Stankovic v The Hills Shire Council and Namul Pty Ltd

Background and procedural history

1. The issue of the ownership of the Kellyville land has been the subject of previous proceedings between the applicant and Namul. The background to those proceedings is as follows: 1. The applicant and his wife were tenants in common of the Kellyville land; 2. In 2005 Baulkham Hills Shire Council (which has since been renamed as the Hills Shire Council) commenced proceedings against the applicant and his wife in the Land and Environment Court alleging that the Kellyville land was being used otherwise than for a permitted purpose under the Baulkham Hills Shire Local Environment Plan 1991 (NSW). The Council alleged that the Kellyville Property was being used as a "junk yard" and the applicant was keeping up to 100 pigs for his own "enjoyment" and not as part of a business; 3. On 16 February 2005, an order was made by Lloyd J, dismissing those proceedings "for want of prosecution" because the Council failed to attend on the day of hearing. The applicant has for many years asserted that this order was final and that the subsequent orders made against him were made without jurisdiction; 4. By notice of motion dated 21 February 2005, the Council sought to have the order dismissing the proceedings vacated. On 4 March 2005, in circumstances that the applicant asserts are controversial, the order for dismissal of the proceedings for want of prosecution was apparently vacated. The parties were directed to approach the registrar for a hearing date. The applicant has consistently denied that an order for reinstatement was made; 5. On 14 March 2005, a hearing was conducted before Pain J in the Land and Environment Court. The applicant participated in the hearing. On 22 March 2005, orders were entered in favour of the Council, including an order that the applicant to pay the Council's costs. These were assessed at approximately $22,000; 6. On 12 May 2009, the Federal Magistrates Court made a sequestration order against the estate of the applicant following an act of bankruptcy, being the non-payment of the judgment entered pursuant to the costs order made in the Land and Environment Court. Trustees were appointed to the bankrupt estate of the applicant and his wife in equal shares; 7. On or about 14 September 2010 Newham Namul Pty Ltd purchased the Kellyville land from the trustees at auction and subsequently transferred it to a related company, Namul, which became the registered proprietor of the Kellyville land; and 8. On 5 June 2015 the applicant sought leave to appeal from the orders of Pain J. That application was dismissed on 9 September 2015: Stankovic v The Hills Shire Council [2015] NSWCA 279.
2. In 2013, the applicant commenced proceedings in the Supreme Court of New South Wales, alleging that Namul had obtained title to the Kellyville land with notice of a fraud in the appointment of trustees of the applicant's bankrupt estate.
3. On 14 February 2013, Rein J held that the applicant had no right title or interest in the Kellyville land: see Namul Pty Ltd v Milovan Stankovic [2013] NSWSC 115. Further, his Honour also rejected the assertion that the purchaser, or Namul, knew that the trustees had not been regularly appointed and found that the purchaser and Namul were entitled to act on the basis that the trustees had been validly appointed: [20] The only relevant time to establish knowledge of fraud in the context of s 42 of the Real Property Act is before the purchase of the Property and the payment of money. In this case a very substantial amount, $6.7M, together with a further 10 per cent of that amount for GST, was paid following the auction on 14 September 2010. [21] I have no hesitation in accepting Mr Newham's [the principal of Namul] evidence. I do not think Mr Newham's credibility was impugned at all by the cross-examination of him by the defendant and there was nothing substantive from the defendant's affidavit to contradict his evidence. Not only that, his agreement with the proposition to which I have earlier referred to, only reinforces the likelihood that he did not know that there was any irregularity in the appointment of the trustees. [22] Further, the defendant's assertions about misconduct do not amount to evidence of misconduct, irregularity or fraud. I am not satisfied that Mr Newham knew before he purchased the Property, and therefore that Namul knew, that the trustees had not been regularly appointed. On the contrary, Mr Newham and Namul were, in my view, entitled to act on the basis that the trustees had been validly appointed. Not only is the appointment of the trustee evidenced by a certificate (Exhibit A, tab 10, p 13) Mr Newham and Namul were also entitled to rely on the registration of the trustee on the register at the Land Titles office.
4. On 27 August 2013 this Court dismissed the applicant's appeal against the decision of Rein J and confirmed that the applicant had no interest in the Kellyville land: Stankovic v Namul Pty Limited [2013] NSWCA 276. In the course of that judgement the Court said: [8] The appellant maintained before Rein J that the respondent had taken title to the land with notice of fraud in or about the appointment of trustees of the appellant's bankrupt estate. The fraud that the appellant now seems to allege is described at [16] of a judgment of the Federal Court of Australia (Emmett J) in Stankovic v The Hills Shire Council (No 3) [2012] FCA 523. According to the appellant, it had its origin in proceedings in the Land and Environment Court in which the costs order that founded the bankruptcy was made. The explanation given in the Federal Court judgment does not support any view whatsoever that there was any fraud. [9] The primary judge was in any event of the opinion that the appellant's assertions did not amount to evidence of misconduct, irregularity or fraud; added to which, Mr Newham (the principal of both the respondent and Eric Newham Holdings Pty Ltd) and the respondent were entitled to act on the faith of the court orders appointing the trustees in bankruptcy and the trustees for sale. In short, there was a finding that the respondent was not involved in any fraud and had no notice of any fraud. [10] The primary judge went on to consider steps taken by the appellant to have his bankruptcy annulled and to have the sequestration order set aside, all of which were unsuccessful. [11] The primary judge was required (as this Court is) to recognise and accept the orders of the Federal Magistrate's Court, the Family Court and the Land and Environment Court. The power of the trustees in bankruptcy and the wife to sell was clear and unimpeachable. They duly exercised that power so as to bring about a sale at arm's length to a purchaser for value who became the registered proprietor in consequence of the purchase. The respondent became the registered proprietor by registration of a subsequent transfer. [12] The appellant has shown no basis for impugning the indefeasible title obtained by the respondent under s 42 of the Real Property Act in consequence of its becoming the registered proprietor of the land. That title is held free from all estates and interests other than those recorded in the register. No estate or interest of the appellant is so recorded.

The draft notice of appeal

1. The draft notice of appeal contains two appeal grounds, which are as follows: 1. The Judgment made in the Land and Environment Court on 17th November 2016 by Moore J. must be reversed because he acted wrongfully and injudiciously by disregarding the hardcopy proof of the substantive issue of fact that the Case of BAULKHAM HILLS SHIRE COUNCIL v MILOVAN & MILKA STANKCOVIC, File No: 41243 of 2004 was DISMISSED on 16th February 2005 and NOT RE-INSTATED before 14th March 2005 when Justice Pain conducted a further hearing of the action to make a "Costs Order" against Milovan Stankovic contrary to the specific requirement of s.58 of the Land & Environment Court Act 1979 No 204 of "Class 4 proceedings - appeals. (1) Where a party to a proceedings in Class 4 of the Court's jurisdiction is dissatisfied with an order or decision (including an interlocutory order or decision) of the Court, the party may appeal to the Supreme Court against the order or decision." 2. This Order of Dismissal and the absence of any record or document as to any "re-instatement" of that case, together, are irrefutable proof that I, Milovan Stankovic, am the lawful and rightful owner of Lot 12 York Raod, Kellyville NSW 2153 under s. 42 of the Real Property Act 1900 and am entitled to demand that the court extinguish those proceedings between THE HILLS SHIRE COUNCIL and NAMUL PTY LTD.

Consideration

1. Section 39A of the Land and Environment Court Act 1979 (NSW) requires one of three tests to be satisfied before a person can be joined to proceedings as a party to an appeal: 1. that the person is able to raise an issue that should be considered in relation to the appeal but would not be likely to be sufficiently addressed if the person were not joined as a party; or 2. it is in the interests of justice to do so; or 3. it is in the public interest to do so.
2. The sole basis upon which the applicant sought to be joined was that by reason of what he asserts were irregularities in proceedings in the Land and Environment Court before Pain J in 2005 he is the "lawful and rightful owner" of the Kellyville land.
3. The applicant did not satisfy any of the tests for joinder set out under s 39A. The sole issue he wished to agitate, the ownership of the Kellyville land, had already been conclusively determined against the applicant by Rein J, whose decision was affirmed by this Court.
4. In his written summary of argument and oral submissions the applicant challenged the orders of Pain J that ultimately led to his bankruptcy, the appointment of trustees for sale of the Kellyville land and the purchase of that land by Namul. He advanced the same matters that had previously been considered and rejected by Basten and Ward JJA on 9 September 2015 in refusing leave to appeal from Pain J's orders (see [5(8)] above). He argued that no order had been made reinstating the Land and Environment Court proceedings after they had been dismissed for want of prosecution by Lloyd J on 16 February 2005. In their reasons of 9 September 2015 Basten and Ward JJA said (at [12] and [14]) that there was no reason to doubt that an order for reinstatement had been made. They also said that the orders of Pain J were not a nullity, even if a prior step that should have been taken was not taken. The applicant advances no argument that casts doubt on that conclusion. In any event, the orders of Pain J were final and conclusively determined the matters before her Honour, except on appeal. The application for leave to appeal was dismissed.
5. But even if all of the applicant's complaints about the course of proceedings in the Land and Environment Court in 2005 had substance and could be raised by way of collateral challenge in the way now sought, it would not affect Namul's title to the Kellyville land. The validity of its title has been finally determined by this Court's dismissal of the appeal from the orders of Rein J. The matter is res judicata.
6. It is sufficient to observe for present purposes that the applicant has not demonstrated any error, nor any issue of principle or question of public importance warranting a grant of leave: The Age Company Ltd v Liu [2013] NSWCA 26 per Bathurst CJ (at [13]), with whom Beazley and McColl JJA agreed. To the contrary, the order made by Moore J refusing to entertain the applicant's claim that he was the "lawful and rightful" owner of the Kellyville land was the only one open to him given the decision of Rein J, affirmed in this Court.
7. On the hearing of this application, the Council sought an order for indemnity costs if the application for leave to appeal failed. Namul ultimately did not press a claim for indemnity costs, but submitted that costs should follow the event on the ordinary basis. In the circumstances, the Court is of the opinion that the appropriate order is for the payment of costs on the ordinary basis.
8. The Court makes the following order: 1. Dismiss the summons seeking leave to appeal filed on 2 December 2016 with costs.

Amendments 21 March 2017 - Correction to representation in cover sheet 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: 21 March 2017