Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd

[1999] NSWSC 524

Reported Decision: [1999] 9 BPR 17,533
[2000] ANZ ConvR 133
[1999] NSW ConvR 55-904

New South Wales

Supreme Court

CITATION:	Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd [1999] NSWSC 524
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	3978/98
HEARING DATE(S):	21/05/99
JUDGMENT DATE:	21 May 1999
PARTIES :	Australian Security Estates Pty Ltd (P) Bluecrest Holdings Pty Ltd (D1) John Star (D2)
JUDGMENT OF:	Young J

COUNSEL :	Plaintiff: B Collins QC and M Pesman Defendants: W Haffenden
SOLICITORS:	Plaintiff: Allen Allen & Hemsley Defendants: KNPW Lawyers
CATCHWORDS:	Conveyancing [187]; Torrens system; Caveats; Whether undertaking as to damages by caveator required if caveat extended
ACTS CITED:	(NSW) Real Property Act 1900, ss 74J, 74K, 74P, Part 7A
DECISION:	Application dismissed with costs including reserved costs

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG, J

FRIDAY 21 MAY 1999

3978/98 - AUSTRALIAN SECURITY ESTATES PTY LTD V BLUECREST HOLDINGS PTY LTD & ANOR

JUDGMENT
1 HIS HONOUR : The parties are involved in lengthy proceedings in which, to put it simply, the plaintiff was the proprietor and the first defendant the builder. There are a series of associated proceedings.
2 It would appear that the contract involved the building of blocks of units on several pieces of land. The first defendant is now in liquidation. The second defendant is the liquidator. The first defendant says, though the plaintiff does not agree, that this is a result of the non payment to it by the proprietor of moneys in connection with these building contracts.
3 There are two blocks of land, one at 176 Old South Head Road, Bellevue Hill and the other at 1A Tara Street, Woollahra over which the first defendant has placed caveats. Lapsing notices issued in respect of those caveats but they have been continued until further order.
4 The plaintiff seeks an order that that continuation only be preserved on the basis that the second defendant gives an undertaking as to damages or that the undertaking as to damages by the Company be appropriately secured. The first defendant does not wish to give an undertaking as to damages for a variety of reasons. First it says that this is a special case in which an undertaking should not be required. Secondly, it says that in the instant case it is prepared and has made an open offer to give an undertaking progressively to release units for proper purposes so that no damages should be incurred. Thirdly, that the plaintiff has never quantified any of the losses which it has evidently claimed and already began to run and fourthly, as the first defendant is in liquidation, an undertaking should not either be required of the liquidator personally or in circumstances where the registered proprietor has brought about the liquidation, at least in part.
5 I was much assisted by the submissions made on the scheme of part 7A of the Real Property Act 1900 dealing with caveats both by Mr Collins QC and Mr Pesman on behalf of the plaintiff and Mr Haffenden on behalf of the defendants.
6 The cases are not completely reconcilable but various threads go through them which allow some general propositions to be noted.

1. Eng Mee Yong v Letchumanan [1980] AC 331 is authority for the proposition that a caveat is analogous to an interim injunction.
2. That analogy, as the cases show, must not be pressed too far: Bethian Pty Ltyd v Green (1977) 3 Fam LR 11, 579; Kingstone Constructions Pty Ltd v Crisfel Pty Ltd (1991) 5 BPR 11,987, 11,991. Although the proposition means that a court needs to consider not only whether there is an arguable case but also whether the balance of convenience favours retention of the caveat, (see eg Vella v Aliperti (1995) 7 BPR 14,657, 14,664) the analogy is not complete.
3. Whilst in the case of an interlocutory injunction the rule is that apart from exceptional cases there is no injunction unless an undertaking as to damages is proffered ( Southern Tableland Insurance Brokers Pty Ltd v Schomberg (1986) 11 ACLR 337), the rule with caveats is not quite as definite.
4. Although to a degree one proceeds on analogy with interlocutory injunctions, the decision whether to extend a caveat at all under section 74K of the Real Property Act, and if it is extended on what conditions, is a matter for the discretion of the Court and that discretion is not to be trammelled by too strict adherence to the principles applicable in the case of an interlocutory injunction.
As has been pointed out on numerous occasions, the statutory words of section 74K are that the Court is to consider if it is satisfied that the caveator's claim has or may have substance. Thus the Court can continue the caveat at a very early stage in the proceedings, if it can see that given a little time to collect the evidence, the plaintiff might be able to establish an arguable case that it has an interest in land to protect. The Court is not limited to situations where the plaintiff can prove its case at the date the application is made: Jensen v Guigni (1994) 6 BPR 13,667, 13,669.
5. Again it is discretionary as to whether the Court will take an undertaking as to damages. The authorities were collected and discussed in BP Oil New Zealand Ltd v Van Beers Motors Ltd [1992] 1 NZLR 211. Barker J referred to all the recent New Zealand articles on the problem, approved the decision in Holmes v Australasian Holdings Ltd [1988] 2 NZLR 303 and then said at page 219 that there was a discretion in every case as to whether the Court would ask for an undertaking as to damages as a condition to extend a caveat.
His Honour then said, “One would imagine that, in the vast bulk of cases, including the present, there can be little argument but that the discretion should be exercised in favour of the registered proprietor."

7 That, to my mind, is the rule that this Court should generally apply. I did so in Jean-Pierre Cosmetics Pty Ltd v Gary Truswell and Associates Pty Ltd (1994) 6 BPR 13, 497, and it is the rule that is set out in Lindsay, Caveats Against Dealings (Federation Press, Sydney, 1995) at pages 213 to 214. Although the English have not yet advanced to the Torrens system, it is a rule that their Court of Appeal has applied in analogous circumstances with regard to cautions: Tucker v Hutchinson (1987) 54 P & CR 106.
8 Accordingly, one does not have to go quite so far as to find exceptional or special circumstances as per the Southern Tableland case but one does start with a bias towards making the caveator give an undertaking as to damages. Why then should that not occur in this case?
9 Each case must depend on its own facts. It seems to me in the instant case that the combined facts show that:

(a) there is an arguable case that the liquidation was at least partly caused by the underlying dispute between these parties;
(b) the plaintiff has not quantified or illustrated the type of damage that it fears; and
(c) an undertaking has been proffered which would leap most practical problems that might occur before the underlying dispute is resolved such that the Court should not insist on an undertaking as to damages at this time.

10 I would add that if I was of the view that an undertaking should be exacted, I would agree that it should not, unless he were willing to proffer it, come from the liquidator personally, but rather should be secured by the appropriate bank guarantee; see eg Rosling & Flynn Ltd v Law Guarantee and Trust Co (1903) 47 Sol Jo 255. As no sum has been particularised, my view would have been only to require a secured undertaking as to $5,000 with liberty to apply to increase that amount if there was evidence of a very real probability that the damages might be more than nominal.
11 This application has really come about because of the inadequacies of the compensation provision in section 74P of the Real Property Act. Those deficiencies have been commented upon before by Judges. It does not appear that Parliament is going to do anything about it. Accordingly, as a general rule, the Court needs ordinarily to seek such an undertaking as to damages, and also in view of the inadequacies of section 74J, needs to seek an undertaking that the caveat will be removed if the Court should hold that it should not remain, cf McCosker v Lovett (1995) 7 BPR 14,507.
12 Accordingly the application is dismissed with costs including reserved costs.
13 I make the same order in suit 4639 of 1998.

oOo

Last Modified: 06/01/1999