JUDGMENTS AND ORDERS - Amending, varying and setting aside - Consent orders
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JUDGMENTS AND ORDERS - Amending, varying and setting aside - Consent orders
Judgment (2 paragraphs)
[1]
Judgment
HER HONOUR: This is an application brought by the receivers and managers of the property of GR Capital Group Pty Limited, the first defendant in these proceedings, that application being made together with Everest Private Pty Limited as a secured lender to GR Capital Group Pty Limited (GR Capital).
The application is made by notice of motion filed in court on 3 July 2019 and has come before me in the duty list. The application is for a variation of orders made by consent by the Court on 13 August 2018 in relation to the extension of a caveat that had been filed by the plaintiff in these proceedings, Xinfeng Australia International Investment Pty Limited (Xinfeng). That order was in terms, relevantly, that "[u]pon the plaintiff by its counsel giving the usual undertaking as to damages, the operation of caveat AN 467327 be extended until further order of this Court".
There is evidence to the effect that Xinfeng and the other parties to the proceedings have been informed of the present application and consent to the making of the orders that are now sought. The subsequent caveators have not been notified on the basis that registration of the plan of subdivision will not affect the interests they have respectively claimed in the caveats that each has lodged; and they have consented to the registration of the plan of subdivision.
The substantive proceedings involve a claim by Xinfeng and the second plaintiff, Yuqing Liu, against GR Capital and two other defendants. The substantive issues in those proceedings were resolved by consent by orders made by me on 18 October 2018 for the entry of judgment for the first plaintiff against all defendants in the sum of $10 million as principal, and an order dismissing the cross-claim; and for the defendants to pay the costs of the plaintiff on an indemnity basis.
A declaration was on that occasion (with the consent of the parties) that the judgment referred to in order 1, together with interest and costs on an indemnity basis, was secured by the mortgage and the General Security Agreement and that the defendants were in default under the General Security Agreement. The consent orders provided that there was to be reserved for further consideration the entry of judgment for interest on that principal. Liberty to apply was granted.
The caveat lodged by Xinfeng claimed a caveatable interest as mortgagee under certain mortgage and finance documents dated 19 August 2016 (including the General Security Agreement). Also on the title to the relevant property are two other dealings; the first being a caveat by Alpha Distribution Ministerial Holding Corporation (care of Ausgrid Operator Partnership) claiming an equitable interest as grantee of an easement for electricity and other purposes; and the second being a caveat lodged by Jianhua Yan claiming an equitable interest pursuant to a loan agreement dated 19 December 2017.
The issue before me arises because (as explained in an affidavit sworn 2 July 2019 by Mr Ryan Eagle) on 26 October 2018 Mr Ryan Eagle and his accounting partner, Mr Philip Quinlan, were appointed receivers and managers of all of the assets and undertakings of, amongst others, GR Capital. Mr Eagle is a chartered accountant and registered liquidator and a partner of the firm KPMG. Prior to 17 June 2019 he was a partner at the firm Ferrier Hodgson, which has now merged its practice with that of KPMG. Mr Quinlan and Mr Eagle were appointed receivers and managers over all of the assets of GR Capital by Everest Private Pty Limited (Everest).
The assets to which the receivers have been appointed as receivers and managers include a Hurstville property pursuant to the terms of a mortgage made on 13 June 2017 between Everest and GR Capital. Since their appointment as receivers and agents of GR Capital, the receivers have continued a development of the Hurstville property, which is being undertaken by GR Capital. That development was the subject of Council approval on 12 May 2015 for the construction of a mixed use residential and retail development on the Hurstville property. At the time of the appointment of the receivers, GR Capital had completed approximately 80% of the development.
Prior to Mr Eagle's appointment as receiver, GR Capital had entered into 50 pre-sales contracts with various purchasers for the sale of a number of residential units situated within floors 1 to 10 of the proposed development. An example of one of the pre-sale contracts is exhibited to Mr Eagle's affidavit (now part of Exhibit A in the proceedings). I interpose to note that in the initial development approval for the development contained, as one of the conditions of the approval, there was a requirement for the dedication to the Council of a one metre wide strip of land along the western boundary of the development site for road widening purposes (see special condition 62 of the site specific conditions set out in the Development Consent dated 12 May 2015.)
The significance of the pre-sales contracts is that, under the pre-sales contracts, GR Capital is required to register a proposed plan of subdivision within 36 months from the date of the pre-sales contracts (to which I will refer as the sunset date). There is provision under the pre-sales contracts which enables GR Capital to extend the sunset date by a period of up to twelve months. Mr Eagle's evidence (see [18] of his affidavit sworn 2 July 2019) is that, prior to his appointment as a receiver, GR Capital had issued notices to a significant number of pre-sale purchasers extending the sunset date for a further period up to 12 months. The sunset dates as extended under the pre-sales contracts vary, with the earliest sunset dates commencing from 28 September 2019.
Therefore, if the proposed plan of subdivision is not registered by the applicable sunset date as extended, the pre-sales purchasers may become entitled to rescind their respective pre-sales contracts. Reference in that regard is made to cl 30 (subclause (6) to subclause (8)) of the special conditions concerning the particular units the subject of the sample pre-sales contract contained in Exhibit A).
Mr Eagle has deposed in his affidavit that the receivers currently anticipate that practical completion of the development should occur around the end of August or early September 2019 (which is on the assumption that the construction of the development is not subject to any further disruptions or delays resulting in any material consequential later completion of the development).
Mr Eagle has been informed by the project manager for the purposes of overseeing the development, Mulpha Norwest Pty Ltd (Mulpha), that in order to complete the development (and to be in a position to sell and to complete the sale of the residential units and retail lots in the development), the receivers will need to cause GR Capital to undertake a number of further steps. Those steps include, amongst others, the registration of the plan of subdivision identified in [20(a)] of Mr Eagle's affidavit for the purposes of dedicating the 1 metre wide strip or road widening purposes to which I have referred earlier, it being a condition of the development consent.
The steps also include the registration of an easement pursuant to s 88B of the Conveyancing Act 1919 (NSW) (Conveyancing Act) setting out the terms of the positive covenant, the registration of an easement to Ausgrid and the registration of a plan of subdivision for the purpose of converting the lot comprising the Hurstville property into strata titles for sale to pre-sales purchasers under the pre-sales contracts in respect of the development and for the sale of remaining unsold lots in the development, as well as the registration of one or more instruments pursuant to s 88B of the Conveyancing Act in connection with the plan of subdivision; see [20] of Mr Eagle's affidavit.
Mr Eagle has deposed at [21] that he is informed by Mulpha that registration of the plans or dealings described in [20(b)]-[20(e)] of his affidavit can only occur following the registration of the plan of subdivision and the registration of a plan of subdivision for the purpose of converting the lot comprising the Hurstville property into strata title is to occur following the registration of the dealings described in [20(b)] and [20(c)] of his affidavit.
In connection with the registration of the plan of subdivision, the legal advisers of the receivers and Everest Private have obtained signed written consents to the registration of the plan of subdivision from each of Xinfeng, Ausgrid and Mr Yan; see [22] of Mr Eagle's affidavit, and the documents exhibited to that affidavit (at pages 244 to 247 of Exhibit A).
The applicants on the present application have sought to register the plan of subdivision and have received a requisition from Land Registry Services in the following terms:
As advised by NSW LRS Legal Officer, order of court AN583901 noted on the title to extend the operation of the caveat AN467327, a variation of Court order if required for registration of your plan.
(I assume that should read "is" required for registration of the plan.)
Mr Eagle has deposed that if the plan of subdivision is not registered promptly there will be potential adverse consequences to the timing of completion of the development and particularly in connection with the possible effect of delay in the registration of a plan of subdivision for the purpose of converting the lot comprising the Hurstville property into strata titles on pre-sale contracts which he has deposed results in potential risks that pre-sales purchasers will become entitled to rescind their pre-sales contracts under the sunset date provisions of the pre-sales contracts; see [25] of his affidavit.
Mr Eagle has also deposed to communications with Land Registry Services in relation to the requisition notice as between the applicant's legal representatives and officers at Land Registry Services.
It appears that the Land Registry Services officers are concerned that a variation of the Court order is required on the basis that the 13 August 2018 orders operate as an injunction against the Registrar General. One of the courses of action that had been proposed by the legal representatives for the applicants was the withdrawal by Xinfeng of the caveat to permit the registration of the plan of subdivision followed by a lodgement of a new caveat for the same address.
Mr Eagle has deposed that his solicitors have been informed by the Land Registry Services representative that, in order to remove the caveat, these proceedings would need to be discontinued and evidence of discontinuance provided to Land Registry Services where upon Land Registry Services would remove the caveat.
The applicant apprehends that there has been a conflation of the effect of certain of the provisions of the Real Property Act 1900 (NSW) (Real Property Act) by Land Registry Services. In this regard, it is noted that s 74H of the Real Property Act prohibits the Registrar General, while a caveat lodged under s 74F remains in force, from taking certain steps except with the written consent of the caveator and it is noted that the caveator has consented to the lodgement of the registration of the plan of subdivision.
Reference has been made to s 74LA of the Real Property Act which provides that, where the operation of a caveat is extended until further order of the Court by an order of the Supreme Court, the caveat lapses if the Registrar General is satisfied that the proceedings in which the order was obtained have been finalised and that no further order is likely to be sought, and the Registrar General may make a recording in the register to the effect that the caveat has lapsed; see s 74LA(2). Reference has also been made to s 74M which deals with withdrawal of caveats and provides that a caveat lodged under provision of this part may be withdrawn by the caveator.
In the present case, in circumstances where there is no objection by the caveator (Xinfeng) or by any of the subsequent caveators (Ausgrid and Mr Yan) to the registration of the plan of subdivision, it would seem that there is nothing to prevent the registration by those in Land Registry Services of the plan of subdivision and that no variation of the orders made on 13 August 2018, extending the operation of the caveat until further order, would be required.
However, in circumstances where the Land Registry Services officers have taken a different view (and have issued a requisition in relation to this matter) it is appropriate (for the avoidance of doubt) that there be a variation of the order the Court made on 13 August 2018 in order to make clear that there is no prohibition on the Registrar General from acceding to the request for lodgement of the plan of subdivision in this case.
For those reasons I will make the orders sought in the short minutes of order.
[2]
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Decision last updated: 12 July 2019
Parties
Applicant/Plaintiff:
Xinfeng Australia International Investment Pty Ltd