Yeshiva Properties No 1 Pty Ltd & Ors v Lubavitch Mazal Pty Ltd & Anor

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

04399/03 YESHIVA PROPERTIES NO 1 PTY LTD & ORS V LUBAVITCH MAZAL PTY LTD & ANOR (NO 2) JUDGMENT 1 On 8 July 2003 Young CJ in Eq gave judgment in Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd [2003] NSWSC 615. An appeal from that decision is pending before the Court of Appeal. 2 Yeshiva College Ltd, Yeshiva Jewish Day School Ltd, Sydney Talmudical College Association and Yeshiva Gedola Pty Ltd sought the leave of the Court to file a notice of motion in the proceedings concluded before Young CJ in Eq seeking to restrain the defendant in those proceedings and the Sheriff of New South Wales from acting on the writ of possession issued in the proceedings or otherwise seeking to disturb the occupation by the applicants of the respective lands the subject of those proceedings. 3 Reference was made to Kerr v Sheriff of New South Wales (1996) 9 BPR 16,215. In that case by separate proceedings in equity, the plaintiffs sought to set aside common law division proceedings in which an assignee of a mortgage was held entitled to possession as against the mortgagor because the plaintiffs in equity were occupiers of the subject lands and had not been given notice of the common law division proceedings. Young J said that he thought the point could only be taken in the common law division proceedings. 4 I do not take his Honour to have said more than the point should have been raised in the common law division proceedings. I refused leave to file the notice of motion in the proceedings concluded before Young CJ in Eq. However, I gave leave to the applicants to file in court by midday the next day, a summons initiating new proceedings claiming the relief in the notice of motion. 5 I dismissed the summons and indicated I would give reasons for my decision so soon as I was able. I set out below my reasons for that decision. 6 The basis for the application was the assertion that each of the applicants had been in occupation of the lands held by the plaintiffs in the proceedings before Young CJ in Eq as trustees of the Sydney Talmudical College Building and Maintenance Fund since their formation. 7 By a document dated 28 January 1997, the trustees of the Fund purported to grant a lease of two of the properties to three of the applicants. There is no term of the lease and no rent is reserved. 8 The company secretary of three of the applicants, Henry Kinstlinger, said he became aware of the existence of this document two weeks ago. Mr Kinstlinger was present at, and gave evidence in, the proceedings before Young CJ in Eq. So did Rabbi Pinchus Feldman. In those proceedings, Rabbi Feldman swore that it was Sydney Talmudical College Association as beneficiary of the Fund that conducted the activities on the subject lands. There was no suggestion in those proceedings that the applicants before me conducted activities on the lands. 9 Rabbi Feldman and members of his family, or members of his family, are directors of each of the applicants. No attempt was made in the proceedings before Young CJ in Eq to have them joined as parties. 10 The applicants submitted that the writ of possession issued consequent upon the orders of Young CJ in Eq was good against the plaintiffs in the proceedings before Young CJ in Eq but did not bind the applicants in these proceedings because the originating process in the proceedings before Young CJ in Eq was not served on them and they were not given an opportunity to be joined in those proceedings. This assertion was made for the first time on the hearing of the application before me. 11 The Supreme Court Rules 1970, Pt 7 r 8(1) is in the following terms: "Where, on the date on which proceedings for possession of land are commenced, a person (in this rule called the occupier) not joined as a defendant is in occupation of the whole or any part of the land, the plaintiff shall either - (a) state in the originating process that he does not seek to disturb the occupation of the occupier; or (b) serve the originating process on the occupier together with a notice that the occupier may apply to the Court for an order that the occupier be added as a defendant and that, if the occupier does not so apply within 10 days after service, the occupier may be evicted pursuant to a judgment entered in the occupier's absence." 12 The purpose of the rule is to provide occupiers of land the subject of proceedings for a judgment for possession with the opportunity to assert any rights they may have. In this case, the commonality of directors between the plaintiffs in the proceedings before Young CJ in Eq and the applicants before me meant that the applicants were well aware of the proceedings and, if they had wished to assert rights stemming from their occupancy, they had the opportunity to be joined in those proceedings. 13 In cross examination, Mr Kinstlinger said he was aware that the defendant cross claimant before Young CJ in Eq was seeking possession of the properties in order to sell them. 14 In these circumstances, the protection afforded to occupiers by the Supreme Court Rules 1970, Pt 7 r 8 was superfluous. The applicants were already aware of the nature of the proceedings and the impact that a successful judgment on the cross claim would have. 15 The Supreme Court Rules 1970, Pt 1 r 12 allows the Court to dispense with compliance with any of the requirements of the Rules, either before or after the occasion for compliance arises. 16 Since the applicants were aware of the proceedings before Young CJ in Eq and took no steps to assert any rights arising from their occupation in those proceedings, I formed the view that it was appropriate for me to act under the Supreme Court Rules 1970, Pt 1 r 12 and dispense with compliance with the requirements of Pt 7 r 8 upon the commencement of the proceedings before Young CJ in Eq. Upon that basis I dismissed the summons. 17 Had it been necessary for me to consider whether, in the exercise of discretion, I should have restrained the respondents from acting on the writ of possession issued consequent upon the proceedings before Young CJ in Eq or otherwise seeking to disturb the occupation by the applicants with respect to the lands the subject of those proceedings, I would have exercised my discretion against issuing the injunction. 18 There was evidence before me that two of the properties were the subject of contracts for sale. The purchasers were not joined in the application and the issue whether they were bona fide purchasers for value without notice was not addressed. That was a matter I would have taken into account with respect to the balance of convenience (Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317). 19 Again, in view of the knowledge of the applicants of the proceedings before Young CJ in Eq and their failure to raise the issue of their occupation in those proceedings, I would have declined a grant of an injunction on the basis that the opportunity was available to the applicants and they failed to take advantage of it. 20 The applicants through Mr Kinstlinger had been aware of the existence of the lease document for two weeks. The issue was not raised until the application was brought before me. In the context of the litigation between these parties, two weeks is a long time. In that period the first respondent entered into the two contracts for sale. Had the matter been raised before 4 August 2003, those contracts might not have been executed. If the applicant's argument was successful, the first defendant would be at risk under those contracts. I would have taken this matter into account in exercising my discretion against issuing the injunction. 21 If the lease document was construed to be indefinite and thus for a period greater than three years, it was submitted that the requirement of registration pursuant to the Real Property Act 1900, s 53(1) arose. It is unnecessary for me to decide this issue. 22 It was for these reasons that I would have exercised my discretion against granting the injunction.

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