Demondrille Nominees Pty Ltd v Shirlaw, Kevin R
[1996] FCA 568
•20 Jun 1996
LIMITED DISTRIBUTION
CATCHWORDS
PRACTICE AND PROCEDURE - judgments and orders - summary (relevantly final) disposal of application for removal of caveats - no formal reasons for orders for removal of caveats given - contract for sale of real property - receipt of deposit acknowledged as express term - "deposit" in a sum equal to two-thirds of purchase price - "deposit" never in fact paid - Deed of Rescission of contract entered into by parties - considerable body of evidence of extrinsic circumstances surrounding each of these transactions - extrinsic circumstances not taken into account at first instance - approach justified only where contrary view is unarguable - inquiry into detail of extrinsic evidence required - correct legal question not addressed.
DEMONDRILLE NOMINEES PTY LIMITED v. KEVIN R. SHIRLAW & ANOR.
No. AG 24 of 1996
GALLOP, BEAUMONT AND FINN JJ.
CANBERRA
20 JUNE 1996
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY )
DISTRICT REGISTRY ) No. AG 24 of 1996
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE SUPREME COURT
OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:DEMONDRILLE NOMINEES PTY LIMITED
Appellant
AND:KEVIN R. SHIRLAW
First respondent
CORNELIS HOLDINGS PTY LIMITED (IN LIQUIDATION)
Second respondent
CORAM: GALLOP, BEAUMONT AND FINN JJ.
PLACE: CANBERRA
DATE: 20 JUNE 1996
MINUTES OF ORDER
THE COURT ORDERS:
Leave to appeal granted.
Appeal allowed. Set aside the orders made in the Supreme Court of the Australian Capital Territory.
Remit the matter to the Supreme Court for further hearing and determination in accordance with the orders pronounced by the Full Court.
The respondents to pay the appellant's costs of the appeal.
Reserve the costs of the proceedings in the Supreme Court to the presiding Judge on the further hearing.
Grant a costs certificate to the respondent pursuant to s.6(1), and in accordance with s.6(3)(a) and (b), of the Federal Proceedings (Costs) Act 1981
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY )
DISTRICT REGISTRY ) No. AG 24 of 1996
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE SUPREME COURT
OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:DEMONDRILLE NOMINEES PTY LIMITED
Appellant
AND:KEVIN R. SHIRLAW
First respondent
CORNELIS HOLDINGS PTY LIMITED (IN LIQUIDATION)
Second respondent
CORAM: GALLOP, BEAUMONT AND FINN JJ.
DATE: 20 JUNE 1996
REASONS FOR JUDGMENT
GALLOP J.
I will ask Beaumont J. to give the first judgment.
BEAUMONT J.
INTRODUCTION
This is an appeal from a judgment of the Supreme Court of the Australian Capital Territory purportedly brought as of right. But, as is properly now accepted, it is in truth an application for leave to appeal. As will be seen, the orders, although important and final so far as they went, were part of a series of orders in which the Supreme Court ordered, inter alia, that issues not then resolved be reserved for further consideration. It follows that leave to appeal is necessary. However, senior counsel for the respondents indicated in the course of argument that the grant of leave to
appeal is not opposed. The matter does raise some issues of principle, and the points argued in the appeal are of a character which, in my view, make it appropriate that leave be granted. I will propose, therefore, that leave to appeal from the material part of the judgment be granted.
In order to understand the context in which the orders appealed from were made, it is necessary to outline the history of the matter.
By their amended application dated 14 June 1995, the present respondents claimed declaratory and other relief in several respects which were set out as follows:
"1.A declaration that the agreement for sale dated 7 February 1994 between the second applicant and the respondent (`the agreement') is an unfair preference pursuant to section 588FA of the Corporations Law (`the Act').
Further, or in the alternative, a declaration that the agreement is an uncommercial transaction pursuant to section 588FB of the Act.
Further, or in the alternative, a declaration that the respondent does not have a caveatable interest in the land situated at unit 3 units plan 1226 located on block 33 section 100, division of Narrabundah in the Australian Capital Territory (`the land').
Further, or in the alterntive, a declaration that the caveat registered number 940993 is of no effect in that the person described therein does not have any caveatable interest as claimed.
An order pursuant to section 588FF of the Act declarating the agreement void or such other order as the court sees fit.
An order that within 48 hours, the respondent lodge at the Land Titles Office in the Australian Capital Territory all necessary documentation, and take all steps necessary to be done on its part, to withdraw caveat number 940993 and caveat number 950516 from the land.
6a.Compensation pursuant to section 108 of the Real Property Act 1925.
..."
The proceedings came before the learned primary Judge in the Supreme Court on 26 March, 1996 by way of a final hearing. Since his Honour gave no formal reasons for the orders made, it will be necessary to refer at some length to the course of the proceedings before his Honour. However, before doing so, it will be convenient to set out now the orders made on that day, as certified by the Deputy Registrar of the Supreme Court.
THE ORDERS AT FIRST INSTANCE
Leaving aside the prefatory parts of the order, the minutes of the order read as follows:
"...IT IS ORDERED that the sale agreement dated 7 February 1994 and Deed of Rescission dated 15 December 1994 leave no claim by the respondent on the applicant for the return of the deposit set out in annexure 'A' in the affidavit of Mr Kevin R Shirlaw sworn the 10th day of July 1995 and attached hereto AND IT IS FURTHER ORDERED that the caveats are founded on a claim that does not arise and caveats number 940993 and 950516 should be deemed not to disclose a caveatable interest and should be withdrawn accordingly AND IT IS FURTHER ORDERED that it is unnecessary to determine whether the agreement for sale dated 7 February 1994 and the Deed of Rescission dated 15 December 1994 either alone or together are an unfair preference or an uncommercial transaction AND IT IS FURTHER ORDERED that the remaining issues be reserved and adjourned to a hearing date to be fixed AND IT IS FURTHER ORDERED that the parties have liberty to apply on 72 hours notice AND IT IS FURTHER ORDERED that the applicant's costs of and incidental to this application be paid by the respondent on an indemnity basis."
THE PROCEEDINGS AT FIRST INSTANCE
The transcript of the proceedings before the learned primary Judge indicates the following sequence of events.
Mr. Oakes, senior counsel for the respondents, indicated at the commencement of the hearing that he was moving on the application originally filed on 5 May, 1995, which (as has been noted) was subsequently amended, seeking declarations that a particular transaction was either an "unfair preference", or an "uncommercial transaction"; and that essentially, the case would concentrate on the "uncommercial transaction" aspect.
His Honour was told of the liquidation of the second respondent, a single purpose company formed to develop a block of units. It appeared from the chronology provided to his Honour that there had been an exchange of contracts on 7 February, 1994 for the sale of three units in the development to the appellant, but that on 15 December, 1994, the Deed of Rescission of that contract had been entered into.
His Honour was then referred to the agreement dated 7 February 1994, which was annexed to an affidavit of the first respondent sworn on 10 July 1995. Counsel then said, by reference to the agreement dated 7 February 1994, that provision had been made for a "deposit" of $120,000. That provision was in the following terms, as "special condition 13" of the agreement:
"13. The seller hereby acknowledges that it has received the sum of $120,000, by way of deposit."
Counsel went on to inform his Honour that:
"It is the $120,000 that this case concentrates on because the applicant's case is that the $120,000 was never paid over, and it is the $120,000, which we will be submitting, constitutes the uncommercial transaction for the purposes of the application."
The purchase price under the agreement was $180,000, leaving a balance of $60,000 payable on completion.
It may be noted, in passing, that it would appear that a deposit, so substantially in excess of the usual 10 per cent permissible by way of a true deposit, would not be enforceable as a deposit in terms of its liability to forfeiture (cf. Workers Trusts and Merchant Bank Limited v Dojap Investments Limited [1993] AC 573 at 578-582) but nothing appears to turn on this particular point for present purposes as the "deposit" was never paid.
Mr. Oakes reiterated that the evidence was that those moneys were never, in fact, received by the second respondent. He went on to say, "If I could then take your Honour to...", and it would appear that counsel was then about to take his Honour to that material, but his Honour then said, "Well, does that matter?" Counsel replied: "It does matter, for the purposes of the application, it is an uncommercial transaction." His Honour said, "Yes, all right."
Counsel then took the primary Judge to the Deed of Rescission. That Deed is an important document for present purposes and was in the following terms:
"DEED OF RESCISSION OF AGREEMENT FOR SALE OF UNIT TITLE
THIS DEED is made the 15th day of December 1994 between CORNELIS HOLDINGS PTY LIMITED (ACN 058 353 423) (hereinafter "Cornelis") and DEMONDRILLE PTY LIMITED (ACN 008 561 331) (hereinafter "Demondrille")
WHEREAS
A.Cornelis as seller and Demondrille as buyer entered into an Agreement for Sale and purchase respectively on 7 February 1994 (hereinafter "the Agreement") pertaining to a Unit to be erected as part of a Development numbered 3 on Block 33 Section 100 in the Division of Narrabundah in the Australian Capital Territory and purchase price for which in the Agreement was noted at ONE HUNDRED AND EIGHTY THOUSAND DOLLARS ($180,000.00)
AND WHEREAS
the parties now wish to rescind the Agreement by consent.
NOW WITNESS THIS DEED by their execution hereof Cornelis and Demondrille hereby evidence the rescission by consent of the Agreement to become effective only on the receipt by Demondrille at the direction of Cornelis of the sum of ONE HUNDRED AND TWENTY THOUSAND ($120,000) being the return of the deposit deemed to have been paid pursuant to Special Condition 13 of the Agreement."
Counsel then explained to his Honour the terms of the Deed of Rescission, mentioning the sum of $120,000, "being a return of the deposit deemed to have been paid pursuant to special condition 13 of the agreement." The following exchange then took place between his Honour and senior counsel for the respondent:
"HIS HONOUR: Yes, but if that has already happened because it was never paid in the first place, what is the problem?
MR OAKES:Well the problem that now arises is that there has been a caveat placed on the property.
HIS HONOUR: By whom?
MR OAKES:By Demondrille.
HIS HONOUR: How can Demondrille do that if it has rescinded the agreement?
MR OAKES:Well, Mr Walmsley will tell you that.
HIS HONOUR: Will he?
MR OAKES:But they have placed the caveat on and we want the caveat off because there is a new buyer. The evidence will disclose there is a new buyer of the property.
HIS HONOUR: Well, is this really a summons to remove a caveat?
MR OAKES:Well, it is a summons to remove a caveat and it is seeking declaratory relief that there is a relevant uncommercial transaction for the purposes of the Corporations Law.
HIS HONOUR: Well, just a moment. Taken in order, it may or may not be an uncommercial transaction but if the circumstance is that there is an obligation to pay $120,000 under the original agreement, for whatever reason, it is not actually paid over. The agreement is then rescinded on the grounds that the $120,000 not paid over be returned. It then, of course, obviously having been returned because it has never been taken. The rescission stands and that is it, is it not?
MR OAKES:That is one analysis, yes.
HIS HONOUR: Well, it is one that appeals to me, yes.
MR OAKES:Well, it certainly would shorten the case, your Honour.
HIS HONOUR: All right. Well, should I hear Mr Walmsley as to why that is not so.
MR WALMSLEY: I do not know that I followed the way that your Honour was putting it.
HIS HONOUR: Well, it is very simple, Mr Walmsley. There is a contract which says you pay $120,000 deposit. There is a deed of rescission which said on the return of that deposit the agreement is rescinded. If the agreement is rescinded the caveat cannot stand. The $120,000 Mr Oakes says was never paid, therefore there is nothing to be refunded. Full Stop. Why is that not so?
Mr. Walmsley, counsel for the appellant, then referred to the caveats, in the following exchange:
"MR WALMSLEY: There are two caveats: one of them relies upon the contract which was rescinded by this agreement. The other one, which was apparently put on some months later, was to claim an equitable interest in the land by virtue of the fact, as I understand it, that the $120,000 was not repaid on rescission of the agreement.
HIS HONOUR: Yes, but you cannot have that if it has not been paid in the first place.
MR WALMSLEY: Well, that is not so, with respect, your Honour. If the parties choose to conduct their affairs in such a way that they, between them, agree that one of them is deemed to have paid a certain amount of money, then they are bound to that agreement. Parties frequently sign agreements which acknowledge that deposits have been paid."
Mr. Walmsley went on to submit that although the Deed of Rescission had been executed, the money had never been paid. His Honour then said, "But there is no money to be paid, Mr. Walmsley."
Mr. Walmsley then submitted that this was a term of the Deed of Rescission, and his Honour said, "As soon as the Deed was signed, the money is deemed to be repaid. It is as simple as that." Mr. Walmsley demurred to this, but his Honour said, "Well, I would not interpret it that way." Later, the following exchange took place between the primary Judge and Mr. Walmsley:
"HIS HONOUR: No. Look, get the steps right. Under the contract there is an obligation to pay $120,000. Receipt of it is acknowledged, even though it has not been paid. All that means is that the seller will proceed to settlement without having received, in advance, by way of deposit, the $120,000. It does not mean that the purchaser is not obliged to pay the full purchase price. It is not given a notional credit for the $120,000.
MR WALMSLEY: Well, that is what the parties intend to do by the contract.
HIS HONOUR: Well, it is not what they have said.
MR WALMSLEY: But it is, with respect, your Honour. If your Honour goes to the contract ---
HIS HONOUR: There is no point in arguing with me about that because I have told you what I think it means. That is what it means, plainly on the face of it, and that is that.
MR WALMSLEY: There may be one aspect of the Deed of Rescission ... which I would like to take your Honour to.
HIS HONOUR: Well, take me to it but it seems to me that ... it is really unarguable.
MR WALMSLEY: I beg your pardon, your Honour?
HIS HONOUR: It is really unarguable."
The primary Judge subsequently, in the course of a further
exchange with Mr. Walmsley, said this:
"HIS HONOUR: 'Special condition 13.' Well, in the first place it is not deemed to have been paid by special condition 13 in the strict sense. I mean, it has meaning in the sense that I know what it refers to, but that is really not what special condition 13 says. What ... condition 13 says is that the receipt is acknowledged. And that has a different effect [to] saying it is deemed to have been paid. So it really mis-states the effect of clause 13 if you took it literally. Well, obviously you cannot, you have got to read it in ... context."
His Honour expressed the view that there was no caveatable interest, and indicated that he would adjourn temporarily. Upon the resumption of the hearing later in the morning, senior counsel for the respondents indicated that he sought a finding from the Court along the lines that nothing arising out of the sale agreement and its rescission leaves $120,000 owing by the second respondent to the appellant, as was specified in the contract as being the deposit.
If his Honour were so to find, then it would follow that the other issues, including whether the transaction was uncommercial, would not arise. The Court was asked to deal with the matter by making orders for the removal of both caveats.
It should be explained at this stage that the first caveat, which was lodged on 9 February 1995, claimed an "[e]quitable estate as buyer pursuant to the agreement for sale dated 7 February 1994". The second caveat lodged on 20 April 1995 claimed "[a]n equitable lien in favour of the caveator in the sum of $120,000".
Senior counsel for the appellant then asked his Honour to reserve further consideration of one of the claims for relief in the amended application. His Honour said:
"HIS HONOUR: Yes. Well, I think at this point in time the matter has progressed only so far as that I can find that the sale agreement and the Deed of Rescission leaves no claim by Demondrille against Cornelis for the return of the deposit referred to in annexure A of the affadavit of Mr. Shirlaw of 10 July 1995. Now, having made that finding, and the caveats referred to being founded on a claim for the return of that deposit, it follows that no caveatable interest is revealed by virtue of that fact. So it follows that the present caveats at least, 940993 and 950516, should be declared not to disclose a caveatable interest and to be withdrawn accordingly. Now, that says nothing about whether the agreement is void or not void or whether compensation is payable or not. Those are consequences that may flow or not flow, depending on other facts.
MR OAKES:That is correct, your Honour.
HIS HONOUR: Yes, but you do not seek to press those now?
MR OAKES:I do not seek to press the claim for damages."
His Honour next heard submissions on the question of costs. During that aspect of the hearing, senior counsel for the respondents sought to "have formally read onto the record" the affidavit of Mr. Shirlaw, sworn 10 July 1995, and two other affidavits. At that point, Mr. Walmsley raised some objections to several paragraphs in the affidavit of Mr. Shirlaw, and his Honour appeared to reject certain portions of
that material. It does not appear clearly whether objections to the other affidavits were formally maintained, or dealt with.
The following exchange between his Honour and Mr. Oakes should be noted:
"MR OAKES: Your Honour, other than that I think that I should formally read on to the record the other affadavits. Given those objections, I do not think there is a lot I can say about it. So, they are the affidavits of Kees... Veraar of 31 July 1995. There is an affidavit of Michael John Empson of 14 March 1996 and your Honour, there is a further affadavit of Mr Shirlaw which I was going to seek leave to file at the court. So I seek that leave. There [are] some exhibits with that affidavit.
HIS HONOUR: ...are these the same as you have got exhibited in Mr Shirlaw's affidavit already?
MR OAKES:No, they are not.
HIS HONOUR: These are different, are they?
MR WALMSLEY: No objection.
HIS HONOUR: And what is the relevance of those?
MR OAKES:They would have only gone to the uncommercial transaction aspect of the matter.
HIS HONOUR: In what way?
MR OAKES:That is what the evidence goes to. It is just a matter of having the complete picture of the evidence, totality of evidence.
HIS HONOUR: I have always got a suspicion about things which are tendered for totality purposes, Mr Oakes.
MR OAKES:Well, your Honour, if my friend is indicating to me that he might take the matter to another place, I feel I should have what I would have had before the Court... The material ... of Mr Empson and the additional affadavit of Mr Shirlaw goes to the issue of insolvency of 15 December. "
There was then further discussion and submissions on the question of insolvency, but it appears that this was only relevant to the alleged uncommercial character of the transaction, and we need not be concerned with it. Finally, his Honour made an order for costs.
The appellant now appeals on several grounds, and it will be convenient to deal with them in turn.
CONCLUSIONS ON THE APPEAL
The first ground of appeal is that his Honour erred in finding that the Deed of Rescission was, although executed in escrow, immediately effective, and in finding that it had the effect of rescinding immediately the contract for sale before payment to the appellant of the sum of $120,000, notwithstanding that the payment of $120,000 was, on the face of the Deed, the necessary precondition for its effectiveness. It is further submitted on behalf of the appellant that his Honour erred in holding that the Deed of Rescission represented a desire on the part of the parties to it to bring about restitutio in integrum, notwithstanding that the parties to the Deed had entered into a different agreement which did not involve restitutio in integrum. On behalf of the appellant, Mr. Walmsley has presented a full argument in the development of this ground of appeal. However, I have come to the conclusion, for the reasons I will now give, that it is neither necessary, nor appropriate, that I attempt to address the argument, at least in its fully developed form.
As has been seen, the way in which the primary Judge approached the present matter was simple in the extreme. It appears that his Honour considered that it was necessary to look to three circumstances only, in order to come to the conclusion arrived at by his Honour. The first was the provisions of special condition 13 of the agreement for sale; the second was the terms of the Deed of Rescission; and the third was for his Honour to note, as was indeed the case, that it was common ground that the sum of $120,000 had not, in truth, been paid.
However, although of necessity we have not been taken to the detail of all the material before us in the Appeal Book, even a cursory examination of that material indicates that there are background circumstances or extrinsic material which, at the very least, could reasonably be expected to throw some light upon the true character of the bargain or bargains that were struck between the parties to this litigation, and perhaps as between those parties and others. As I have said, it is neither necessary, nor appropriate, that I attempt to express a view on these matters, but there was before the primary Judge material in the form of the affidavit evidence to which I have referred, which purported to describe those background or extrinsic circumstances.
His Honour did not regard it as necessary to delve into those matters. But such a robust approach could, I think, only be justified if the present case were so straightforward, and so obvious, that the contrary was, and I use his Honour's term, "unarguable". In other words, the approach taken by his Honour was appropriate only if this were indeed an application for summary judgment against the appellant.
True it is that there may be cases which justify summary disposal where an application is made for the removal of a caveat, and it is clear on the face of the material that it is impossible for the caveator to maintain the caveat. But, with all respect to the primary Judge, I cannot think that the present matter falls into that category.
I can accept that if the only point to be resolved were one of a straightforward, indeed truly unarguable, construction of a provision in a document, it may be appropriate for the Court to act in a summary fashion, and thus to eliminate the possibility of a vexatious or frivolous defence being mounted or sought to be mounted to the proceeding. However, the present case is not of that kind, for these reasons.
First, the documentation itself provides for a deposit well in excess of the amount of 10 per cent of the purchase price that one would ordinarily find. Accordingly, there are indications of extraordinary features in the negotiated terms of the transaction.
Secondly, it is common ground that, in fact, the sum of $120,000 was not paid. Again, this is a consideration which naturally puts one upon inquiry, indicating a need to examine at an appropriate length, the true circumstances surrounding the transactions in question.
Yet his Honour did not undertake any such examination since, on the robust approach he adopted, it was an unnecessary and irrelevant inquiry. I am afraid I cannot agree with such an approach here.
In my opinion, once it is accepted, as the parties appear to have done, that the matter did not fall for resolution simply on the face of the documentation and its interpretation; and once it is further accepted that it was necessary to embark upon an inquiry into the surrounding circumstances of these dealings, involving as they did, not only these immediate parties, but other parties as well, it appears that, on any view, a factual inquiry, perhaps of some significant dimensions, was required to be undertaken by the parties and by the Supreme Court. The amount of the material in the appeal book in this matter, which presumably contains evidence which is relevant, or potentially relevant, is consistent with at least a provisional view that the inquiry requires a consideration of the detail; yet none was undertaken at first instance.
It follows, in my view, and without expressing an opinion on the arguments now developed by Mr. Walmsley, that his Honour failed to address the extrinsic circumstances that lay behind the documentation at all. His Honour was content to note that the sum of $120,000 had not been paid, but did not seek to inquire as to why that was so; nor did his Honour inquire as to the circumstances that surrounded the making of these transactions, or their subsequent implementation.
It follows, in my view, that his Honour failed to address the correct legal question posed for his determination. Instead, the learned Judge embarked upon the very different exercise of attempting to resolve the matter in a summary way. In my opinion, the points raised by Mr. Walmsley were at least arguable, and were entitled to consideration.
For completeness, the appellant's further grounds of appeal should be noted next.
The second ground of appeal is that his Honour erred in giving judgment before any evidence was formally before him.
I have already recited the course which these proceedings took. As I have said, if this were, in truth, a case for summary judgment, I would not demur to the way in which these proceedings went forward. However, once it is accepted, as I believe it should be, that the summary procedure was not appropriate here, there must be some force in this ground of appeal. However, I need not express a final view on it.
The third ground of appeal is that the learned Judge erred in failing to give adequate reasons for his decision.
It is well established that whether in a particular case reasons are adequate is a question of degree which depends upon the circumstances. If, as his Honour thought, the matter were unarguable, then again, I would concur with the taking of a robust approach and the expression of reasons in a reasonably brief form. However, if, as I think, the matter merited a more detailed consideration, including not only findings of fact, but a consideration of the points developed by Mr. Walmsley in his submissions to us, then again, there is much force in this ground of appeal. Here also, I need not express a final view.
The fourth ground of appeal is that his Honour erred in finding that the appellant had no caveatable interest in either caveat. Having regard to the approach which I believe should be taken in the appeal, it is neither necessary nor appropriate that I express a view on that either. This will be a matter for a fresh hearing which, I propose, should be ordered.
Finally, it is submitted that his Honour erred in making an order for indemnity costs. Since I am of the view that there should be a new trial in the Supreme Court, it will be appropriate, I think, to order that the costs of the hearing to this point in the Supreme Court be reserved.
In those circumstances I propose the following orders: (1) That leave to appeal be granted. (2) That the appeal be allowed with costs, but that the respondents have a certificate under s.6(3)(a) and (b) of the Federal Proceedings (Costs) Act 1981. I would further propose: (3) That the orders made at first instance be set aside; and that in lieu thereof it be ordered that there be a fresh hearing of the respondents' application, the costs to date incurred in the Supreme Court to abide the order of the Judge entertaining the fresh hearing.
GALLOP J: I will ask Finn J to deliver the next judgment.
FINN J: I agree with the reasons of Beaumont J. and the orders he proposes. However, I would note expressly that I reserve my opinion on the question whether the appellant would
have been entitled to an order allowing the appeal on the bare ground that his Honour failed to provide adequate reasons for his decision.
GALLOP J: I too agree with the reasons of Beaumont J. I just want to add a word of my own. In my opinion, the trial Judge failed to apply the correct onus in an application for removal of caveats where a caveator was the respondent. The correct test for the exercise of the discretion granted pursuant to s.105(3) of the Real Property Act is to put the onus on the caveator to show a valid caveatable interest, or at least to show that there is a real question to be tried.
In my respectful opinion, the trial Judge never gave the present appellant an opportunity to discharge that onus. For that reason alone I would grant leave to appeal, allow the appeal and remit the matter to the Supreme Court for further hearing and determination in accordance with the reasons pronounced. I would also order the respondent to pay the appellant's costs of the appeal and order that the costs of the proceeding in the Supreme Court be reserved to the Judge presiding at the further hearing in that court. As to the grant of a costs certificate, I think that the respondent has shown circumstances which warrant the grant of a costs certificate.
The failure to apply the correct onus is clearly a question of law, and accordingly, the respondent has brought itself within section 6(1) of the Federal Proceedings (Costs) Act. There were, at least prima facie, other failures which amount to questions of law, that is, failure to hear both parties and all the evidence before determining the issues, and failure to give adequate reasons. So I would grant a costs certificate, particularly as the respondent did not substantially contribute to what I regard as the unsatisfactory disposition of the matter in the Supreme Court. Accordingly, I agree with the orders proposed by Beaumont J.
The orders of the Court therefore are: Leave to appeal is granted. We allow the appeal, set aside the orders made in the Supreme Court, remit the matter to the Supreme Court for further hearing and determination in accordance with the reasons pronounced. We order that the respondents pay the appellant's costs of the appeal. We order that the costs of the proceeding in the Supreme Court be reserved to the presiding Judge on the further hearing in that Court. We grant a costs certificate to the respondent pursuant to s.6(1) and in accordance with s.6(3)(a) and (b) of the Federal Proceedings (Costs) Act 1981.
I certify that this and the preceding twenty (20) pages are a true copy of the Reasons for Judgment herein of the Court.
Associate
Dated:
Counsel and Solicitors Mr. S.L. Walmsley instructed by
for Applicant: Phelps Reid
Counsel and Solicitors Mr. M.B. Oakes SC with
for Respondents: Mr. R. Arthur instructed by
Phillips Fox
Date of hearing: 20 June 1996
Date Judgment delivered: 20 June 1996
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