Chalik v Wales and Ors, Vaysman v Wales and Ors, Brainenberg v Wales and Ors, Damiz Pty Ltd v Woodgate and Ors

[2005] NSWSC 877

CITATION:	Chalik v Wales & Ors, Vaysman v Wales & Ors, Brainenberg v Wales & Ors, Damiz Pty Ltd v Woodgate & Ors [2005] NSWSC 877
HEARING DATE(S):	25/08/05
JUDGMENT DATE :	2 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Short minutes to be brought in

CATCHWORDS:	CONTRACTS - general contractual principles - alleged oral agreement to compromise claims - whether parties intended only written agreement to be binding - CONTRACTS - Statute of Frauds - need for contract varying contract for sale of land to be in writing - whether parties' contract of that kind - CONVEYANCING - relationship of vendor and purchaser - purchaser's lien - whether arises as security solely for costs awarded to purchaser in specific performance suit
LEGISLATION CITED:	Conveyancing Act 1919, s.54A
CASES CITED:	Combe v Lord Swaythling [1947] Ch 625 Field Glen Pty Ltd v Condux Pty Ltd (unreported, NSWSC, Abadee J, 18 February 1993) Hewett v Court (1983) 149 CLR 639 Hua Chiao Commercial Bank Ltd v Chiaphua Industries Ltd [1987] AC 99 Kitton v Hewitt [1904] WN (Eng) 21 Masters v Cameron (1954) 91 CLR 353 Middleton v Magnay (1864) 2 Hem&M 233; 71 ER 452 Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 Rose v Watson (1864) 10 HL Cas 672; 11 ER 1187 United Malayan Banking Corporation Bhd v Goodhope Realty [1989] 1 SLR 272 Whitbread & Co Ltd v Watt [1902] 1 Ch 835
PARTIES:	(1) Igor Chalik - Plaintiff John Andrew Wales - First Defendant Downunder Pte Limited - Second Defendant Dennis Cooney - Third Defendant Giles Woodgate as trustee of the bankrupt estate of John Andrew Wales - Fourth Defendant (2) Leonid Vaysman - Plaintiff John Andrew Wales - First Defendant Downunder Pte Limited - Second Defendant Dennis Cooney - Third Defendant Giles Woodgate as trustee of the bankrupt estate of John Andrew Wales - Fourth Defendant (3) Eva Brainenberg - Plaintiff Giles Woodgate as trustee of the bankrupt estate of John Andrew Wales - First Defendant Downunder Pte Limited - Second Defendant (4) Damiz Pty Limited - Plaintiff Giles Woodgate as trustee of the bankrupt estate of John Andrew Wales - First Defendant Downunder Pte Limited - Second Defendant Igor Chalik - Third Defendant Leonid Vaysman - Fourth Defendant Eva Brainenberg - Fifth Defendant
FILE NUMBER(S):	SC (1) 1882/02; (2) 1883/02; (3) 3095/02; (4) 3022/04
COUNSEL:	Mr F. Gleeson - Igor Chalik and Leonid Vaysman Mr V.R.W. Gray - Eva Brainenberg Mr M.L. Brabazon - Damiz Pty Limited Mr A.M. Combe, Solicitor - Giles Geoffrey Woodgate
SOLICITORS:	Paul Bard - Igor Chalik and Leonid Vaysman John Lloyd & Co - Eva Brainenberg McClellands - Damiz Pty Limited TurksLegal - Giles Geoffrey Woodgate

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 2 SEPTEMBER 2005

1882/02 IGOR CHALIK v JOHN ANDREW WALES & 3 ORS
1883/02 LEONID VAYSMAN v JOHN ANDREW WALES & 3 ORS
3095/02 EVA BRAINENBERG v JOHN ANDREW WALES & 3 ORS
3022/04 DAMIZ PTY LIMITED v GILES GEOFFREY WOODGATE AS TRUSTEE OF THE ESTATE OF JOHN ANDREW WALES & 4 ORS

JUDGMENT

1 In four separate proceedings heard together, persons claiming through or under the registered proprietors of two strata lots in a residential development assert claims in respect of those properties.

2 The properties are sufficiently described as Lot 9 and Lot 14. The registered proprietors of each lot are Mr Woodgate (as trustee of the bankrupt estate of Mr Wales) and Downunder Pte Limited. It will be convenient to refer to Mr Wales and Downunder as “the vendors”. They took no part in the hearing, although I am satisfied that they had due notice. Mr Woodgate was represented at the hearing by his solicitor. A submitting appearance had been filed and Mr Woodgate’s solicitor was excused. Downunder had been represented by a solicitor but the solicitor ceased acting a few days before the hearing.

3 The active parties were accordingly:

(a) Mr Chalik who became the purchaser of Lot 14 from the vendors under a contract for sale and purchase dated 27 June 2001;
(b) Mr Vaysman to whom the vendors granted an option to purchase Lot 9 by means of a written agreement dated 8 June 2001;
(c) Mrs Brainenberg who claims to have become the purchaser of Lot 9 from the vendors by virtue of exercise by Mr Vaysman of his option to purchase and Mr Vaysman’s nomination of Mrs Brainenberg as purchaser upon such exercise (those events, it is said, having taken effect on 23 July 2001);
(d) Damiz Pty Limited which, on 28 August 2001, entered into an agreement with the vendors entitled “construction management agreement” under which, Damiz says, it assumed control of the then partially completed development on the basis
(i) of a promise by Damiz to pay money to the vendors by stated instalments;
(ii) that Damiz could attend to all matters concerning sales of units, would be entitled to all profits and benefits from the project and was responsible to meet the claims of the vendors’ creditors related to the project (as well as on-going costs); and
(iii) of an undertaking of the vendors which caused Damiz to become an equitable mortgagee of the development property as a whole, including, of course, Lot 9 and Lot 14.

4 As to Lot 14, there is no dispute between the active parties interested in that property (Chalik and Damiz) as to the correct outcome. They are agreed that there must be an order that the vendors (or, more precisely, Woodgate, as Wales’ trustee in bankruptcy, and Downunder) specifically perform the contract in favour of Chalik on the basis that the sum payable on completion is $240,000 plus or minus adjustments of the usual kind as provided for in the contract. They are also agreed that, as between the vendors and Damiz, there is an entitlement for Damiz to receive the whole of the purchase moneys.

5 There have been no submissions by the vendors or Woodgate on this (or any other) matter. I have, however, been taken to the relevant documents and other evidence and it is sufficient that I record that I am satisfied that the position for which Chalik and Damiz contend is in accordance with them and that that position should be achieved by orders of the kind they propose, plus ancillary orders concerning the removal of several caveats affecting Lot 14.

6 The parties interested in the fate of Lot 9, apart from the vendors and Woodgate, are Brainenberg and Damiz and, to a residual extent, Vaysman. There is, as among them, a measure of agreement as to the nature and extent of their respective rights. Some issues are contentious, but only between Brainenberg and Damiz. Those issues (which, in some cases, span several of the separate proceedings) have been identified as follows:

1. Whether Brainenberg entered into a contract with Damiz on 11 November 2004 to the effect that she would complete the purchase under the contract between Brainenberg and the vendors made in consequence of Vaysman’s exercise and nomination under his option agreement with the vendors in respect of Lot 9 (which contract I shall call “Brainenberg’s purchase contract”), but with completion by Brainenberg being on the basis that she would pay upon completion $341,250 rather than whatever sum was payable on completion under the contract with the vendors. This issue may be broken down into several sub-issues, namely:
(a) whether any agreement was made between Brandenberg and Damiz on 11 November 2004;
(b) if so, whether it was the intention of the parties that the agreement should not be binding unless and until reduced to writing and signed by the parties to be bound; and
(c) whether any agreement so made was one to which s.54A of the Conveyancing Act 1919 applied.

2. Whether, if no such agreement was entered into on 11 November 2004 (or any such agreement then entered into is not enforceable as against Brainenberg), Brainenberg’s purchase contract must be regarded as no longer on foot because of non-payment of the deposit thereunder and termination on that account by the vendors.
3. Whether, if no such agreement was entered into on 11 November 2004 (or any such agreement then entered into is not enforceable as against Brainenberg), completion under Brainenberg’s purchase contract is to proceed on the footing that the deposit of $17,500 provided for in the contract has or has not been paid thereunder – in other words, whether the amount payable on completion does or does not include a sum of $17,500 representing unpaid deposit.
4. Whether, if costs are awarded in these proceedings in favour of Brainenberg and against the vendors, Brainenberg will have a lien for those costs upon the proceeds of sale in the hands of the vendors.

7 It is Damiz that contends that an agreement was made between it and Brainenberg on 11 November 2004. Brainenberg says that no agreement was made or that any agreement that was made is unenforceable. The case was argued on the footing that, if Damiz’s contentions on this aspect are upheld and an enforceable agreement is found to have been made on 11 November 2004, neither the issue regarding termination of Brainenberg’s purchase contract for non-payment of the deposit nor the question whether credit should be given for the deposit on completion arises.

8 The agreement of 11 November 2004, if it was made at all, was made orally in the context of a mediation at which Chalik, Vaysman, Mr Barel (director of Damiz) and Mr Korzitz (Brainenberg’s husband) were present. Other persons were present also. They included Mr Clarke, the solicitor for Damiz and Mr Lloyd, the solicitor for Brainenberg. It is accepted, as I understand it, that Korzitz spoke with the authority of Brainenberg at the meeting; likewise that Barel spoke with the authority of Damiz. From the perspective of Brainenberg’s involvement in the mediation, through her husband and Lloyd, the contentious issue was whether she had ever actually paid the deposit of $17,500 under her contract. Barel said in relation to this in his affidavit:

“6. The discussion between Ron [Korzitz] and myself related substantially to a dispute about whether his wife had ever actually paid the deposit of $17,500.00 on the exchange of contracts for the sale of unit 9. So far as I can recall, the general wording of the discussion put into the English language went as follows:
Me: ‘After all, if a Judge has a look at it, he will say “where’s your deposit?’”
Me: ‘The unit now is worth $400,000.00 to $450,000.00 and you haven’t put a cent into it.”
Ron: ‘You don’t understand. I gave the cheque for $17,500.00.’
Me: ‘Let’s forget about it. We have inquired about it for the last 3 years. It cost a fortune to inquire about. If you want, I am going to give you $7,500.00 off, and you pay $342,500.00.”
7. Ron said ‘I agree’. We shook hands. I told my solicitor that we had reached an agreement.
8. A further discussion then took place with the two solicitors present. I don’t remember exactly what was said next and by whom, but I remember that I finally agreed that I would split the disputed amount of the deposit in half with Ron. Our final agreement was that the sale of unit 9 to Eva Brainenberg would be completed for a payment of $341,250.00.
9. To the best of my recollection, Ron left the mediation with his solicitor about 4.00 p.m.”

9 Clarke, the solicitor for Damiz, gave the following evidence in his affidavit:

“5. During the afternoon tea break I noticed my client Mr Barel walk together with Mr Korzitz to one end of the passage outside the conference room at the Portside Centre at Clarence Street, Sydney, where the mediation took place.
6. After ten minutes or so, Mr Barel came back and made a statement to me to the following effect:
‘I have reached agreement with Ron. I will reduce the price by $7,500.00.’
7. To the best of my recollection, Mrs Brainenberg’s solicitor Mr Lloyd then spoke to my client and me to the following effect:
‘My client says they agreed to split the difference, but $7,500 is not half of $17,500. It should be $8,750.’
Mr Barel said something like:
‘OK’ or ‘I agree’.
8. I made the following note in my record of the proceedings:
‘3:25 agreement with Mrs Brainenberg’s husband – sell unit to her for $341,250.00.’
9. To the best of my recollection, Mr Korzitz and his solicitor left the mediation shortly after the conclusion of the discussions to which I have referred. The mediation continued with the other parties and concluded at 7.45 p.m.
10. At the conclusion of the mediation, an agreement between all of the remaining parties was reached and reduced to writing. A true copy of that document, entitled ‘Heads of Agreement’, is annexed hereto and marked with the letter ‘A’.”

10 Barel and Clarke were both cross-examined, but nothing that emerged in cross-examination cast doubt on the affidavit accounts. Mr Lloyd (Brainenberg’s solicitor) gave evidence but it did not include evidence of events at the mediation of 11 November 2004. His affidavit was sworn on 6 September 2002. His cross-examination did not touch on the events of 11 November 2004. Korzitz did not give evidence. There is thus no evidence contradicting the consistent accounts of Barel and Clarke.

11 It is clear that the mediation was undertaken to explore the possibility of reaching an agreed compromise in all four proceedings. The aim, therefore, was to find a negotiated basis to be put before the court by consent to dispose of all such proceedings, if possible. The parties’ disputes included questions as to whether the deposit had been paid under Brainenberg’s purchase contract and whether that contract was still on foot and as to the amount payable under the contract on completion. The evidence to which I have referred shows that there was, as between Brainenberg and Damiz, an oral agreement, first, that it would be accepted that the contract was on foot, second, that the question of payment or non-payment of the deposit would be put to one side and, third, that, regardless of the position otherwise prevailing, the amount payable on completion (disregarding adjustments) would be $341,250.00. The commercial rationale for this involved Brainenberg’s paying $8,750.00 more than would have been payable had the deposit in truth been paid and Damiz’s accepting (as effective successor to the vendors) $8,750.00 less than would have been receivable had the deposit in truth not been paid.

12 I accordingly record my finding that an oral agreement was made between Brainenberg and Damiz on 11 November 2004 in the terms for which Damiz contends. I then address the question whether the parties intended that oral agreement to be legally binding or whether their intention was that there should be no binding agreement unless embodied in a document signed by them.

13 It was submitted on behalf of Brainenberg that the whole context of the mediation was such that no one intended anything to be binding unless and until reduced to writing. The evidence shows that there were, as it were, three stages to the mediation. During the first stage, Vaysman, Chalik, Brainenberg, Barel, Woodgate and various lawyers were present (although not necessarily in the same room at any point), as was the mediator. The first stage ended when matters affecting Woodgate had been exhausted and he left. That was around mid-morning. The second stage ended when Brainenberg’s representative Korzitz (her husband) and Brainenberg’s lawyer left about 4 pm. By that time, there was no longer anything affecting Brainenberg requiring discussion, Barel and Korzitz having disposed of the matters centred on payment of the deposit by Brainenberg. The third stage culminated in the signing, some time after 7 pm, of a handwritten document (called “heads of agreement”) by Chalik, Vaysman and Barel (for Damiz). This recorded the agreement among those three parties in relation to matters affecting them and not involving Brainenberg.

14 It was submitted on behalf of Brainenberg that the intention of all parties who assembled on the morning of 11 November 2004 was that there would be no outcome unless it was an outcome agreed to by all. Both the nature of the disputes and the subsequent actions of the parties tell against the existence of any such intention. If the intention was as postulated, why did Vaysman, Chalik, Barel and their advisers remain after Korzitz had left? Why did anyone remain after Woodgate had left in the morning? Vaysman, Chalik and Barel showed an intention of reaching an agreement among themselves, regardless of the other parties, by the signing of the heads of agreement after 7 pm. There is no reason why Barel (for Damiz) and Korzitz (for Brainenberg) should not be seen to have done likewise when, at about 4 pm, they came to the oral consensus described by Clarke and Barel.

15 An agreement to compromise litigation is not, of its nature, one that attracts any a priori expectation that it will be reduced to writing: see Field Glen Pty Ltd v Condux Pty Ltd (unreported, NSWSC, Abadee J, 18 February 1993). The likelihood that the parties did not intend to be bound except by writing could arise in some cases and would increase with the complexity of the content of the agreement. Where the dispute was, in essence, whether a particular sum had already been paid by one party under a pre-existing contract or remained still to be paid, and the compromise was that that party would pay half the sum in question and the other interested party would not then raise the issue of non-payment of the whole, the degree of complexity would be so slight as not to attract any such expectation.

16 The evidence does not show that the possibility of recording the outcome of the mediation in writing to be signed by relevant parties was addressed at any stage of the mediation before that course was adopted by Vaysman, Chalik and Barel some hours after Brainenberg’s representatives had left. It therefore cannot be said that the oral bargain struck between Brainenberg and Damiz was made in a context where those parties had agreed that writing was essential.

17 I am satisfied that Korzitz and Barel were not negotiating on the basis of any common assumption that only a written outcome would be binding. I am also satisfied that their oral agreement was intended to be legally binding either in a complete and final sense or in a way contemplated by the first category in Masters v Cameron (1954) 91 CLR 353 (that is, that in that the parties intended to be bound immediately though contemplating more formal steps at a later time).

18 The next question is whether the legally binding contract just described was unenforceable because of s.54A of the Conveyancing Act 1919:

“ Contracts for sale etc of land to be in writing
(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

(2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.

(3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.”

19 There can, of course, be no doubt that Brainenberg’s purchase contract was itself within s.54A, being a contract by which Wales and Downunder agreed to sell Lot 9 to Brainenberg and she, in turn, agreed to purchase Lot 9 from them. The requirement for writing was satisfied in relation to Brainenberg’s purchase contract. Mr Gray of counsel, who appeared for Brainenberg, emphasised that a contract required by s.54A to be in writing cannot be varied orally (Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 at p.243 per Williams J) and submitted that the oral agreement of 11 November 2004 between Brainenberg and Damiz was for that reason itself unenforceable against Brainenberg.

20 I am not satisfied that the oral agreement of 11 November 2004 between Brainenberg and Damiz is within this rule. Damiz is not and never has been the owner of Lot 9; nor was it the vendor under Brainenberg’s purchase contract. Damiz did, however, have certain rights in respect of Lot 9 (as well as all other lots in the development) under the construction management agreement between it and Wales and Downunder dated 28 August 2001. The provisions of that agreement are, in some respects, unclear. What is clear is that the parties (Wales and Downunder on the one hand and Damiz on the other) declared an intention that Damiz “acquires an equitable interest directly or indirectly in the Site” (clause 3.1) and that Wales and Downunder agreed to grant to Damiz, upon request, a registered second mortgage (clause 25). The property to be mortgaged is not explicitly identified but there can be no doubt that it is the whole of the development site. Wales and Downunder appear to have agreed to “accept a direction from” Damiz in relation to certain matters, including:

“(i) Rescind, terminate or complete any existing contract for pre-sold units which are entitled to be rescinded terminated or completed at law.
(ii) Enter into a sale contract or grant an option for a contract for sale of any of the units on the site entitled to be sold.
(iii) Provide a power of attorney to legally allow D to execute any documentation on behalf of DU and JW to effect (i) and (ii) above.”

21 I say that there appears to have been agreement to the effect just mentioned because the relevant specifications are in recitals coming before the section of the document headed “operative provisions”. Despite this positioning, the provisions must, I think, be taken to have been intended to be operative provisions.

22 The authority thus held by Damiz from Wales and Downunder extended to rescission, termination or completion of “any existing contract for pre-sold units”. The agreement conferring the authority was made on 28 August 2001 and, since Brainenberg’s purchase contract had been made on 23 July 2001, it was such an existing contract. Damiz could therefore have acted for Wales and Downunder by rescinding, terminating or completing the contract, had grounds for so doing arisen. But Damiz could not, under the quoted (or any other) provision of the agreement with Wales and Downunder, have acted for Wales and Downunder in varying the pre-existing contract between those parties and Brainenberg. It follows that, if the oral agreement of 11 November 2004 between Brainenberg and Damiz was properly regarded as an agreement to vary Brainenberg’s purchase contract, it was ineffective to do so, regardless altogether of the absence of writing.

23 But the oral agreement of 11 November 2004 was not, in my opinion, an agreement which purported or attempted to vary the pre-existing contract for sale between Wales and Downunder as vendors and Brainenberg as purchaser. The impact of that agreement must be considered against the background of the proceedings to which Damiz and Brainenberg are parties. By its statement of claim in 3022/04, Damiz pleaded the agreement of 28 August 2001 as follows:

“Pursuant to the Agreement and in the events which have happened, Wales, the Second Defendant and the Plaintiff agreed that:
(a) The Plaintiff is entitled to the full proceeds of sale of lots in the developed and subdivided Site after proper expenses of sale and payment of the moneys secured by the Prior Mortgages.
(b) The plaintiff is entitled to a mortgage of the Site ranking immediately after the Prior Mortgages securing to the Plaintiff inter alia the sale proceeds of subdivided lots as aforesaid.
(c) The Plaintiff is entitled to direct Wales and the Second Defendant to enter into a sale contract of any of the lots in the developed land.”

24 Damiz then pleaded its entitlement to be registered as mortgagee of Lot 9 and Lot 14 and that Damiz had required Woodgate (as trustee in bankruptcy of Wales) and Downunder to offer each of those lots for sale by public auction. After referring to the positions of Chalik and Vaysman vis-à-vis Damiz, the statement of claim dealt with Brainenberg (the fifth defendant) as follows:

“The Fifth Defendant was the purchaser of Lot 9 under a contract between Wales and the Second Defendant as vendors and herself as purchaser dated 23 July 2001, and she has commenced proceedings for specific performance of that contract and other relief by suit 3095 of 2002 in the Equity Division of this Honourable Court. The Plaintiff says in respect of her claim:
(a) The purchase price under the contract was $350,000.00 and the contract provided for a deposit of $17,500.00 to be paid on exchange, time being of the essence.
(b) The Fifth Defendant did not pay the said deposit.
(c) Wales and the Second Defendant terminated the contract for non-payment of the deposit.
(d) Further or in the alternative, if the Fifth Defendant is or becomes entitled to specific performance of the said contract, the Plaintiff is entitled to require payment to it of the said purchase price subject to adjustment for proper expenses of sale as a condition of releasing Lot 9 from the Plaintiff’s mortgage.
(e) The Fifth Defendant is not entitled to become registered as proprietor of Lot 9 pursuant to her said contract with Wales and the Second Defendant clear of the Plaintiff’s mortgage save as aforesaid.”

25 The relief claimed against Brainenberg was:

“A declaration that the Fifth Defendant is not entitled to become registered as proprietor of Lot 9 pursuant to her said contract with Wales and the Second Defendant dated 23 July 2001.”

26 The claim between Damiz and Brainenberg to which the mediation of 11 November 2004 related was this claim for declaratory relief and the basis on which the claim was advanced was, in essence, that there was no contract on foot in favour of Brainenberg as purchaser or, alternatively, that Brainenberg could not call for a transfer under that contract in such a way as to take title free of Damiz’s equitable mortgage unless she paid the deposit.

27 The efforts of Korzitz, on behalf of Brainenberg, at the mediation were thus obviously efforts to prevent Damiz pursuing its claim for declaratory relief against Brainenberg. To be successful, he had to find a basis on which Damiz would not pursue that claim, thus allowing the contract between Wales and Downunder as vendors and Brainenberg as purchaser to be completed. Korzitz succeeded in this by agreeing that Brainenberg would pay $341,250 on completion rather than whatever sum was payable under the contract; in return for which he received an assurance that Damiz would no longer attempt to upset the sale to Brainenberg by the vendors who, to his knowledge, would not attempt to intervene to prevent the outcome to which Damiz agreed.

28 The oral agreement of 11 November 2004 between Brainenberg and Damiz was not an agreement directly within s.54A of the Conveyancing Act or an agreement caught by the principle recognised in Phillips v Ellison Brothers Pty Ltd (above). The circumstance that it is not in writing and signed therefore does not render it unenforceable.

29 Having reached this point, I need not consider issues 2 and 3 set out at paragraph [6] above. The reason is stated at paragraph [7] above. The remaining issue is issue 4.

30 I turn, therefore, to the question of the lien asserted by Brainenberg. It is her contention that if an order for costs in her favour is made against the vendors (she having been successful in her claim for an order for specific performance against them), those costs are secured by a lien in her favour over Lot 9 or, more precisely, over the proceeds of sale received upon completion of the sale pursuant to the order.

31 It is clear that, where a contract for sale goes off and some part of the purchase money paid by the purchaser to the vendor becomes refundable, the purchaser has a lien upon the property to secure repayment of that money. The relevant principles are summarised at paragraph 355-4795 of “Halsbury’s Laws of Australia” as follows:

“Where a contract has been terminated or abandoned other than through default of the purchaser, the purchaser may hold an equitable lien over the property to the extent of any deposit paid. The purchaser is a secured creditor to the extent of any such lien and for interest on the deposit if the contract so provides or a court so orders. The lien extends only to money paid by way of deposit or instalments pursuant to, or in performance of, the contract.” [footnotes omitted]

32 It is also recognised that this lien may, in some cases, extend beyond moneys paid by and refundable to the purchaser under the aborted contract. I quote again from the same paragraph of “Halsbury’s Laws of Australia”:

“A purchaser’s lien may be extended to costs for an action for specific performance or costs for investigating title where a good title is not shown by the vendor.” [footnotes omitted]

33 One of the cases cited as authority for the first part of this last proposition is Middleton v Magnay (1864) 2 Hem&M 233; 71 ER 452. In that case, the vendor was unable to make title and it was declared that the purchaser had a lien to secure “the repayment of all moneys paid by him on the faith of and pursuant to the agreement, together with his costs”. Relying on that (and referring to the general nature of an equitable lien as expounded by the High Court in Hewett v Court (1983) 149 CLR 639), Mr Gray submitted that, in the present case, a lien in respect of Lot 9 would arise in Brainenberg to secure any costs awarded in her favour as against Wales and Downunder (the vendors) and that, following completion, that lien would subsist in the proceeds of sale in the hands of the vendors.

34 This analysis breaks down at the first stage. A lien for costs has never been seen as arising in isolation. The cases in which costs have been held to be secured are cases in which a lien has arisen independently as security for the return of moneys paid and the costs have formed an additional element of the secured moneys. The ancillary nature of the costs element in such cases was emphasised in Combe v Lord Swaythling [1947] Ch 625. In that case, the contract went off otherwise than through the purchaser’s default and an action by the vendor for specific performance was dismissed. The vendor was ordered to pay two-thirds of the purchaser’s costs. There was otherwise no right for the purchaser to recover money from the vendor since, although a deposit had been paid under the contract, it had been paid to and was held by a stakeholder and had not been accounted for to the vendor. The purchaser nevertheless contended that he was entitled to a lien upon the property to secure the costs awarded to him. Wynn-Parry J, after referring to the line of cases cited in relation to the first of the above extracts from “Halsbury’s Laws of Australia” (Rose v Watson (1864) 10 HL Cas 672; 11 ER 1187, Middleton v Magnay (above), Whitbread & Co Ltd v Watt [1902] 1 Ch 835 and Kitton v Hewitt [1904] WN (Eng) 21) said (at pp.628-9):

“In my judgment, all those cases are to be explained by reference to the underlying principle that the right of a purchaser to a lien in such circumstances is tested on the basis that he is to be regarded as a secured creditor. I cannot see how a purchaser has any right to a lien until that can be postulated of him that he is a secured creditor.
It follows, therefore, in my judgment, that the purchaser in the present case – who could not, on his counterclaim, have sued for return of the deposit and for a declaration of lien in respect of it - is not entitled to a lien for his costs of this action. To hold otherwise would, in my judgment, be to introduce a new rule to support which the principle which underlies the authorities which have been cited to me and relied on by Mr Upjohn for the purchaser could not be prayed in aid. I hold, accordingly, that the purchaser in the present case is not entitled to a lien for his costs.”

35 The rationale for this decision in Combe v Lord Swaythling is, in my view, that identified by the Privy Council in Hua Chiao Commercial Bank Ltd v Chiaphua Industries Ltd [1987] AC 99, namely, that the obligation of the vendors under any costs order in favour of Brainenberg, viewed alone and having no connection or relationship with part payment for the land, would not “touch and concern” the land so as to be secured upon it (see also United Malayan Banking Corporation Bhd v Goodhope Realty [1989] 1 SLR 272).

36 There is therefore no basis for finding the lien for which Brainenberg contends.

37 The possibility that Brainenberg might have a right of set-off as against the vendors was raised by Mr Brabazon of counsel, who appeared for Damiz. He raised it in order to reject it. There is, however, no occasion for me to address that issue, since Mr Gray, in his submissions in reply, expressly disclaimed any intention of asserting a right of set-off on the part of Brainenberg, confining his submissions to the matter of a lien with which I have already dealt (see transcript, pages 51, 52).

38 Having determined those of the contentious matters in need of determination, I pass briefly to matters affecting Lot 9 not in contention between the parties represented upon the hearing. Those parties accept that, in light of findings to the effect of those I have now made, the vendors and Brainenberg are required to complete the sale and purchase of Lot 9 on the basis that the balance of purchase moneys is $341,250 plus or minus adjustments in accordance with the contract, that Vaysman is entitled to $200,000 out of the proceeds, and that the balance of the proceeds belongs to Damiz; also that various caveats must be withdrawn. Having regard to the documents in evidence (including those constituting and associated with Brainenberg’s purchase contract and the heads of agreement of 11 November 2004 among Chalik, Vaysman and Damiz), I am satisfied that that is the correct outcome and that it is appropriate to impose it upon the vendors despite the absence of submissions from them.

39 It remains to consider the form of the orders that should be made. Various draft short minutes relating to the different proceedings were handed up at the hearing. It was, I think, agreed that the draft handed up by Mr Brabazon on behalf of Damiz would reflect the appropriate outcome in the Damiz proceedings (3022/04) in the eventuality that has now emerged (the departure, had Brainenberg’s contentions prevailed as to the matters I have determined, would have been as to the amount payable by Brainenberg and as to the existence of the lien). It was also agreed, on my understanding, that certain of the orders in that draft would also appropriately be made in each of the other proceedings (1882/02, 1883/02 and 3095/02). The draft handed up by Mr Brabazon (amended to refer to names, consistently with the nomenclature in these reasons) was as follows:

“1. Order that Woodgate (as the trustee in bankruptcy of Wales) and Downunder as vendors and Brainenberg as purchaser specifically perform and carry into execution a contract for the sale of Lot 9 in SP66078 known as 9/30-34 Folkstone Parade, Botany dated 23 July 2001, on the basis that the sum payable by the purchaser to complete the purchase is $341,250 plus or minus adjustments under clauses 14 and 23 and special conditions 2, 10 and 14 of the contract.
2. Declare that upon settlement of the said sale Vaysman is entitled to receive from the net proceeds thereof the sum of $200,000 and Damiz is entitled to receive the balance.
3. Subject to the payments referred to in the above declaration 2, order that upon settlement of the said sale:
(a) Damiz deliver to Brainenberg a signed withdrawal of its caveats Nos 7909109 and 7909116 and the certificate of title of that property;
(b) Damiz deliver to Brainenberg, or jointly to Brainenberg and Chalik, a discharge of mortgages Nos 549425 and 5494453 (as varied) in registrable form executed by Elliot Tuthill Nominees Pty Limited;
(c) Woodgate (as trustee in bankruptcy of Wales) deliver to Brainenberg a withdrawal of caveat No 9839446;
(d) Chalik deliver to Brainenberg a signed withdrawal of his caveat No 7995531 affecting the said property;
(e) Vaysman deliver to Brainenberg a signed withdrawal of his caveat No 7995532 affecting the said property.
4. Order that Woodgate (as the trustee in bankruptcy of Wales) and Downunder as vendors and Chalik as purchaser specifically perform and carry into execution a contract for the sale of Lot 14 in SP66078 known as 14/30-34 Folkestone Parade, Botany dated 27 June 2001, on the basis that the sum payable by the purchaser to complete the purchase is $240,000 plus or minus adjustments under clauses 14 and 23 and special conditions 2 and 13 of the contract.
5. Declare that upon settlement of the said sale Damiz is entitled to receive the moneys so paid on settlement by Chalik.
6. Subject to the payments referred to in the above declaration 5, order that upon settlement of the said sale:
(a) Damiz deliver to Chalik a signed withdrawal of its caveats Nos 7909109 and 7909116 and the certificate of title of the subject property;
(b) Damiz deliver to Chalik, or jointly to Brainenberg and Chalik, a discharge of mortgages Nos 549425 and 5494453 (as varied) in registrable form executed by Elliot Tuthill Nominees Pty Limited;
(c) Woodgate (as trustee in bankruptcy of Wales, deliver to Chalik a withdrawal of caveat No 9839458;
(d) Vaysman deliver to Chalik a signed withdrawal of his caveat No 7995532 affecting the said property.”

40 I am satisfied that orders to this effect should be made in 3022/04 and that corresponding orders, as applicable to the particular elements of the overall controversy at issue in each of 1882/02, 1883/02 and 3095/02, should also be made there. I direct that the parties file within 28 days by delivery to my Associate the final version of short minutes of orders to be made in the several proceedings, ensuring consistency of form and detailed wording where orders in separate proceedings deal with the same matter.

41 I also direct that, within 28 days, any party or parties seeking an order for costs against another party so notify that other party in writing, the notification to be accompanied by submissions in support of the making of the order; also that, within 14 days of receiving any such notification and submissions, the notified party deliver submissions in reply. A copy of a notification and a copy of all submissions is to be filed, by delivery to my Associate, on the day the original is delivered.

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