, in our view, engaged. Until the out of time application was made to amend the summons seeking leave to appeal and the draft notice of appeal, the only issue in this Court was a challenge to the primary judge's exercise of discretion as to the costs of proceedings in which the only relief granted was interlocutory relief to extend a caveat. True it is that the caveat asserted and protected a claimed equitable interest in land whose registered proprietor was a trustee in bankruptcy. In order to determine finally whether the equitable interest claimed by Ms Watton was established, there was unquestionably a matter arising under the Bankruptcy Act within the exclusive jurisdiction of the Federal Court and the Federal Circuit Court conferred by s 27 of the Bankruptcy Act. But, for the purposes of the exercise of the discretion as to costs, the Bankruptcy Act was "lurking in the background", to use Windeyer J's language in Felton v Mulligan (1971) 124 CLR 367 at 388 and 391; [1971] HCA 39. No right, obligation, entitlement or privilege which was the subject of the appeal arose under the Bankruptcy Act.
9. In some circumstances, in order to determine a question of costs, courts embark upon a partial evaluation of the underlying issues. That course is very much disfavoured, as the principles associated with Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 disclose. We express no view as to whether in such a case, had the primary judge's exercise of discretion been informed by either a tentative or a concluded view as to the merits of a claim arising under the Bankruptcy Act, the costs order would fall within the exclusive jurisdiction in bankruptcy. That is not what occurred in the present case. His Honour simply granted interlocutory relief, to which there was no objection in principle, although the parties disputed the form it should take. It is quite clear that the primary judge did not determine on any final basis any aspect of Ms Watton's claim against property owned by a trustee in bankruptcy. Both parties and the primary judge proceeded on the basis that that was a matter for a federal court.
10. The only question arising on the (unamended) application for leave is as to costs in light of the interlocutory relief which had issued. That does not amount to a matter arising under the Bankruptcy Act. We note that this is consistent with the result in Luxottica Retail Australia Pty Ltd v Grant [2009] NSWCA 378 (although no point as to jurisdiction was taken in that appeal).
11. This Court's jurisdiction is unaffected by s 7(5).

The application to seek leave to appeal from the orders extending the caveat

1. We turn to the trustee's application to extend the time for filing an amended summons seeking leave to appeal and an amended draft notice of appeal. The trustee seeks to contend that although the primary Judge had jurisdiction to make orders on 12 and 27 January 2017 extending the caveat, his Honour had no jurisdiction to make the further order extending the caveat on 20 October 2017 against a registered proprietor who was a trustee in bankruptcy.
2. That is a singularly inappropriate vehicle for the grant of leave. The application is made months out of time. It is brought in circumstances in which the trustee accepted before the primary judge that his Honour had jurisdiction to grant at least some interlocutory relief. Hence this is not merely a case where an applicant seeks to advance a point which was not raised before the primary judge. This is a case where the trustee seeks to raise a point which is to some extent inconsistent with the stance he took before the primary judge. Of course, the primary judge lacked the benefit of any of the submissions now sought to be made in the event that leave is granted.
3. There is no basis for the substantial extension of time for leave to appeal against the orders made on 20 October 2017. The trustee's application to amend his summons for leave to appeal and the draft notice of appeal should be dismissed.

Leave to appeal

1. Proposed grounds 1, 2, 3 and 5 in the draft notice of appeal sought to advance House v The King error in the exercise of the discretion to order costs, in conventional ways. They need not be summarised, because with commendable candour, Mr Hartford-Davis made it clear that only proposed grounds 4 and 6 might merit a grant of leave to appeal. The concession was well made. Proposed grounds 1, 2, 3 and 5 raised no question of principle or general importance or an injustice which was reasonable clear: Be Financial Pty Ltd, as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[38]; The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13]. It is also to be borne in mind that leave was sought in respect of an order as to costs incurred in respect of an interlocutory hearing and where the discretion was exercised on the papers.
2. Proposed grounds 4 and 6 are as follows: "4. The Primary Judge acted upon a wrong principle in extending the operation of the caveat under s 74K of the Real Property Act 1900 (NSW), and that error of principle infected the costs discretion because of his Honour's perception (J[25]) of what 'event' the costs order should follow. 6. The Primary Judge erred insofar as he doubted (J[28]) that the Federal Court had power to make an order under s 74K of the RPA."
3. There is no sound reason to grant leave to appeal in respect of proposed ground 4. That ground is premised upon there being error in the order made on 20 October 2017 extending the caveat. But the draft notice of appeal challenges only the costs orders made by the primary Judge. It does not challenge the order made on 20 October 2017 extending the caveat. It cannot be right to grant leave to challenge the exercise as to costs on a basis that impugns the substantive order, in circumstances where the applicant for leave does not challenge, and continues to be bound by, the substantive order. Further, as has already been stated in dealing with the application for an extension of time, the submissions now sought to be advanced were never advanced to the primary judge.
4. Proposed ground 6 falls within a different category. However, it is not necessary to reach a final view as to whether the Federal Court has power to make an order under s 74K of the Real Property Act 1900 (NSW). Indeed, it would be inappropriate to do so. Section 74K confers power upon the Supreme Court of New South Wales to make an order. The Court was not taken to any decision of the Federal Court where it has been determined, after argument, that the Federal Court had such power. It may very well be that there is such power, in accordance with what was said in John Robertson & Co Ltd (in liq) v Ferguson Transformers Pty Ltd (1973) 129 CLR 65 at 95; [1973] HCA 21, which was the view taken in Leroy v Koutavas, in the matter of Koutavas (No 2) [2017] FCA 912 at [11]-[15]. On one view it may be necessary to revisit, in an appropriate case, that reasoning in light of the way in which the operation of s 79 of the Judiciary Act 1903 (Cth) has been reinterpreted in Rizeq v Western Australia [2017] HCA 23; 91 ALJR 707. Although Rizeq was mentioned during the hearing, no submissions were addressed to this.
5. It suffices for present purposes to observe two matters. The first is that there was no error in the primary judge proceeding on the basis that there might be a doubt as to whether the Federal Court had power to make an order, in circumstances where his Honour did not have the benefit of full argument on the point. The second is that there is no question of principle or public importance in ground 6 and we are unpersuaded that the trustee has made out a case of reasonably clear injustice.

Orders

1. For those reasons, the trustee's application to amend his summons to seek leave to appeal from the orders made on 20 October 2017 should be dismissed. Ms Watton does not seem to have filed an objection to competency, but in any event her application based on want of jurisdiction lacks merit. Leave to appeal from the costs order made on 22 November 2017 should also be refused.
2. The discretion as to costs in this Court should be exercised on the basis that neither side has been wholly successful. Rather than apportioning costs by issues, which would be apt to lead to yet further disputation, it is appropriate to take a broadbrush approach: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219. The trustee should pay 50% of Ms Watton's costs in this Court.
3. The Court's orders are:
4. Refuse leave to the applicant to amend his summons seeking leave.
5. Dismiss the summons seeking leave to appeal.
6. Applicant to pay 50% of the respondent's costs in this Court.

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: 20 November 2018