Westpac Banking Corporation v Victor Warren Ollis & Ors

Westpac Banking Corporation v Victor Warren Ollis & Ors - [2008] NSWSC 824 - NSWSC 2008 case summary — Zoe

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c) 77 Woodward Street, Parkes, having title reference 3/547904 ("Woodward Street"). 7 The tenth respondent, Green Parkes Estate Pty Ltd ("Green Parkes") asserts an interest in all three properties. 8 Submissions and evidence have been served by solicitors for the seventh respondent (Peter William Flynn), eighth respondent (Richard Maurice Hawkins), ninth respondent (Kathryn Hawkins) and eleventh respondent (Docos Estate Parkes Pty Ltd ("Docos Estate")). These respondents assert an interest in the Docos Street property by Docos Estate. 9 The Bank relies upon the findings made in the reasons for judgment given on 31 August 2007 and a number of affidavits. 10 In summary, the Bank submits that neither Docos Estate nor Green Parkes have any interest in land with respect to the properties in which they assert an interest, and in the alternative, even if they do establish such an interest, then the interest of the Bank is entitled to priority. 11 Affidavits were also read by the seventh, eighth, ninth and eleventh respondents and also by Green Parks. Dealing with the respective properties seriatim The Woodward Street Property 12 The title reference for this property is 3/547904 and the registered proprietor is Ms Shields. 13 The evidence indicates that the property is a vacant block with an estimated value of approximately $200,000. 14 On 6 September 2007, the Court ordered that this property was subject to a charge in favour of the Bank in the sum of $5,585,245.57. The chronology is as follows: 27 Oct 03 Transferred to Ollis 2 Feb 04 Alleged parol agreement between Ollis and Green Parkes to reduce purchase price of property 20 Feb 04 Contract for sale of "Hillview Estate" forming part of property between Shields and Green Parkes Estate with Green Parkes paying a deposit of $7,500 21 May 04 Ollis gives unregistered mortgage to Green Parkes & IGRX3 15 Apr 05 Green Parkes registers caveat AB415457 25 May 05 Green Parkes and IGRX3 register mortgage AB466465 27 Oct 05 Green Parkes and IGRX3 register discharge of mortgage & Ollis transfers property to Shields. Shields transfers $290,000 stolen money to Green Parkes Estate and IGRX3 19 Apr 06 Subdivision application refused 9 May 06 Green Parkes registers caveat AC289663

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Asserted interest 15 The caveat asserts that Green Parkes has an interest in the entire estate which it "purchased" under contract dated 20 February 2004. Mr Brown appears to assert that Green Parkes is entitled to a decree of specific performance if it tenders the remaining purchase price of $46,840. Decision 16 Green Parkes has not satisfied its onus of proving that it has an interest in land. 17 Putting for the moment the question of a purchaser's lien to one side, Green Parkes only has an interest in land to the extent that it is entitled to specific performance: Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [53] per Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ; Black v Garnock (2007) 230 CLR 438 at [32] per Gummow & Hayne JJ. 18 In this case, the alleged contract presented as evidence has not been stamped and is therefore both inadmissible and a nullity in law: section 304(1) of the Duties Act 1997 (NSW). Furthermore, the document alleged to be the contract has not had the vendor's signature witnessed. 19 Even if the alleged contract was admissible and effective, completion was conditional upon the subdivision application being registered substantially in accordance with the sketch plan annexed to the document: Special Condition 3. The subdivision application with respect to this property was refused on or about 16 April 2006. That being so, the contract would in any event no longer be specifically performable: Fitzgerald v Masters (1956) 95 CLR 420 at 433 per Dixon CJ & Fullagar J; Brown v Heffer (1967) 116 CLR 344 at 351 per Windeyer J. 20 There is a further reason why Green Parkes has failed to establish that it would be entitled to specific performance. To do so it must show that it is ready, willing and able to substantially perform its obligations under the contract, most critically being ready, willing and able to pay the outstanding purchase moneys in full: see Mehmet v Benson (1965) 113 CLR 295 at 307 - 308 per Barwick CJ (McTiernan J agreeing) and 314 per Windeyer J; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [4] per Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ. 21 Green Parkes has not adduced such evidence. It has sought to place reliance upon vague evidence of an alleged parol agreement with Mr Ollis such that it is entitled to pay less than the stipulated purchase price. Such an agreement, however, even if established by admissible evidence on the balance of probabilities, is not enforceable unless it is in writing and signed by Mr Ollis: section 54A(1) Conveyancing Act 1919 (NSW). The prohibition in that section applies equally to parol variations of existing contracts as it does to the creation of an entirely new agreement: Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 at 234 per Starke J and 243 - 244 per Williams J; Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 at 112 - 113 per Dixon CJ & Fullagar J and 122 per Williams J. 22 It is in any event unclear how a written contract made on 20 February 2004 can be varied by a parol agreement made more than two weeks earlier on 2 February 2004. 23 That leaves the question of whether Green Parkes is entitled to a purchaser's lien. To prove such an interest, however, Green Parkes must adduce evidence that the moneys paid over were paid to Mr Ollis directly (and not to an agent or to his stakeholder), that they were paid pursuant to a contract of sale and that it is entitled to the return of the deposit under the contract: see Rose v Watson (1864) 10 HL Cas 672; Combe v Lord Swaythling [1947] Ch 625; Hewett v Court (1983) 149 CLR 639. Green Parkes has simply failed to discharge its onus on all three of these matters. 24 There being no interest in land, the issue of priorities does not arise. The Cathedral Close Property 25 The title reference for this property is 6/1085775 and the registered proprietor is Ms Shields. 26 The evidence indicates that the property is a vacant block with an estimated value of approximately $50,000. 27 On 6 September 2007, his Honour ordered that this property was subject to a charge in favour of the Bank in the sum of $12,718,362.64. The chronology is as follows: 8 Dec 03 Property at corner of Koala St & Best St, Parkes (DP 1/518440) transferred to Ollis. Ollis executes mortgage in favour of Holmes Conveyancing securing $409,000 30 Apr 04 Ollis executes further mortgage in favour of Holmes Conveyancing securing $630,000 2 Feb 04 Alleged parol agreement between Ollis and Green Parkes to reduce purchase price of lot 6 29 Jun 04 Alleged contract of sale between Shields and Green Parkes concerning "Lot 6 Koala Estate, Parkes" being Lot 6 in an unregistered plan annexed to the contract of DP 1/518440 20 Dec 04 Ollis executes variation of mortgage in favour of Holmes Conveyancing increasing principal to $872,570.93 3 Mar 05 Unregistered mortgage to Guardian Loans 7 Mar 05 Guardian Loans registers caveat 19 Jul 05 Roger Wylie Developments registers caveat over property, the interest claimed an unregistered mortgage securing $28,000 9 Aug 05 Property subdivided into lots 1-14/1078492 31 Aug 05 Ollis pays $22,500 stolen money to Peter Flynn 12 Sep 05 Ollis pays $28,880 of stolen money to Roger Wylie Developments 16 Sep 05 Roger Wylie Developments registers withdrawal of caveat over DP 1-14/1078492 22 Sep 05 Guardian Loans registers discharges of the caveat, and Holmes Conveyancing registers discharges of the mortgages, over lots 3 - 6 & 8 - 12 of DP 1078492. The lots are transferred to Shields 7 Oct 05 Ollis pays $203,316 stolen money to Guardian Loans 13 Oct 05 Guardian Loans registers discharge of caveat over DP 14/1078492 21 Oct 05 Ollis pays $635,000 stolen money to Holmes Conveyancing 27 Oct 05 Holmes Conveyancing registers discharge of mortgage (over lot 14) 4 Nov 05 DP 14/1078492 subdivided into DP 1-14/1085775 14 Nov 05 Ollis transfers lots 2, 3, 5 & 10 - 13 of DP 1085775 to Shields 16 Nov 05 Guardian Loans registers discharges of the caveat, and Holmes Conveyancing registers discharges of the mortgages, over lots 1, 7 & 13 of DP 1078492. Ollis transfers the lots to Shields 23 Nov 05 Ollis pays $157,000 stolen money to Peter Flynn 7 Dec 05 Ollis transfers lots 1, 4, 6, 7, 9 & 14 of DP 1085775 to Shields

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ii. in any event, was made on 2 February 2004, almost five months before the contract of sale was allegedly exchanged. 33 Additionally, in relation to the Cathedral Close property, Green Parkes has not adduced sufficient evidence to prove that that property was the property the subject of its alleged contract: that contract concerns the sale of Lot 6 in the unregistered plan for the subdivision of Lot 1 of DP 518440. It is simply impossible to determine from the evidence whether that lot is what subsequently became Lot 6 in deposited plan 1085775, itself a subdivision of Lot 14 in deposited plan 1078492. An equity regarding the purchase of a prospective lot in a subdivision only becomes a proprietary interest when it attaches to an identifiable lot, and Green Parkes has failed to prove that this has occurred: see Harrison v Lidoform Pty Ltd [unreported, Federal Court of Australia, 24 November 1998, Hely J]; Forder and Others v Cemcorp Pty Ltd (2001) 51 NSWLR 486 at [15] per Barrett J; Sama Zaraah Pty Ltd v 888 Projects Pty Ltd [2007] NSWSC 1041 at [4] - [5] per Gzell J. 34 That therefore leaves the question of whether Green Parkes is entitled to a purchaser's lien. As with the Woodward Street property, however, Green Park has failed to discharge its onus on the question of who has the deposit, whether it was paid under a valid contract and whether it would be legally entitled under that contract to a return of the deposit. 35 Furthermore, having failed to caveat its alleged interest, if the question of priorities arises, Green Parkes' claim would be defeated by laches as the interests of third parties have intervened: see Fitzgerald v Masters (1956) 95 CLR 420 at 433 per Dixon CJ & Fullagar J and Lamshed v Lamshed (1963) 109 CLR 440 at 453 & 455 per Kitto J (Windeyer J agreeing). 36 That being so, here again the issue of priorities does not arise. The Docos Street Property 37 The registered proprietor is the first defendant, Victor Warren Ollis. 38 The Bank's evidence indicates that it is a vacant development site with an estimated value of approximately $350,000. 39 On 6 September 2007, the Court ordered that this property was subject to a charge in favour of the Bank in the sum of $12,718,362.64. The chronology is as follows: 2 Feb 04 Ollis and Green Parkes Estate execute "agreement of sale" of lot 28 of subdivision. Alleged parol variation the same day. 30 Apr 04 Holmes Conveyancing advances $717,000 to Ollis 20 Aug 04 Transfer of property to Ollis executed Mortgage to Holmes Conveyancing executed 5 Oct 04 Transfer of property to Ollis registered Mortgage to Holmes Conveyancing registered 22 Nov 04 Alleged agreement between Dr Peter Flynn & Dr Susan Flynn and Ollis for the purchase of unregistered lots 19, 28, 29, 30, 31, 32, 38, 39 & 40 20 Dec 04 Mortgage to Holmes Conveyancing: principal $872,570.93 3 Mar 05 Unregistered mortgage to Guardian Loans 7 Mar 05 Guardian Loans registers caveat 14 Mar 05 Peter Flynn registers caveat AB346794Y Richard & Kathryn Hawkins register caveat AB346806U 5 May 05 Alleged agreement between Peter & Mary Lawrence and Ollis for the purchase of unregistered lots 3, 4, 5, 6, 33, 34, 41, 42, 43 & 44 13 May 05 Alleged agreement between Richard Hawkins and Ollis for the purchase of unregistered lots 16, 17, 18, 25, 26 & 27 26 Jun 05 Alleged agreement between Jennifer & John Vallance and Ollis for the purchase of unregistered lots 1, 2, 20, 21, 22, 23, 24, 35, 36 & 37 7 Oct 05 Ollis pays $203,316 stolen money to Guardian Loans 13 Oct 05 Guardian registers withdrawal of caveat 21 Oct 05 Ollis pays $635,000 stolen money to Holmes Conveyancing Holmes Conveyancing provides discharge of mortgage to Pilgrim 16 Dec 05 Ollis and Docos Estate allegedly exchange contract for sale of entire property (price $400,000). Peter Flynn and Richard & Kathryn Hawkins provide executed withdrawals of caveat. 20 Dec 05 Settlement alleged to occur 19 Jan 06 Sully J makes restraining order against entire property pursuant to section 10 of the Criminal Assets Recovery Act 1990 (NSW) ("the Restraining Order") 20 Jan 06 NSW Crime Commission ("the Commission") lodges caveat AC62711 pursuant to section 15(3) of the Criminal Assets Recovery Act 27 Jan 06 Transfer stamped. Presumably lodged for registration immediately thereafter 30 Jan 06 Registrar-General writes to Pilgrim: NSWCC caveat means that transfer, discharge of mortgage and withdrawal of caveats rejected 8 May 06 Green Parkes Estate Pty Ltd registers caveat AC289640T 25 Sep 07 Docos Estate registers caveat AD424720W 10 Mar 08 Jennifer & John Vallance register caveat AD763396K

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iii. in the further alternative, if the Court holds that Docos Estate had a "dealing registrable" on 20 December 2005 despite the failure to stamp, then the intervention of the restraining order on 19 January 2006 and the caveat the day after deprived Docos Estate of the protection it would otherwise have had pursuant to section 43A. 60 The first proposition is accepted as of substance. 61 Had it been necessary to deal with the alternative proposition 2 and/or 3, each would itself be of substance. 62 The question of "delay" is only germane to the third argument. In that respect, I accept that it is the intervention of the restraining order and caveat between the taking of the transfer and lodgement and not mere delay or prejudice which causes Docos Estate to lose the section's protection against notice. That being so, laches is simply irrelevant. Competing Equities 63 Docos Estate submits that even if section 43A is inapplicable it is entitled to succeed on the question of priorities. 64 The finding is that as first in time, it follows that the Bank prevails. 65 Docos Estate has not pointed to any disentitling conduct which would reverse the prima facie position. The Court having accepted that there is insufficient evidence to show that it was a purchaser for value, clearly Docos Estate does not have a true equitable interest, because its interest in the land is commensurate only with payment of the purchase price: see Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 47 NSWLR 382 at [30] - [31] per Austin J. 66 Docos Estate submits that the Court did not find how much stolen money was paid to discharge the mortgages attached to the property. Although that is true, it is beside the point. The Court needed only to find the total amount of stolen money into the relevant properties. 67 The amount of the Bank's interest is sufficiently established for present purposes by the evidence of John Williams, which evidence was accepted by the Court in the findings against the defendants. Docos Estate has not adduced any evidence to the contrary. 68 Lastly, Docos Estate submits that it is entitled to priority because the interest asserted by the Bank is a "mere equity": Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265. 69 It is apparent that Docos Estate misapprehends the nature of the interests created by the Court's orders on 6 September 2007. The trusts and charges created by the wrongful taking and conversion by the defendants arose as soon as the money was taken or converted without the necessity for an order of the Court. 70 Thus, in Evans v European Bank Ltd (2004) 61 NSWLR 75 at [112], the Spigelman CJ (with whom Handley and Santow JJA agreed) stated that at [113] - [115]:

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