Despot v Registrar General of New South Wales

[2016] NSWCA 5

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Despot v Registrar General of New South Wales [2016] NSWCA 5
Hearing dates:	23 - 24 July 2015
Date of orders:	03 February 2016
Decision date:	03 February 2016
Before:	Gleeson JA at [1]; Leeming JA at [ 174]; Sackville AJA at [ 175]
Decision:	1.   Appeal dismissed. 2.   Appellant to pay the costs of the second, third and fourth respondents.
Catchwords:	ESTOPPEL – Res judicata or cause of action estoppel – where order for specific performance made – condition as to payment of part purchase price not fulfilled – order not complied with – purchaser and incoming mortgagee obtain registration – on earlier appeal, vendor sought to maintain order for specific performance but vary condition as to payment on basis that amount of unpaid purchase price exceeded that found by trial judge – argument not able to be made on earlier appeal because inconsistent with basis upon which trial judge found purchaser ready, willing and able to perform – vendor obtained judgment on appeal for the outstanding purchase price and interest – vendor subsequently terminated the contract and applied to set aside order for specific performance – inconsistent remedies of enforcing order for specific performance by obtaining (and later recovering) judgment for outstanding purchase price and setting aside order for specific performance -– merger of rights and obligations under contract in money judgment obtained on earlier appeal – where relief sought before primary judge is inconsistent with judgment of the court on the earlier appeal which stands unreversed   CONTRACT – where order for specific performance made ––vendor fulfils all obligations under contract – condition as to payment of part purchase price not fulfilled – vendor seeks to enforce order and obtains judgment for payment of outstanding purchase price and interest – where vendor subsequently terminates contract – application by vendor to set aside order for specific performance – whether election between inconsistent remedies – where order for specific performance not complied with – merger of rights and obligations under contract in money judgment
Legislation Cited:	Home Building Act 1989 (NSW) Real Property Act 1900 (NSW), s 42; s 42(1); s 74 Supreme Court Act 1970 (NSW), s 75A (5), (7) and (9) Uniform Civil Procedure Rules 2005 (NSW), r 39.50; r 36.15(1); r 36.16; r 36.16(3A); subrule 1; sub-rule 3C
Cases Cited:	Achurch v The Queen [2014] HCA 10; 253 CLR 141 Aarons v Advance Commercial Finance Ltd (1995) 6 BPR 13,911 A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701 Austins of East Ham Ltd v Macey [1941] Ch 388 Bahr v Nicolay [No 2] [1998] HCA 16; 164 CLR 604 Barclays Bank plc v Estates & Commercial Ltd [1997] 1 WLR 415 Baxter v Obacelo Pty Ltd [2001] HCA 66; 205 CLR 635 Blair v Curran [1939] HCA 23; 62 CLR 464 Boland v Dillon; Cush v Dillon [2015] NSWCA 183 Breskvar v Wall [1971] HCA 70; 126 CLR 376 Buckman v Rose (1980) 1 BPR 97,059 Capital Properties v Swycher [1976] Ch 319 Carr v Finance Corporation of Australia (No 1) [1981] HCA 20; 147 CLR 246 Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149 Chamberlain v Deputy Federal Commissioner of Taxation [1988] HCA 21; 164 CLR 502 Ciavarella v Balmer [1983] HCA 26; 153 CLR 438 Derrawee Pastoral Company Pty Ltd v McConochie [1995] NSWCA 123 Despot v Registrar General of NSW; Sky v Despot [2011] NSWSC 273 Despot v Registrar General [2012] NSWCA 160 Despot v Registrar General of NSW [2013] NSWCA 313 Despot v Registrar General of NSW [2014] NSWSC 1002 Despot v Registrar General of NSW (No 2) [2014] NSWSC 1122 Despot v Registrar General of NSW; Dlakic trading as Johnston Vaughan Solicitors v Despot [2014] NSWSC 1303 Dunworth v Mirvac Queensland Pty Ltd [2011] QCA 200; [2012] 1 Qd R 207 El-Saeidy v NSW Land & Housing Corporation [2014] NSWCA 172 Facey v Rawsthorne [1925] HCA 10; 35 CLR 566 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 Forge & Ors v Australian Securities & Investments Commission [No 2] [2007] NSWCA 42; 69 NSWLR 575 Frazer v Walker [1967] AC 569 Harding v University of New South Wales [2002] NSWCA 325 Heggies Bulkhaul v Global Minerals Australia [2003] NSWSC 851; 59 NSWLR 312 Hewett v Court [1983] HCA 7; 149 CLR 639 Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd [2012] NSWCA 61 Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; 182 CLR 26 Jackson v Goldsmith [1950] HCA 22; 81 CLR 446 JAG Investments Pty Ltd v Strati [1981] 2 NSWLR 600 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Johnson v Agnew [1980] AC 367 Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 Lee v New South Wales Crime Commission [2012] NSWCA 262; 224 A Crim R 94 Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; 136 CLR 444 Perpetual Trustees Australia Ltd v Heperu Pty Ltd & Ors (No 2) [2009] NSWCA 387; 78 NSWLR 190 Petersen v Moloney [1951] HCA 57; 84 CLR 91 Re Ferrarese and Others; Ex parte Aloisio (1995) 60 FCR 586 Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 Re Luck [2003] HCA 70; 78 ALJR 177 Carr v Finance Corporation of Australia (No 1) [1981] HCA 20; 147 CLR 246 Riltang v L Pty Ltd [2004] NSWSC 977; 12 BPR 22,347 R v Marks; Ex parte Australian Building Construction Employees' and Builders Labourers’ Federation [1981] HCA 33; 147 CLR 471 Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1989) 166 CLR 245 Tang Man Sit v Capacious Investments Ltd [1996] AC 514 Thiess Pty Ltd v Industrial Court of New South Wales [2010] NSWCA 252; 78 NSWLR 94 Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; 323 ALR 1 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Vella v Aliperti (1995) 7 BPR 97586 Victorian Stevedoring and General Contracting Co Pty Ltd sub nom Meakes v Digan [1931] HCA 34; 46 CLR 73 Wishart v Fraser [1941] HCA 8; 64 CLR 470
Texts Cited:	R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed 2002, LexisNexis) Spencer Bower and Handley; Res Judicata (4th ed 2009, LexisNexis London)
Category:	Principal judgment
Parties:	Ranko Despot (Appellant) Registrar General of New South Wales (First Respondent) Stelli Pty Ltd (Second Respondent) Westpac Banking Corporation (Third Respondent) Joyce Azzi (Fourth Respondent)
Representation:	Counsel: J Hewitt / Z Hillman (Appellant) Submitting appearance (First Respondent) D Williams / A Kaylinger (Second and Fourth Respondents) A Leopold SC / P Dowdy (Third Respondent)   Solicitors: Pamela J Enright (Appellant) Land & Property Information, Legal Services (First Respondent) Kheir & Associates (Second and Fourth Respondents) Henry Davis York (Third Respondent)
File Number(s):	2014/247042
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: Despot v Registrar General of NSW [2014] NSWSC 1002 (28 July 2014) Despot v Registrar General of NSW (No 2) [2014] NSWSC 1122 (20 August 2014) Date of Decision: 28 July 2014 and 20 August 2014 Before: Ball J File Number(s): 2009/298869

Judgment

1. GLEESON JA: This appeal concerns an unsuccessful application by the appellant (Mr Despot) to set aside an order for specific performance made in proceedings (the Equity Proceedings) brought by cross claim by the second respondent, Stelli Pty Ltd (Stelli) against Mr Despot in respect of a contract for sale dated 16 May 2008 of a strata unit in Double Bay (the property) from Mr Despot to Stelli.

2. The history of this matter is unusual in that the decision to order specific performance, which Mr Despot now seeks to set aside, has already been the subject of a partly successful appeal in this Court.

3. On 15 April 2011, Macready AsJ made a declaration in the Equity Proceedings that the contract was valid and binding and ought be specifically performed and carried into effect. His Honour also made an order for specific performance of the contract upon payment of $91,086 by Stelli to Mr Despot. Despite non-payment of that amount by Stelli to Mr Despot, various dealings with respect to the property were registered by the first respondent, the Registrar General of New South Wales (Registrar General) on 30 May 2011. As a consequence, Stelli became the registered proprietor of the property and St George Bank Ltd (St George), as lender to Stelli, became the registered mortgagee of the property. An existing registered mortgage held by St George, securing the amount owing by Mr Despot was discharged. The third respondent, Westpac Banking Corporation (Westpac), is the successor to St George.

4. Mr Despot appealed against the orders made by Macready AsJ but importantly, ultimately did not challenge the order for specific performance. Instead, he sought an order on appeal for payment of the unpaid purchase price, which he claimed was in excess of $1 million. On 20 September 2013, this Court held that it was not open to Mr Despot to claim that the amount of the unpaid purchase price was greater than $91,086, and gave judgment in favour of Mr Despot against Stelli (which was later amended on 10 October 2013) for the sum of $91,086 plus pre-judgment interest of $23,148, such judgment to take effect on 15 April 2011: Despot v Registrar Generalof NSW [2013] NSWCA 313 (the 2013 appeal).

5. On 6 May 2014, Mr Despot gave notice terminating the contract on the ground that Stelli had failed to observe the condition as to payment of $91,086 in the order for specific performance made by Macready AsJ. Also on 6 May 2014, Mr Despot filed a notice of motion seeking declarations to the effect that he had validly terminated the contract, or alternatively, an order that he have leave to terminate the contract. In addition Mr Despot sought orders vacating the order for specific performance (specifically order 8) and other ancillary orders, on the same basis. Those ancillary orders included that the Registrar General record Mr Despot as registered proprietor of the property, cancel any record of Stelli as registered proprietor and amend the record of the mortgage in favour of Westpac.

6. The primary judge (Ball J) held that Mr Despot could not terminate the contract for sale without first seeking an order that the order for specific performance be vacated, and that he was not entitled to give a notice of termination of the contract in any event. His Honour also rejected Mr Despot’s arguments that he was entitled to set aside the transfer of the property to Stelli or Westpac’s mortgage: Despot v Registrar General of NSW [2014] NSWSC 1002.

7. Mr Despot has appealed against that decision.

8. Westpac objected to the competency of the appeal on the ground that his Honour’s decision was interlocutory and therefore, by reason of s 101(2)(e) of the Supreme Court Act 1970 (NSW) an appeal lies only if there is a grant of leave. In response to Westpac’s competency motion, Mr Despot filed a summons seeking leave to appeal on 3 November 2014.

9. For the reasons that follow, I have concluded that leave to appeal is required and such leave should be granted, but the appeal be dismissed with costs.

10. As will appear, among the many issues raised on appeal is the question of whether Mr Despot is precluded from seeking to vacate the order for specific performance made by Macready AsJ in circumstances where he ultimately did not challenge that order on appeal and the judgment of this Court on the 2013 appeal stands unreversed. At issue is whether Mr Despot’s conduct in the 2013 appeal involved a relevant election against challenging the order for specific performance, and in any event, whether the judgment of this Court on the 2013 appeal gives rise to a res judicata.

11. These questions make it necessary to consider in some detail the events giving rise to the order for specific performance in the Equity Proceedings and the way in which the 2013 appeal was advanced by Mr Despot and determined by this Court.

RELEVANT FACTS

12. In 2007, Mr Despot engaged the eighth defendant in the Equity Proceedings, Sky Constructions Pty Ltd (Sky Constructions), to undertake renovation work on the property. The building work commenced in August 2007 and continued through to May 2008. Mr Despot was overseas for substantial parts of that period. Sky Constructions did not have a builder's licence under the Home Building Act 1989 (NSW), and there was no contract of insurance in relation to the building work as required by s 92 of that Act. That fact emerged late in the hearing before Macready AsJ.

13. On 5 September 2007, Mr Despot executed a general power of attorney, which was registered on 6 May 2008, to the second defendant (Mr Maalouf), a director and controller of Sky Constructions. On 16 May 2008, Mr Maalouf, acting as Mr Despot’s attorney (and without his knowledge), entered into a contract of sale for the property for a price of $1.6 million to Stelli. By then, Sky Constructions claimed that Mr Despot owed it the sum of $944,932 in respect of the renovation work it had undertaken.

Events of 3 July 2008

14. Settlement of the sale of the property occurred on 3 July 2008. At settlement, St George advanced to Stelli the sum of $1,120,000, and Stelli paid a total of $1,028,914, of which $502,540 went to discharge an existing mortgage which Mr Despot had granted to St George, $464,932 went to Sky Constructions and the balance went to pay outstanding rates, leaving $480,000 owing as vendor finance and a shortfall of $91,086. That shortfall arose because Stelli had overlooked the fact that, at settlement, it would be required from the money advanced by St George to pay the mortgagee’s costs ($15,319), stamp duty ($73,490) and legal costs on the conveyance to Stelli's solicitors, Kheir & Associates ($2,186). Also at settlement, St George obtained a transfer to Stelli executed by Mr Maalouf, a discharge of mortgage in respect of the mortgage granted by Mr Despot to Westpac and the mortgage executed by Stelli in favour of St George.

15. On or shortly after 3 July 2008, St George lodged the various instruments it obtained with the New South Wales Department of Lands for registration. They were given unregistered dealing numbers.

16. On 21 July 2008, Mr Despot discovered that the contract for sale had been entered into by Mr Maalouf as his attorney. His solicitors at the time, Johnston Vaughan, wrote immediately to the solicitors for Stelli and Mrs Azzi alleging that Mr Maalouf had sold the property fraudulently. (Mrs Azzi was the sole director and shareholder of Stelli.) On the same day, Mr Despot executed a revocation of the power of attorney in favour of Mr Maalouf and lodged a caveat against the property.

17. On 22 July 2008 Mr Despot commenced proceedings against the Registrar General, Mr Maalouf, Stelli and Westpac to restrain the Registrar General from registering any dealings and to restrain Mr Maalouf acting pursuant to the power of attorney. Interim orders to that effect were made on that day.

18. Pursuant to directions given on settlement by Mr Carbone, who was the solicitor instructed by Mr Maalouf in relation to the sale of the property, Stelli made five payments between 6 August and 16 October 2008 totalling $480,000, directly to Sky Constructions. Those payments were made under the vendor finance arrangement.

19. Mr Despot later agreed to vacate the property, and that Ray White & Co be appointed as managing and letting agent. Orders to give effect to those arrangements were made by Barrett J (as his Honour then was) on 15 August 2008. Those orders, which were expressly made “until further order” of the Court, included:

5.    Upon [Mr Despot] giving to the Court through Counsel the usual undertaking as to damages the Court makes orders 6, 7 and 8 below.

6.    The [Registrar General] is restrained from registering any dealing and / or instrument and / or document of whatsoever nature over [the property].

7.    An order that [Mr Maalouf] is restrained from acting pursuant to the power of attorney alleged to have been executed by [Mr Despot] on 5 September 2007 ....

8.    An order that [Mr Maalouf] be restrained from representing that he is the holder of a power of attorney granted by [Mr Despot] and acting pursuant to any power of attorney listing [Mr Despot] as the principal.

20. In March 2009, Sky Constructions commenced proceedings against Mr Despot. The two proceedings were heard before Macready AsJ in late 2010.

Equity Proceedings before Macready AsJ

21. As finally constituted, the Equity Proceedings raised a large number of issues, including claims by Mr Despot to set aside the sale of his property, claims by Sky Constructions to recover payment for the building work it had undertaken and claims by Mr Despot against Westpac that it had breached a duty of care it owed to Mr Despot as a customer causing him loss and damage. Stelli and Mrs Azzi brought a cross-claim against, among others, Mr Despot seeking an order for specific performance of the contract for sale dated 16 May 2006.

22. The Equity Proceedings so far as they concerned Westpac were settled on the first day of the hearing. Order 4 of the consent orders as between Mr Despot and Westpac provided:

Otherwise dismiss [Mr Despot's] claim against [Westpac] comprised in the First Amended Statement of Claim filed 10 February 2010 as if on the merits with no order as to costs to the intent that those parties bear their own costs ...

As a result of those orders, Westpac did not participate in the hearing before Macready AsJ.

23. Macready AsJ delivered his reasons for judgment on 31 March 2011: Despot v Registrar General of NSW; Sky v Despot [2011] NSWSC 273. In a further judgment delivered on 29 April 2011 he dealt with the costs of the proceedings.

24. On 15 April 2011, the following orders and declarations (relevant to the relief later sought by Mr Despot in the 2013 appeal) were made:

1.    Judgment for [Mr Despot] against [Mr Maalouf] in the sum of $788,375.35, including interest.

...

6.    Order that the Injunction granted on 22 July 2008 to [Mr Despot] against the [Registrar General], [Stelli] and [St George/Westpac] be dissolved.

7.    Declaration that the Contract for Sale dated 16 May 2008 between [Mr Despot] as Vendor and [Stelli] as Purchaser ('the Contract') is valid and binding and ought to be specifically performed and carried into effect.

8.    Upon the payment by [Stelli] to [Mr Despot] or as he may direct of the sum of $91,086, the Contract be specifically performed and carried into execution by [Mr Despot] and [Stelli] so far as it remains to be performed.

9.    Order that the [Mr Maalouf] is to have credit for the sum of $91,086 upon payment of that sum by [Stelli].

10.    A declaration that [Mr Maalouf] is liable to account to [Mr Despot] for the sum of $628,057.13 plus interest of $160,318.22, calculated to 8 April 2011.

11.    An order that [Mr Maalouf] account for and pay to [Mr Despot] the sum of $788,375.35 within 28 days of the date of this order.

25. Macready AsJ found that Mr Despot was bound by the contract for sale, that the power of attorney he had granted to Mr Maalouf was irrevocable and that Sky Constructions was only entitled to be paid the sum of $316,874.87 in respect of its construction work (on a quantum meruit basis). Accordingly, Mr Maalouf had to account to Mr Despot for the sum of $628,057.13. His Honour held that Mr Maalouf was not entitled to rely on the power of attorney because he was in breach of various provisions of the Home Building Act 1989 (NSW). However, he held that Mr Maalouf had ostensible authority to enter into the contract of sale and to execute the transfer of the Property on behalf of Mr Despot: [2011] NSWSC 273 at [131], [173].

26. His Honour further found that Mr Despot should have the benefit of a direct payment from Stelli of $91,086, “being the outstanding part of the purchase price”: at [295]. His Honour held that upon payment by Stelli of the outstanding $91,086, Stelli would be entitled to a declaration in terms of paras 1 and 2 of its claim for relief (a declaration that the contract for sale dated 16 May 2008 is valid and binding upon the parties, and a declaration that the transfer executed on 3 July 2008 by Mr Maalouf on behalf of Mr Despot is valid and registrable) with consequential orders to effectuate registration of the transfer. His Honour noted that it should be a condition of relief that the sum of $91,086 be paid direct to Mr Despot by Stelli: at [311].

25. Macready AsJ also ordered on 15 April 2011 that Mr Despot withdraw the caveat he had lodged against the property. His Honour reserved the question of costs and also reserved liberty to the parties to apply. He stayed the orders he had made until 28 days after delivery of his reasons on costs, which occurred 29 April 2011. Those orders included orders that Mr Despot pay the costs of Stelli and Mrs Azzi of his proceeding and their cross-claim. Consequently, the orders of 15 April 2011 took effect on 27 May 2011.

The hearing on 27 May 2011

28. On 27 May 2011 the proceedings were before Macready AsJ, and counsel for Stelli (acting on instructions) informed the Court that:

Stelli was ready, willing and able to immediately pay the outstanding amount of $91,086.

Mr Dowdy of counsel, who appeared for Westpac, informed the Court that Westpac intended to take steps to have the transfer to Stelli and its mortgage registered. Ball J found (at [23]) that Macready AsJ acknowledged Westpac's right to do so was a consequence of the expiration of the stay of the 15 April 2011 orders. On the same day, Mr Despot filed a notice of intention to appeal.

29. Also on 27 May 2011, Macready AsJ made the following order:

All parties have liberty to apply on 7 days notice in the event of any need to deal with any matters involved in or arising out of the implementation and carrying through into effect of the final orders of the Court made on 15 April 2011.

30. Mrs Azzi gave evidence before Ball J that after 27 May 2011 she received advice from her solicitor, Mr Kheir, to the effect that Mr Despot’s liability to Stelli under the costs order made by Macready AsJ on 29 April 2011, would amount to hundreds of thousands of dollars and well in excess of the $91,086 owing by Stelli under the contract of sale. Mr Kheir advised Mrs Azzi (based on advice he had received from senior counsel) that the payment of the sum of $91,086 should not be made and that she should instruct him to attempt to negotiate a set-off arrangement with Mr Despot’s solicitors. Mrs Azzi also gave evidence that Mr Kheir advised her that it would not be prudent to make payment of the $91,086 to Mr Despot since Mr Despot had signalled an intention to appeal. Mrs Azzi said that she accepted that advice and gave instructions to that effect. This change of position on the part of Mrs Azzi on behalf of Stelli was unknown to Westpac at that time.

Registration of dealings on 30 May 2011

31. On 30 May 2011 the solicitors for Westpac wrote to the Registrar General enclosing sealed copies of the orders made by Macready AsJ, and requested that the Registrar General withdraw the caveats lodged by Mr Despot and register forthwith the unregistered dealings in respect of the property, including the discharge of an existing mortgage in favour of St George (given by Mr Despot), the transfer to Stelli, and a mortgage to St George (given by Stelli).

32. Upon registration of these dealings on 30 May 2011, Stelli became the registered proprietor of the property and St George (now Westpac), became the registered mortgagee in respect of the mortgage given by Stelli.

33. Ball J found that Mr Sullivan, the solicitor acting for Westpac and author of the 30 May 2011 letter, did not know at the time the letter was written that Stelli had not paid Mr Despot the outstanding purchase price of $91,086: at [25]. There is no challenge to this finding.

Events following registration

34. On 31 May 2011, Westpac’s solicitors informed Mr Despot’s then solicitors by letter that they had sought registration of Westpac’s mortgage and enclosed a copy of their 30 May 2011 letter to the Registrar General.

35. Thereafter extensive correspondence ensued between the legal representatives of Mr Despot and Stelli concerning the payment of the $91,086. Mr Despot asserted an entitlement to be paid the $91,086. A creditor’s statutory demand for payment dated 22 August 2011 was served on Stelli. Ball J found (at [26]) that Stelli took the position that, although it accepted that the $91,086 was owing, it wanted to discuss its payment in circumstances where Stelli had obtained a costs judgment against Mr Despot in respect of the hearing before Macready AsJ. His Honour noted that in correspondence dated 12 August 2011, Stelli claimed that its legal costs up until that time were $725,237.98. His Honour also found that Stelli wanted the question of any appeal to be resolved before it paid the $91,086.

36. It seems that at about this time, Mr Despot became dissatisfied with his then solicitors, Johnston Vaughan. On 30 August 2011, Mr Despot sent letters to the solicitors for all defendants stating that he intended to appeal (having previously filed a notice of intention to appeal) and requested all parties not to take any action until he had obtained the files and instructed new solicitors. Also on that date, Mr Despot lodged a caveat against the property claiming an unpaid vendor's lien in respect of the sum of $91,086 which had not been paid to Mr Despot.

37. Importantly, Mr Despot did not make any application pursuant to the liberty to apply granted by Macready AsJ on 27 May 2011, seeking to set aside the order for specific performance on the ground of Stelli’s failure to comply with the condition as to payment of the $91,086.

The 2013 appeal

38. On 20 February 2012 Mr Despot filed, out of time, a notice of appeal against the decision of Macready AsJ. An application for an extension of time was granted by Meagher JA on 4 June 2012: Despot v Registrar General [2012] NSWCA 160.

39. In correspondence with the solicitors for Westpac dated 16 March 2012, Mr Despot’s new solicitor, Mr Mark Gallego, confirmed that “the orders sought by our client in the appeal do not presently seek to reverse the dealings so far registered. …. Please note also that we reserve our client’s rights to make further application to the Supreme Court of New South Wales to seek orders in relation to the orders entered on 5 May 2011 including reversing dealings that are not inconsistent with those orders”.

40. Mr Despot’s written submissions in support of the application for an extension of time stated that he had:

…framed the relief sought on the appeal so that there is no prejudice to the respondents. The appellant does not seek to set aside the order that the sale contract be specifically enforced: Order 6. Rather, the appellant seeks orders for the payment of money.

41. Ball J found that in seeking that extension to file a notice of appeal, Mr Despot was faced with a choice. He could have sought to appeal against the order for specific performance with the intention of setting aside the transfer, in which case the respondents to the application for an extension of time would have had a stronger argument that they had or would suffer prejudice by reason of the delay in filing the notice of appeal, with a consequent reduction in the prospects of obtaining an extension. Alternatively, Mr Despot could have accepted the order for specific performance and challenged Macready AsJ's judgment on other grounds. Ball J found that Mr Despot chose the latter course: [2014] NSWSC 1002 at [28]. This finding is not challenged on appeal.

42. In further correspondence with Westpac’s solicitors dated 24 July 2012, Mr Despot’s solicitor had asserted that Mr Despot’s vendor’s lien over the property secured the entire amount which remained owing to him by Stelli and Mrs Azzi, which was claimed, was an amount of $1,097,460 plus interest.

Mr Despot’s amended notice of appeal and arguments on the 2013 appeal

43. Mr Despot filed an amended notice of appeal on 13 September 2012. The relief sought did not seek to impugn or reverse the dealings so far registered or otherwise affect the interests of either Stelli or Westpac.

44. Mr Despot’s written submissions dated 26 October 2012, stated under the heading “Orders, substantive relief”:

93.    Mr Despot does not seek to set aside the order that the sale contract be specifically enforced: Order 7. However, that order should have been made on terms that Stelli and Mrs Azzi pay the full amount of the purchase price. Mr Despot seeks orders that Stelli and Mrs Azzi pay Mr Despot the unpaid balance of the purchase price under the sale contract in the amount of $1,097,460 plus interest. [Emphasis added]

45. The appeal to this Court was heard on 19 and 20 March 2013. In his oral opening, counsel for Mr Despot confirmed that Mr Despot did not seek to set aside the order for specific performance. Counsel stated:

Now on appeal what we’ve done is take the approach which is to say that the order for specific performance should not have been made below but the fact is they were and what we seek now is for terms to be imposed that we’d be paid the purchase price plus interest. We say those terms should have been imposed at trial and we submit they should now be imposed on appeal. [Emphasis added]

46. This remained the position of Mr Despot in both his written submissions in reply dated 14 March 2013 (not in appeal books but see CA tcpt 24/7/15 at 80, lines 19-21) and his oral closing submissions. Relevantly paras 31-32 of Mr Despot’s written reply submissions contained the following:

31.    Further, order 8 of the orders made by the primary judge on 15 April 2011 was as follows:

Upon payment by [Stelli] to [Mr Despot] or as he may direct of the sum of $91,086, the Contract be specifically performed and carried into execution by [Mr Despot and Stelli] so far as it remains to be performed.

32.   That was an order that both Stelli and Mr Despot specifically perform the contract. Stelli is in breach of that order having not paid the sum of $91,086 to Mr Despot. If a purchaser fails to comply with a decree of specific performance, the vendor can seek enforcement of the specific performance decree and recovery of any moneys which may be due under any judgment or order resulting from the working out of the decree. This allows the vendor to recover the balance of the purchase price as well as interest and costs. If a vendor cannot recover all that is due to it in this way, it can have recourse to its vendor's lien on the property: Capital Properties v Swycher [1976] 1 Ch 319 at 327-328; see also Fry, A Treatise on the Specific Performance of Contracts at §1175. [Emphasis added] [Reference to appeal books omitted.]

47. Thus notwithstanding that the grounds of appeal suggested otherwise, Mr Despot did not seek to set aside on appeal the order that the contract of sale be specifically performed. He argued, instead, that the order should be varied and an order made requiring payment by Stelli and Mrs Azzi of “the full amount of the unpaid purchase price”, which was said to have been $1,097,460 and not $91,068. The former amount was calculated as the purchase price ($1,600,000) less the amount paid on settlement to discharge Mr Despot’s mortgage to St George ($502,540). This calculation did not take account of moneys paid on settlement to discharge the vendor’s legal costs and outstanding land tax, water rates and other outgoings.

Judgment in the 2013 appeal

48. This Court delivered judgment in the 2013 appeal on 20 September 2013 and made the following orders (relevant to the relief sought by Mr Despot on appeal against Stelli, Mrs Azzi and Westpac):

(1)   ...

(2)   Appeal allowed in part.

…

(5)   Judgment for the appellant against Stelli for the sum of $91,086 plus pre-judgment interest of $21,746, that judgment to take effect on 15 April 2011.

(6)   Appeal otherwise dismissed.

...

(8)   The appellant pay the costs of the third, fifth and sixth respondents of the appeal.

(9)   The appellant pay the costs of the fourth respondent (St George) of the appeal including its costs of his application to amend the Notice of Appeal to seek relief against it.

49. Meagher JA (with whom Ward JA and Bergin CJ in Eq agreed) rejected Mr Despot’s submission that the primary Judge erred in failing to make it a condition of the order for specific performance that Stelli pay $1,097,460, as the amount remaining due under the contract for sale. Meagher JA observed (at [77]) that acceptance of this argument would require the making of findings which were inconsistent with the findings on which the order for specific performance, which was not challenged, was based. Those findings were that Stelli was ready, willing and able to perform a contract which only required that it make a further payment of $91,086.

50. Meagher JA held that Mr Despot could not make this argument on appeal, particularly in circumstances where he did not seek to set aside the order for specific performance made by Macready AsJ. His Honour observed that Mr Despot’s argument depended on that order being maintained because the only justification for the order sought on appeal was as a condition of the order for specific performance: at [79]. His Honour continued:

[80]    Mr Despot made no freestanding claim against Stelli or Mrs Azzi for payment of the balance of the purchase price in the event that his claims that the contract should be set aside were rejected. In relation to Stelli's cross-claim for specific performance, the only condition Mr Despot sought was that the amount of $91,086 be paid. He did not seek an order that Mrs Azzi pay that amount.

[81]    The claim which Mr Despot now seeks to make as to the amount of unpaid purchase moneys is inconsistent with his case as pleaded and conducted. That case was that $91,086 remained unpaid under the contract for sale and that $480,000 was advanced to Stelli by way of vendor finance. The result was that the amount notionally advanced was “paid” in partial satisfaction of the purchase price. That amount became due under a loan agreement and, for that reason, could not have been the subject of an unpaid vendor's lien: Wossidlo v Catt [1934] HCA 52; 52 CLR 301 at 308, 310-311; Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 478. The primary judge made findings that vendor finance had been provided to enable Stelli to complete the purchase: [104], [116]. Those findings are not challenged on appeal. When making them, the primary judge did not refer to the mortgage executed in July 2008 by Stelli and Mr Maalouf, on behalf of Mr Despot, for the purpose of securing the repayment of that loan. The existence of that mortgage further confirms the correctness of the finding made.

[82] The primary judge's conclusion that Stelli was ready, willing and able to perform was based upon his finding that it was prepared to pay the shortfall of $91,086, the balance of the purchase price having been paid by the vendor finance arrangement: [180], [183], [197]. To permit Mr Despot to maintain that order and, at the same time, to argue that the primary judge erred in the condition imposed when making it, would allow an argument to be made on appeal which could not have been made at the trial without also considering its consequences for Stelli's being ready, willing and able to complete. If Mr Despot's argument on appeal had been put and accepted at trial, the relevant question would have been whether Stelli was ready, willing and able to pay a further $924,932 to secure an order for specific performance, when it had already paid in excess of $1.5m and had questionable prospects of recovering the moneys paid to Sky Constructions. It is most unlikely that Stelli would have contended that it was ready, willing and able to complete on that basis. It would plainly suffer prejudice if Mr Despot was permitted to make this argument for the first time on appeal.

...

[86]    Except in one respect, Mr Despot's appeal, in so far as it concerns Stelli and Mrs Azzi, should be dismissed. That respect concerns whether an order should be made that Stelli pay $91,086 to Mr Despot. The primary judge did not make an order in those terms. He appears to have assumed, wrongly, that if that amount was not paid, the registration of the dealings necessary to give effect to the contract could not proceed. Mr Despot seeks to set aside the condition as to payment and to obtain an order for payment of the unpaid purchase price. In my view Mr Despot is entitled to an order that Stelli pay $91,086 to him. The making of that order is consistent with the relief he sought in the Court below. I do not think that order should extend to Mrs Azzi because no claim was made against her as guarantor of Stelli's obligations under the contract for sale. [Emphasis added]

51. Counsel for Mr Despot accepted on this appeal that the reference in [86] of the reasons of Meagher JA to Mr Despot seeking to set aside the condition as to payment and instead obtain an order for payment of the unpaid purchase price by Stelli and Mrs Azzi, fairly reflected the argument advanced by Mr Despot in his written submissions on the 2103 appeal (set out at [42] above) (CA tcpt 23/7/15 at 54, lines 6-41).

52. On 1 October 2013, Ms Enright, solicitor for Mr Despot, sent an email to Mr Kheir, Stelli’s solicitor, requesting that Stelli pay the sum ordered to be paid by the Court of Appeal on 20 September 2013.

53. On 10 October 2013, this Court made an order to correct a mistake in the calculation of pre-judgment interest by amending order 5 of the orders it made on 20 September 2013 to read:

5.   Judgment for the appellant against Stelli for the sum of $91,086 plus pre-judgment interest of $23,148, that judgment to take effect on 15 April 2011.

54. On 18 October 2013, Mr Despot filed an application for special leave to appeal to the High Court against the decision of this Court. That application was dismissed with costs on 11 April 2014.

The various motions before Ball J

55. As already indicated, on 6 May 2014, Mr Despot served on Stelli and its solicitors, Kheir & Associates, a purported notice of termination of the contract “in accordance with cl 9 of the Contract”. The notice asserted that Stelli had “defaulted in the observance of the condition of the orders for specific performance of the [contract] made by Associate Justice Macready on 15 April 2011”. On the same day, Mr Despot filed a notice of motion in the Equity Proceedings seeking the declarations and ancillary relief already mentioned.

56. There were two other motions filed by Mr Despot concerning strata fees. These are not relevant to this appeal. Westpac also filed a motion seeking an order that the interlocutory injunction granted by Barrett J on 15 August 2008 be dissolved. Ultimately it was unnecessary for Ball J to deal with this motion and it was dismissed. Stelli and Mrs Azzi filed a motion seeking an order to set-off the costs order in Stelli’s favour in those proceedings against the balance of the purchase price owed by it. Ball J refused to make such an order and there is no appeal in respect of this matter.

The nature of the case before Ball J

57. Before the primary judge, Mr Despot claimed that he was entitled to have the transfer of the property to Stelli set aside on three bases. The first relied on the notice of termination given on 6 May 2014. Mr Despot contended that that notice could be supported not only by Stelli’s failure to pay the $91,086, but also by its failure to pay the $480,000 and the $464,932 (referred to at [14] above) on the ground that Mr Maalouf had no authority to direct the payment of those amounts to Sky Constructions.

58. Secondly, Mr Despot contended that the order for specific performance was conditional on the payment of $91,086, and that because that payment had never been made, Stelli had lost the benefit of the order. It was contended that the order for specific performance could be set aside relying upon Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 39.50, which provided:

If a person is entitled under a judgment or order subject to the fulfilment of a condition, but the condition is not fulfilled, then, unless the court orders otherwise:

(a)   the person loses the benefit of the judgment or order, and

(b)    any other person interested may take any steps:

(i)    that are warranted by the judgment or order, or

(ii)    that might have been taken had the judgment not been given or entered or the order not been made.

59. Thirdly, Mr Despot contended that the transfer of the property without the payment of $91,086 was obtained contrary to the orders made by Macready AsJ and involved a contempt of court by both Westpac and Stelli because their conduct in procuring registration was both a breach of the orders made by Macready AsJ and a breach of the injunction granted by Barrett J on 15 August 2008 (which had not been dissolved).

60. The primary judge rejected each of these arguments.

The primary judge’s reasons

61. As to the first argument, his Honour referred to the principles relating to orders for specific performance including the authorities for the proposition that contractual rights do not merge in an order for specific performance: at [44]. Reference was made to a number of authorities including: Ogle v ComboyuroInvestments Pty Ltd [1976] HCA 21; 136 CLR 444 (Ogle) at 460 (Gibbs, Mason and Jacobs JJ); Johnson v Agnew [1980] AC 367 at 393 (Lord Wilberforce); Buckman v Rose (1980) 1 BPR 97,059 (Buckman v Rose) at 9559 (McLelland J); JAG InvestmentsPty Ltd v Strati [1981] 2 NSWLR 600 (JAG Investments) at 603 (Hope JA; Glass and Mahoney JA agreeing); Dunworth v Mirvac Queensland Pty Ltd [2011] QCA 200; [2012] 1 Qd R 207 (Dunworth) at [21]. His Honour noted that the circumstances in which it may be necessary for the Court to reconsider an order for specific performance, included where some act has occurred (or not occurred) which gives rise to new contractual rights: at [45]. His Honour observed that most often the act is a failure by one party to perform the contract, and the contractual right is a right to terminate the contract because of that failure: at [49]. No complaint is made on appeal in relation to his Honour’s statement of these principles.

62. His Honour then turned to the question of whether a contractual right of termination can only be exercised with leave of the Court: at [50]. Reference was made to the views expressed in various editions of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, including the most recent edition at the time of his Honour’s reasons, which had criticised decisions holding that the contractual right can only be exercised with leave: see R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed 2002, LexisNexis) at [20-265]. Whilst noting that these criticisms were repeated by Meagher JA in Aarons v Advance Commercial Finance Ltd (1995) 6 BPR 13,911, his Honour accepted that the issue had been resolved by decisions of this Court in JAG Investments at 603 and in the High Court in Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; 166 CLR 245 (Sunbird Plaza) at 260.

63. His Honour observed that in Sunbird Plaza at 260, Mason CJ (Deane, Dawson and Toohey JJ agreeing) stated that in light of the existing authorities, particularly Facey v Rawsthorne [1925] HCA 10; 35 CLR 566, the High Court should continue to apply the proposition that “rescission after an order for specific performance requires the leave of the Court or, more appropriately, the vacation of the order”: at [51].

64. His Honour did not accept the contrary view expressed by Philip McMurdo J in Dunworth at [57], that a party seeking to be relieved of an order for specific performance can apply for vacation of the order after a right of termination has been exercised: at [52]. His Honour also noted that what Mason CJ was saying in Sunbird Plaza was that the relevant order was, strictly speaking, an order vacating the order for specific performance rather than an order giving leave to terminate: at [53]. Mr Despot challenges his Honour’s rejection of the approach of McMurdo J in Dunworth. Alternatively, Mr Despot contends that his Honour should have made an order granting him leave to terminate the contract, or (more accurately), an order setting aside the order for specific performance.

65. His Honour observed that in the present case, read literally, there was a degree of circularity in the order for specific performance: at [57]. He found however that the order resulted from a clear finding by Macready AsJ that the only amount outstanding in respect of the purchase price was the sum of $91,086 and that it was not open to Mr Despot to challenge that finding on which the order for specific performance was based, and which had not been overturned on the 2013 appeal: at [58].

66. His Honour accepted that the intention behind the condition of the order for specific performance was that Mr Despot should receive the sum of $91,086 before Stelli received by registration title of the Property: at [59]. Nonetheless he concluded (applying the decisions in JAG Investment and Sunbird Plaza) that Mr Despot did not have a right to terminate the contract of sale without first seeking an order that the order for specific performance be vacated. Consequently, his Honour found the notice of termination invalid: at [62].

67. In addition, his Honour found that Mr Despot was not entitled to give a notice of termination of the contract in any event: at [63]. This was for three reasons. The first was that Mr Despot had done everything required of him by the contract, relevantly by the provision of a signed transfer in registrable form and a signed discharge of Mr Despot’s mortgage to Westpac. His Honour found that upon those documents being handed over (on 3 July 2008) without Mr Despot obtaining the full purchase price, the solicitor on his behalf performed the contract and Mr Despot was entitled to a vendor’s lien in respect of the unpaid balance of the purchase price. Reference was made to Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 477. His Honour considered that termination at any subsequent time could not alter that fact: at [64].

68. Next, his Honour found that on registration of the transfer, Mr Despot’s contractual rights merged in his right to claim a vendor’s lien, which he claimed when lodging a caveat: at [65].

69. Finally, his Honour did not accept that Mr Despot was entitled to terminate the contract without giving a notice in accordance with Special Condition 2. (Special Condition 2 provided that should completion not take place by the completion date then either party shall be entitled to forward a notice to complete to the other party requiring completion of the contract within 14 days upon the receipt of such notice. In this respect, time shall be deemed to be of the essence of the contract). His Honour found that the delay by Stelli in the present case did not evince an intention not to be bound by the contract. His Honour reasoned that Stelli accepted that it owed Mr Despot the sum of $91,086 plus interest and that Stelli had sought to reach an agreement by which that amount could be set off against the cost orders Stelli had obtained against Mr Despot and had wanted to await the outcome of the appeal: at [66].

70. His Honour rejected Mr Despot’s second argument based on the rules, finding that UCPR r 39.50 can only operate where the order provides that the condition must be fulfilled by a specified time. His Honour observed that if it were otherwise, it would not be possible to know at any particular time whether the condition had been satisfied or not; and consequently it would not be possible to know whether the benefit of the order had been lost or not: at [68]. In addition, he found that Stelli had already obtained the benefit of the contract, and UCPR r 39.50 could not be read as undoing anything that was done pursuant to the order before the non-fulfilment of the condition: at [69].

71. His Honour also rejected Mr Despot’s third argument based on breach of the Court orders, finding that the injunction granted by Barrett J on 15 August 2008, although not specifically dissolved by the orders made by Macready AsJ on 15 April 2011, must have been intended to cease to operate when final orders were made, as happened on 15 April 2011, although those orders were stayed until 27 May 2011. His Honour reasoned that the order made by Barrett J, expressed in terms of “until further order”, operated as an interlocutory injunction: at [71].

72. His Honour was prepared to assume that there may be cases where a court will order the retransfer of property that has been obtained in breach of a court order, on the basis that the breach gives rise to a personal equity on the part of the person who obtained the interest in breach of the order. Reference was made to authorities, including Bahr v Nicolay [No 2] [1998] HCA 16; 164 CLR 604 at 613, 638 and 653-654 which recognised that, a registered proprietor or mortgagee of land under the Real Property Act 1900 (NSW) is not relieved from their personal obligations: at [74].

73. Nonetheless, his Honour found that no order was breached in this case by the conduct that lead to the registration of the transfer: at [75]. His Honour reasoned that Stelli had already obtained all the benefits of an order for specific performance conferred on it, because it had already obtained transfer in registrable form and a discharge of mortgage in registrable form on 3 July 2008. His Honour considered that the true benefit of the orders to Stelli and Westpac was the vacation of the injunction and the order that Mr Despot withdraw the caveat. His Honour also noted that neither of those orders was conditional on the payment of the $91,086: at [75].

74. His Honour observed that the condition on the order for specific performance assumed that Mr Despot would be paid the outstanding purchase price immediately and assumed that Stelli would not become registered proprietor of the property until this had occurred. He found that assumption was mistaken. It did not, in his Honour’s view, give rise to an obligation on the part of Westpac not to do what it did, nor an obligation on the part of Westpac or Stelli to prevent registration of the transfer and mortgage in circumstances where the orders preventing those acts had been dissolved: at [76].

75. With respect to Stelli’s notice of motion seeking to set-off the judgment for $91,086 against the costs orders it had obtained against Mr Despot, his Honour concluded that Stelli could not take the benefit of the orders made by Macready AsJ, which it had done, and at the same time, not make the payment that the orders contemplated would be made. Accordingly, his Honour found that Stelli should not be permitted to rely on a set-off that was contrary to the basis on which the orders made by Macready AsJ were made: at [79].

Mr Despot’s application to reopen or set aside the judgment of Ball J

76. By a notice of motion filed 8 August 2014, Mr Despot sought to reopen the judgment of Ball J on the ground that his Honour proceeded on a misapprehension of certain facts, and also to set aside the judgement on the ground that Stelli had not made the payment of $91,086 which his Honour considered ought to be made by it. Stelli and Westpac sought an order that any obligation to make the payment to Mr Despot be stayed until the resolution of any appeal.

77. On 20 August 2014 his Honour rejected the re-opening application and dismissed Stelli’s and Westpac’s application for a stay: Despot v Registrar General of NSW(No 2) [2014] NSWSC 1122. In refusing the application for a stay, his Honour noted (at [18]) that Westpac had given an undertaking to the Court that, if the Court concluded that a set-off was not available to Stelli and the money had to be paid, then it would be paid immediately either into court or as the Court directs, or failing that direction, in a way that gets it into the hands of Stelli so that Stelli could make the payment (to Mr Despot). No grounds of appeal are directed to challenging this decision.

Events after judgment of Ball J

78. Mr Despot filed his notice of appeal on 22 August 2014. On 1 September 2014, Westpac, on behalf of Stelli, paid into court the amount of the judgment against Stelli in the 2013 appeal, including interest, totalling $150,887.86. This amount had been claimed by both Mr Despot and Mr Dlakic, a judgment creditor of Mr Despot.

79. On 18 September 2014, Stevenson J made an order that this amount be paid out to Mr Despot: Despot v Registrar General of NSW; Dlakic trading as Johnston Vaughan Solicitors v Despot [2014] NSWSC 1303 (the garnishee judgment). It is common ground that Mr Despot has received this amount.

ISSUES ON APPEAL

80. The notice of appeal relied upon 14 separate grounds, some of which are connected. The grounds fall into three categories.

81. The first asserted that Ball J erred in failing to find that Mr Despot validly terminated the contract for sale on 6 May 2014, or in failing to grant leave to terminate the contract and vacate the order for specific performance (ground 1). Ultimately Mr Despot did not press ground 1 insofar as it asserted that non-payment of the amounts of $464,932.84 and $480,000 provided a separate basis for termination of the contract for sale.

82. Related to this ground were challenges to his Honour’s findings that Mr Despot’s obligations under the contract were discharged on 3 July 2008 when Mr Maalouf on his behalf provided a signed transfer of the property in registrable form to Stelli (grounds 7 and 8); that Mr Despot lost his rights under the contract by merger or through discharge by performance (ground 9); that Mr Despot was not entitled to terminate the contract without giving a notice to complete (ground 10); that Mr Maalouf had ostensible authority to execute the transfer of the property on behalf of Mr Despot, as Macready AsJ had so held (ground 13); and that settlement of the sale occurred on 3 July 2008 (ground 15).

83. The second category of grounds asserted that the primary judge erred in failing to dissolve the orders for specific performance (ground 5) and in failing to make consequential orders restoring Mr Despot as the registered proprietor of the property (ground 12). Related to these grounds were challenges to his Honour’s finding that Stelli had paid the purchase price (other than the $91,086) to Mr Despot in discharge of its contractual obligations on the basis that this issue was determined by Macready AsJ (ground 11); and in failing to find that Stelli had lost the benefit of the judgment and orders of Macready AsJ pursuant to UCPR r 39.50 (ground 2).

84. The third category of grounds challenged Stelli’s and Westpac’s indefeasible title to their respective interests in the property. It was asserted that Mr Despot had a personal equity against each of them on the basis that the registration of the transfer of the property was procured by misrepresentation by Stelli and Mrs Azzi (ground 6); that registration occurred contrary to the terms of the contract (ground 4); and that registration occurred contrary to the orders of Macready AsJ and Barrett J (ground 3).

85. Mr Despot did not press ground 6 (insofar as it relied upon the fraud exception to indefeasibility) and ground 14 (concerning the finding of Ball J that Macready AsJ’s conclusions as to ostensible authority were not challenged on the 2013 appeal).

86. Westpac filed a notice of contention which sought to support his Honour’s decision on five separate grounds. It is unnecessary to refer to all of those grounds.

87. Westpac’s primary contention was that Mr Despot’s rights in respect of the unpaid purchase price merged (by the doctrine of res judicata) in order 5 made by this Court on 20 September 2013, as subsequently varied on 10 October 2013 (ground 3). Related to this was the contention that Mr Despot’s claims before Ball J were precluded on the ground that Mr Despot’s conduct in the 2013 appeal constituted an election to affirm the contract in the 2013 appeal (ground 2).

88. Westpac also contended that, if there was any basis for vacating the order for specific performance, it was not appropriate as a matter of discretion that the order for specific performance be vacated (ground 5).

Leave to appeal

89. As already indicated, in response to Westpac’s competency motion, Mr Despot filed a summons seeking leave to appeal on 3 November 2014. Although filed out of time, Westpac did not assert any relevant prejudice arising from the short delay.

90. Mr Despot’s primary contention was that leave was not required because his Honour’s refusal of a declaration on substantive grounds was a final decision. Reference was made to A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701 at 712D, 715-717 and 719F; Harding v University of New South Wales [2002] NSWCA 325 at [42].

91. Westpac contended that the orders by Macready AsJ on 15 April 2011 finally disposed of the rights of the parties from which an appeal as of right was brought to this Court in the 2013 appeal. It was submitted that the rights of the parties cannot be finally determined twice. Westpac characterised the relief sought by Mr Despot before by Ball J as involving the “working out of” the order for specific performance: Riltang v L Pty Ltd [2004] NSWSC 977; 12 BPR 22,347 at [51] (White J). Reference was made to authority for the proposition that where a court embarks on a working out of orders previously made which effectively determine with finality the legal rights of the parties, the order of the court working out those orders is interlocutory: Re Ferrarese and Others; Ex parte Aloisio (1995) 60 FCR 586 at 591.

92. Westpac emphasised that in the 2013 appeal Mr Despot took the position that the orders made by Macready AsJ on 15 April 2011 finally determined the rights of the parties, from which Mr Despot was entitled to and did appeal as of right. Although there is some force in the submission that there is an inconsistency between that position and the position now taken by Mr Despot, the matter does not turn on what seems to have been common ground in the 2013 appeal. It is necessary to consider the substantive issue which has been raised by Westpac’s competency motion.

93. The usual test for determining whether an order is final or interlocutory is whether the order, as made, finally determines the rights of the parties in a principal cause pending between them, a question answered by determining whether the legal, rather than the practical, effect of the judgment is final or not: Re Luck [2003] HCA 70; 78 ALJR 177 at [4]; Carr v Finance Corporation of Australia (No 1) [1981] HCA 20; 147 CLR 246 at 248.

94. Thus in Derrawee Pastoral Company Pty Ltd v McConochie [1995] NSWCA 123, Handley JA held that an order for the purchase of shares in an oppression suit was an order which finally determined the rights of the parties in a principal cause pending between them. Subsequent orders which merely worked out the rights of the parties under that order were interlocutory.

95. In El-Saeidy v NSW Land & Housing Corporation [2014] NSWCA 172 at [58] and [64], this Court (McColl and Ward JJA) held that “working out orders, albeit in some cases expressed as declarations, merely concluded the fate of the particular application in which they were made, and accordingly, were interlocutory only.” As Young JA also explained in Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd [2012] NSWCA 61 at [28]-[29], although a declaration of right is always “final”, it may not “finally determine the rights of the parties”.

96. It may be accepted that the rights of the parties cannot relevantly be finally determined twice. Here, the orders for specific performance made by Macready AsJ on 15 April 2011 were final. Mr Despot sought to set aside the order for specific performance by a notice of motion filed pursuant to liberty to apply which had been subsequently granted by Macready AsJ on 27 May 2011. In my view, the orders made by Ball J were interlocutory, notwithstanding they involved the refusal of declaratory relief. The refusal of the declarations sought by Mr Despot merely concluded the fate of the particular interlocutory application in which they were sought.

97. Ordinarily leave to appeal is granted only where when there is an issue of principle or question of general public importance involved, or where it is reasonably clear that there has been an injustice which in the circumstances should be addressed. That may be the case if on the application for leave something more is shown than that the primary judge was arguably wrong. The relevant principles are stated, and authorities referred to, in Jaycar Pty Ltd vLombardo [2011] NSWCA 284 at [16]; Lee v New South Wales Crime Commission [2012] NSWCA 262; 224 A Crim R 94 at [12].

89. Mr Despot submitted that the appeal raised important questions of principle including the circumstances in which a party may terminate a contract after the making of orders for specific performance and whether the court’s permission is required before doing so. However, as will be seen, the appeal may be resolved without needing to address this issue. I would grant leave in the unusual factual circumstances of this litigation, not least of which was Mrs Azzi’s uncommunicated change of stance on 27 May 2011 and because of the issues raised by Westpac’s notice of contention. In particular, the issue of election and whether this Court’s orders in the 2013 appeal operate as a res judicata to preclude the relief sought by Mr Despot before Ball J, raise substantial issues which the primary judge did not find necessary to determine.

DISPOSITION OF THE APPEAL

99. It is convenient to first deal with the issues of raised by grounds 2 and 3 of Westpac’s notice of contention. The essential question is whether the money judgment which Mr Despot obtained against Stelli in the 2013 appeal constitutes a res judicata that prevents Mr Despot from later seeking to set aside the order for specific performance. Related to this is the issue of election between inconsistent remedies, following from Stelli’s failure to observe the condition as to payment in the order for specific performance.

Mr Despot’s submissions

100. With respect to res judicata, counsel for Mr Despot submitted that:

1. there was no res judicata arising from the 2013 appeal because the orders of this Court did not affect orders 7 and 8 made by Macready AsJ relating to specific performance, that those orders remain on the record and were continuing orders to Mr Despot (and Stelli) to perform their obligations under the contract; and

2. vacating order 8 so that Mr Despot would be relieved from his obligation to transfer legal title to the property to Stelli (albeit the transfer had already occurred on 30 May 2011) was not inconsistent with any orders made by this Court in the 2013 appeal.

Later counsel also submitted that:

3. no res judicata arose from order 5 in the 2103 appeal because the order for specific performance made in the Equity Proceedings did not supersede the contractual rights and obligations of the parties. Reference was made, among others, to Buckman v Rose at 9559 and JAG Investments at 604, to which Ball J had referred at [44]; and

4. the right to the unpaid purchase price did not merge in the judgment (order 5) in the 2013 appeal.

101. With respect to election, counsel for Mr Despot submitted that Mr Despot’s conduct in the 2013 appeal did not involve an election between inconsistent rights (or remedies) which preluded him from later seeking the relief sought before Ball J.

102. Counsel for Mr Despot accepted that:

1. Mr Despot made a deliberate decision not to seek to set aside the order for specific performance until after the 2013 appeal was heard and determined; and

2. Mr Despot could have exercised the liberty to apply granted by Macready AsJ on 27 May 2011 and sought to set aside the order for specific performance at the time of the correspondence from Mr Despot’s solicitors to Westpac dated 16 March 2012 (referred to at [39] above).

103. It was submitted that Mr Despot’s failure to apply to set aside the order for specific performance until after the 2013 appeal was determined was justified on the grounds that his position regarding title was protected by the caveat he had lodged and that he was in a parlous financial position and could not afford multiple proceedings.

104. Counsel for Mr Despot also accepted that Meagher JA fairly understood Mr Despot’s submission in para 93 of his written submissions on the 2013 appeal (set out at [44] above), to be that Mr Despot sought “to set aside the condition as to payment and to obtain an order for payment of the unpaid purchase price”: at [86].

105. Despite some reluctance in oral argument to address the inconsistency between Mr Despot asking this Court on the 2013 appeal to set aside the condition as to payment in order 8, and subsequently seeking to rely upon that condition to support Mr Despot’s purported termination of the contract, counsel for Mr Despot ultimately acknowledged that there was an inconsistency. The remedy sought on the 2013 appeal (that Mr Despot be paid the unpaid purchase price by Stelli) was inconsistent with the remedy sought before Ball J (that Mr Despot be restored as registered proprietor of the property).

106. It was submitted, however, that the time for election did not arise until a party established an entitlement to two inconsistent remedies. Here, it was contended that the time for election did not arise until Mr Despot had established his entitlement to be restored as registered proprietor of the property.

107. Nonetheless, counsel for Mr Despot acknowledged that to obtain the relief now sought in this Court on appeal, it would be necessary for the judgment of this Court on the 2013 appeal to be set aside. It was submitted that if Mr Despot was successful, he would submit to an order to apply to set aside order 5 in the 2013 appeal. Further, it was accepted that as a condition of any relief it would be appropriate that Mr Despot be ordered to repay the amount of the judgment (and interest) by way of restitution to Stelli, albeit Mr Despot’s written submissions contended that this amount should be reduced by the rents received from the property by Stelli and Westpac since 15 August 2008.

General principles

108. It is desirable to say something first about the general principles of election before considering the finality of an order for specific performance.

Election between inconsistent remedies

109. The distinction between alternate rights and remedies and its consequences has been described as “fundamental”: Ciavarella v Balmer [1983] HCA 26; 153 CLR 438 at 449. It is well established that in a situation of inconsistent remedies to enforce a right, no question of election arises until one or other claim has been pursued until judgment: United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30; Baxter v Obacelo Pty Ltd [2001] HCA 66; 205 CLR 635 at [39].

110. At the heart of election is the idea of confrontation which in turn produces the necessity of making a choice: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; 182 CLR 26 at 42.

111. As Lord Nicholls explained in Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 521D-E, “[f]aced with alternative and inconsistent remedies a plaintiff must choose, or elect, between them. He cannot have both. The basic principle governing when a plaintiff must make his choice is simple and clear. He is required to choose when, but not before, judgment is given in his favour and the judge is asked to make orders against the defendant”.

112. It is well established, however, that the contractual rights of the parties do not merge in the decree for specific performance: JAG Investment at 603E (Hope JA); Buckman v Rose at 9559 (McLelland J); Johnson v Agnew at 393G (Lord Wilberforce). As Sir Wilfrid Greene MR said in Austins of East Ham Ltd v Macey at 341, “[a]n order for specific performance does not get rid of the contract. The contract is not merged in the order, but it is treated, and always has been treated by the court of equity, as still subsisting”.

113. It has been said that if a party fails to comply with the order for specific performance, the other party may choose to proceed to enforcement of the order for specific performance, or instead of doing that, can elect to ask the Court to set aside the order for specific performance and put an end to the contract: Austins of East Ham Ltd v Macey [1941] Ch 388 at 341. The later reference to the court putting an end to the contract is now more accurately understood as a step taken by the party to the contract, the role of the court being limited to vacating the order for specific performance: see Sunbird Plaza at 260.

114. Importantly, an order vacating the order for specific performance does not follow as of course where one party is in default. It is a matter for the exercise of the Court’s discretion whether, in all the circumstances, to discharge the order for specific performance would be unjust to the other party: Facey v Rawsthorne at 577 (Knox CJ), 579 (Isaacs J), 588-589 (Higgins J); Buckman v Rose at 9559 (McLelland J); JAG Investment at 606; Johnson v Agnew [1980] AC 367 at 399F (Lord Wilberforce).

115. Lord Wilberforce explained the basis of this election in Johnson v Agnew at 394B-C as follows:

… if the order for specific performance is not complied with by the purchaser, the vendor may either apply to the court for enforcement of the order, or may apply to the court to dissolve the order and ask the court to put an end to the contract. This proposition is as stated in Austins of East Ham Ltd. v. Macey [1941] Ch. 338 (and see Singh (Sudagar) v. Nazeer [1979] Ch. 474 , 480, per Megarry V.-C.) and is in my opinion undoubted law, both on principle and authority. It follows, indeed, automatically from the facts that the contract remains in force after the order for specific performance and that the purchaser has committed a breach of it of a repudiatory character which he has not remedied, or as Megarry V.-C. puts it [1979] Ch. 474, 480, 790, that he is refusing to complete.

116. This passage of Lord Wilberforce’s speech in Johnson v Agnew was approved by the High Court in Sunbird Plaza at 264.

117. In Tang Man Sit v Capacious Investments Ltd at 521-522, Lord Nicholls explained why the finality of some orders is qualified by the principles of election, such as when an order for specific performance fails to be realised:

In the ordinary course the decision made when judgment is entered is made once and for all. That is the normal rule. The order is a final order, and the interests of the parties and the public interest alike dictate that there should be finality. The principle, however, is not rigid and unbending. Like all procedural principles, the established principles regarding election between alternative remedies are not fixed and unyielding rules. These principles are the means to an end, not the end in themselves. They are no more than practical applications of a general and overriding principle governing the conduct of legal proceedings, namely, that proceedings should be conducted in a manner which strikes a fair and reasonable balance between the interests of the parties, having proper regard also to the wider public interest in the conduct of court proceedings. Thus in Johnson v. Agnew [1980] A.C. 367 the House of Lords held that when specific performance fails to be realised, an order for specific performance may subsequently be discharged and an inquiry as to damages ordered. Lord Wilberforce observed, at p. 398: "Election, though the subject of much learning and refinement, is in the end a doctrine based on simple considerations of common sense and equity."

118. It can be seen that the election described in Johnson v Agnew and Sunbird Plaza is an election which arises after an order for specific performance has been made but is not complied with. Contrary to Mr Despot’s contentions, when an order for specific performance is not complied with, the election to be made by a vendor (to apply to the court to either enforce the order, or to vacate the order) does not depend upon that party first having established an entitlement to be restored as registered proprietor. The election depends on establishing that the order for specific performance has failed to be realised.

119. If the vendor chooses to proceed to enforcement of an order for specific performance (both parties having rights under the order: JAG Investment at 603G – 604A), the vendor can recover any money due to him or her under any judgment or order resulting from working out the order for specific performance. If the vendor cannot recover all that is due to him or her in this way, he or she can have recourse to their vendor’s lien on the land. The vendor’s lien was succinctly explained by Millett LJ in Barclays Bank plc v Estates & Commercial Ltd [1997] 1 WLR 415 at pp 419-420 as follows:

As soon as a binding contract for sale [of land] is entered into, the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid. … Even if the vendor executes an outright conveyance of the legal estate in favour of the purchaser and delivers the title deeds to him, he still retains an equitable lien on the property to secure the payment of any part of the purchase money which remains unpaid. The lien is not excluded by the fact that the conveyance contains an express receipt for the purchase money.

The lien arises by operation of law and independently of the agreement between the parties. It does not depend in any way upon the parties’ subjective intentions. It is excluded where its retention would be inconsistent with the provisions of the contract for sale or with the true nature of the transaction as disclosed by the documents. [Citations omitted.]

Mr Despot elected not to seek to set aside the order for specific performance

120. In the present case, part of the purchase price remained unpaid at the time of registration of the transfer to Stelli on 30 May 2011. It is not in dispute that Mr Despot was entitled to a vendor’s lien in respect of the sum of $91,086, which had not been paid by Stelli. Consistently with the rights of an unpaid vendor who has not received the full purchase price, Mr Despot lodged a caveat against the property claiming an unpaid vendor’s lien for that amount. Importantly, Mr Despot did not at this point make application in the Equity Proceedings to vacate the order for specific performance on the ground that Stelli had failed to observe the condition as to payment (of $91,086) in order 8 made in the Equity Proceedings. Instead, Mr Despot chose to pursue an appeal against some of the orders in the Equity Proceedings, but ultimately did not challenge the order for specific performance.

121. As Meagher JA explained in his reasons at [86] in the 2013 appeal, what Mr Despot sought on that appeal was “to set aside the condition as to payment and to obtain an order for payment of the unpaid purchase price”. This Court, having concluded on the 2013 appeal that Mr Despot was entitled to payment of the unpaid purchase price of $91,086, made such an order by giving judgment for Mr Despot against Stelli for $91,086 plus pre-judgment interest to 15 April 2011. That judgment reflected Mr Despot’s choice of a remedy (a money judgment against Stelli) in the alternative to applying in the Equity Proceedings to set aside the order for specific performance on the ground of Stelli’s failure to observe the condition as to payment in order 8.

122. Consistently with the remedy he obtained on the 2013 appeal, Mr Despot continued to maintain his caveat on the property claiming this amount was secured by his vendor’s lien on the property.

123. Just as a vendor cannot both retain the property in the land and enforce payment of the purchase price, those remedies being mutually exclusive: (Capital Properties vSwycher [1976] Ch 319 at 327), Mr Despot as vendor of the property cannot both enforce the specific performance order (by varying the condition as to payment in order 8 and obtaining judgment against Stelli in the 2013 appeal for the unpaid purchase price) and later seek to be restored as registered proprietor of the property (by applying to set aside the order for specific performance, on the ground of Stelli’s failure to observe the condition as to payment in order 8).

124. That Mr Despot elected to enforce the order for specific performance is reinforced by his subsequent recovery of the money judgment from Stelli in the garnishee proceedings determined by Stevenson J.

125. As already noted, ground 2 of Westpac’s notice of contention asserted that Mr Despot’s conduct in the 2013 appeal constituted an election to affirm the contract. As the matter was argued on appeal, this ground is to be understood as asserting that by seeking and obtaining a money judgment against Stelli, Mr Despot elected not to apply in the Equity Proceedings to set aside the order for specific performance. In my view, Westpac’s contention should be accepted.

126. That Mr Despot is to be taken to have elected between mutually exclusive remedies is also evident from the fundamental difficulty created by the relief he sought before Ball J. That relief ignored the effect of the judgment given by this Court in the 2013 appeal, which stands unreversed. I now turn to that issue.

Relevant principles - res judicata

127. It has been said that a central tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. This is because underpinning the system is the need for certainty and finality of decision. This tenet finds reflection, among others, in the restriction upon the reopening of final orders after entry, and the doctrines of res judicata and issue estoppel: Achurch v The Queen [2014] HCA 10; 253 CLR 141 at [14]-[17].

128. In Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; 323 ALR 1 (Tomlinson) the High Court explained the essential principles in relation to res judicata, issue estoppel, Anshun estoppel and abuse of process by reference to established authorities. The following principles, relevant to this appeal, may be stated.

129. First, the rendering of a final judgment in the exercise of judicial power, as between defined persons or classes of persons, ‘quells’ the controversy between those persons, and thus the rights and obligations in controversy, as between those persons, cease to have an independent existence because they ‘merge’ in that final judgment. That merger has long been treated in Australia as equating to ‘res judicata’ in the strict sense: Tomlinson at [20]; Blair v Curran [1939] HCA 23; 62 CLR 464 at 532.

130. Secondly, estoppel in relation to judicial determinations is a common law doctrine informed by similar considerations of finality and fairness: Tomlinson at [21]. Estoppel operates as a rule of law to preclude the assertion of a right or obligation or the raising of an issue of fact or law: Jackson v Goldsmith [1950] HCA 22; 81 CLR 446 at 466.

131. Thirdly, the plurality in Tomlinson at [21] observed that three forms of estoppel are recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding – the first is sometimes referred to as “cause of action estoppel”, the second is issue estoppel, and the third is most often referred to as “Anshun estoppel”.

132. It is only necessary to refer to the first form of estoppel which is relevant here. The plurality observed that "cause of action estoppel" is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. It precludes the assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment: Tomlinson at [22].

Application of these principles to the present case

133. It is not in dispute that this Court’s decision in the 2013 appeal was a final judgment. As already indicated, Mr Despot sought a variation of the specific performance order made by Macready AsJ, in particular order 8, being the condition as to payment of $91,086. He sought “to set aside the condition as to payment and to obtain an order for payment of the unpaid purchase price”: [2013] NSWCA 313 at [86]. This reflected the relief sought in Mr Despot’s written submissions on the 2013 appeal (set out at [44] above).

133. Contrary to the submissions of Mr Despot, the orders of this Court in the 2013 appeal did affect the order for specific performance made by Macready AsJ. The condition as to payment in order 8 made by Macready AsJ was effectively varied by order 5 in the 2013 appeal, being the money judgment against Stelli.

134. In accordance with established principle, the rights and obligations of the parties under the contract in respect of the unpaid purchase price ceased to have independent existence and merged in that final judgment: Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Digan [1931] HCA 34; 46 CLR 73 at 106 (Dixon J); Blair v Curran at 532 (Dixon J); Chamberlain v Deputy Federal Commissioner ofTaxation [1988] HCA 21; 164 CLR 502 at 510. As explained by Fullagar J in Jackson v Goldsmith at 466, “where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action.”

135. Here, Mr Despot’s belated claim to terminate the contract based on Stelli’s failure to observe the condition as to payment in order 8 in the Equity Proceedings is the same as Mr Despot’s claim in the 2013 appeal for the unpaid purchase price, which resulted in judgment for that amount plus interest.

136. This is significant for three reasons.

137. First, the premise of the relief sought by Mr Despot before Ball J is that the rights and obligations of the parties in respect of the unpaid purchase price continued to have an independent existence under the contract. However, that was not so once judgment was given in the 2013 appeal and Stelli’s liability for the unpaid purchase price merged in that judgment.

138. Secondly, the relief sought by Mr Despot before Ball J was inconsistent with the judgment of this Court on the 2013 appeal (order 5). So much was ultimately accepted by counsel for Mr Despot, who acknowledged that to set aside the order for specific performance it was necessary that order 5 made by this Court on the 2013 appeal must be set aside. But no application for that relief had been made by Mr Despot in this Court.

139. Thirdly, and importantly, this Court’s decision in the 2013 appeal “holds the field so long as it stands unreversed, and precludes this court making any judicial determination to the contrary”: Wishart v Fraser [1941] HCA 8; 64 CLR 470 at 478 (Starke J); see also at 482–483 (Dixon J); R v Marks;Ex parte Australian Building Construction Employees' and Builders Labourers’ Federation [1981] HCA 33; 147 CLR 471 (at 476) per Mason J.

140. As the Honourable Mr Justice K R Handley explained in Spencer Bower and Handley; Res Judicata (4th ed 2009, LexisNexis London) at [2.33] when “an appeal fails, the decision of the appellate court becomes the source of any estoppels”. The same may be said when an appeal succeeds.

141. In Boland v Dillon; Cush v Dillon [2015] NSWCA 183 at [8], McColl JA noted that the reason for this consequence has been variously expressed. The orders of the lower court are said to have “become merged in the judgment” of the appellate court: Thiess Pty Ltd v Industrial Court of New South Wales [2010] NSWCA 252; 78 NSWLR 94 (at [74]) per Spigelman CJ (Beazley JA agreeing), or to have been “replaced by the decision of the appellate court, whose decision is henceforth “the operative decision for all purposes”: Forge & Ors v Australian Securities & Investments Commission [No 2] [2007] NSWCA 42; 69 NSWLR 575 at [3].

142. It follows that Ball J was precluded from making any determination to the contrary of the judgment in the 2013 appeal.

143. His Honour properly raised this issue with counsel for Mr Despot in oral argument, as well as the related question of the power of the court at first instance to discharge a final judgment of this Court.

144. In response, counsel for Mr Despot submitted before the primary judge that:

1. the application before the primary judge was not a challenge to the judgment of this Court on the 2013 appeal, but simply Mr Despot seeking relief as part of the “working out” of the orders for specific performance made by Macready AsJ;

2. Mr Despot was willing to “do equity” if he recovered the property back, and to this end, the primary judge could either vacate the order in the 2013 appeal, or Mr Despot would agree not to pursue that judgment. Significantly, Counsel accepted that the judgment of this Court had to be set aside if Mr Despot got the property back; and

3. the “working out” of the orders for specific performance is an exception to the finality principle and the primary judge could discharge the order of this Court, or simply note that it no longer remains on the record.

146. These arguments were repeated by Mr Despot in this Court.

147. In addition, counsel for Mr Despot referred to Petersen v Moloney [1951] HCA 57; 84 CLR 91 at 104, as authority for the proposition that the primary judge could substitute one judgment (an order setting aside the order for specific performance) for another (order 5 of this Court on the 2013 appeal). Counsel also contended that the right to the unpaid purchase price did not merge in the judgment in the 2013 appeal.

148. In my view, these arguments should be rejected.

149. First, the judgment of this Court on appeal from the judgment of Macready AsJ is conclusive while it stands. While the order of this Court stands unreversed, the primary judge was precluded from making any judicial determination to the contrary. Had Ball J made orders as sought by Mr Despot, there would have been two inconsistent judicial orders in operation at the same time, that in the Equity Proceedings discharging the order for specific performance, and that of this Court on the 2013 appeal giving judgment against Stelli for the unpaid purchase price plus interest.

150. Secondly, Mr Despot could not avoid this difficulty in any of the ways he suggested in oral argument before his Honour or in this Court. A judgment of this Court remains on the record until it is either set aside by this Court or reversed on appeal by an order of the High Court. Neither had occurred here. The primary judge had no power to vacate the orders of this Court on the 2013 appeal, let alone power to “note” that the judgment of this Court no longer remains on the record.

151. Petersen v Moloney does not assist Mr Despot. There the plaintiff/appellant had sued two respondent-defendants in the alternative. The High Court observed (at 104) that there was no rule which prevented the appellant on appeal asking that judgment against one defendant shall no longer remain on the record but that judgment against another defendant shall be substituted for it. That provides no analogy for the contention by Mr Despot that the primary judge had power to set aside order 5 made on the 2013 appeal.

152. The circumstances in which this Court might set aside an earlier final order of the Court, consistent with the principle of finality, are limited and exceptional. It was not suggested that the order of this Court in the 2013 appeal was made irregularly, illegally or against good faith: UCPR r 36.15(1); Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) [2009] NSWCA 387; 78 NSWLR 190. Nor was it suggested that the judgment in the 2013 appeal could be set aside relying upon UCPR r 36.16. Mr Despot was well outside the 14 day period after entry of judgment to seek to set aside or vary the judgment of this Court on the 2013 appeal under subrule (1): see UCPR r 36.16(3A), noting that the Court may not extend that time limit: subrule (3C).

153. Nor would an undertaking by Mr Despot not to enforce the judgment on the 2013 appeal avoid the acknowledged difficulty of inconsistent orders on the record, if Ball J had granted the relief sought by Mr Despot. In any event, such an undertaking is now otiose, as Mr Despot has since recovered the judgment in the 2013 appeal.

154. Thirdly, the exception to the principle of finality in relation to orders for specific performance which is recognised in Johnson v Agnew and Sunbird Plaza, cannot assist Mr Despot because he elected to enforce the order for specific performance (and has since recovered the judgment for the unpaid purchase price plus interest), rather than apply in the Equity Proceedings to set aside the order for specific performance.

155. In my view, ground 3 of Wespac’s notice of contention should be accepted. This is a sufficient basis to dispose of the appeal.

Discretionary considerations

156. The primary judge did not need to address the discretionary defences raised by both Stelli and Westpac against setting aside the order for specific performance. If, contrary to the conclusions expressed above, there was no obstacle to setting aside the order for specific performance on the grounds of either election or res judicata then, in my view, it would not be appropriate as a matter of discretion to set aside the order 8 in the Equity Proceedings, because to do so would be unjust to Stelli and Westpac. It follows that if it were necessary to determine this issue, I would accept ground 5 of Westpac’s notice of contention. Since this is an alternative reason for disposing of the appeal, my reasons may be stated briefly.

157. First, his Honour found that Westpac acted innocently in procuring registration of the dealings on 30 May 2011, and this finding is not challenged on appeal. Indeed, so much was conceded by Mr Despot in his written submissions on appeal.

158. Secondly, during the hearing before Ball J, Westpac gave an undertaking to the Court that it would advance $91,086 plus interest to Stelli, if it were appropriate on the findings of the Court, to enable Stelli to make payment of the unpaid judgment to Mr Despot: see [2014] NSWCA 1122 at [18]. Thus if (as his Honour found) Stelli was not entitled to set-off the unpaid purchase price against the costs orders Stelli had obtained against Mr Despot in the Equity Proceedings, Stelli would be in a position to pay the judgment plus interest, which is what subsequently occurred.

159. Thirdly, order 5 on the 2013 appeal was expressly obtained by Mr Despot on the basis that he sought to vary the condition as to payment in order 8 made in the Equity Proceedings and obtain a money judgment against Stelli. It is acknowledged that Mr Despot made a deliberate forensic decision not to relist the Equity Proceedings before the determination of the 2013 appeal was known. He should not be permitted to approbate and reprobate the condition as to payment in order 8 in the Equity Proceedings, having successfully removed the condition by order 5 made in the 2013 appeal.

160. Fourthly, the financial prejudice to Westpac outweighs the asserted prejudice to Mr Despot arising from part of the purchase price having been paid by Stelli, at the direction of Mr Maalouf, the solicitor acting for Mr Despot, to Sky Constructions. It is not in dispute that the mortgage to Westpac from Stelli secured an amount over $1.35 million as at July 2014, yet Mr Despot’s proposed mortgage over the property in favour of Westpac would secure only $541,420.41 less rents paid since 15 August 2008.

161. Fifthly, Mr Despot did not, and could not, because he was impecunious, offer to do equity, and repay the purchase price to Stelli. It would be unjust to permit Mr Despot to recover both the property and retain the benefit of the purchase price. At a minimum, Mr Despot received the benefit of the amount of $316,874.87, as referred to by Macready AsJ at [295], being the amount paid by Stelli to satisfy the sum due by Mr Despot to Sky Constructions in respect of the allowance determined by Macready AsJ on a quantum meruit for works carried out by Sky Constructions on the property.

162. Sixthly, the appeal is by way of rehearing and the Court may receive further evidence on appeal; and the necessity to establish special grounds does not apply to evidence concerning matters occurring after trial or hearing: Supreme Court Act, s 75A (5), (7) and (9). Thus, although occurring after the decision of Ball J, it is nonetheless significant that Mr Despot has since recovered the amount of the judgment against Stelli for $91,086 plus interest, following the garnishee proceedings determined by Stevenson J. Pursuit of that recovery was a further forensic decision by Mr Despot which was inconsistent with the relief he had sought before Ball J and also on appeal.

Other matters

163. One further matter should be briefly mentioned. This concerns the obstacle posed by Stelli and Westpac having the benefit of indefeasible title to their respective interests in the property. As already mentioned, Mr Despot did not seek to rely upon the fraud exception to indefeasibility under the Real Property Act, s42.

164. Nonetheless the Court may recognise a claim in personam against a registered proprietor for such relief as a court acting in personam may grant: Frazer v Walker [1967] AC 569 at 585; Breskvar v Wall [1971] HCA 70; 126 CLR 376 at 384-385. The court may recognise such a claim, commonly referred to as a personal equity, notwithstanding that an in personam claim is not an exception contained in s 42 of the Real Property Act: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [193] ff; and Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149 at [31]. However only certain legal or equitable causes of action against a registered proprietor operate as an in personam exception outside the indefeasibility provision in s 42(1) of the Real Property Act: Farah at [193].

165. Here, the personal equity which Mr Despot relied upon against Stelli and Westpac arose from the conduct of Westpac in obtaining registration of the dealings on 30 May 2011, allegedly in breach of the Court orders of Barrett J on 15 August 2008 and Macready AsJ on 15 April 2011. The primary judge comprehensively dealt with and, in my view, correctly rejected those contentions for the reasons given by his Honour: at [70]-[76].

166. It should be mentioned that Mr Despot did not seek to rely upon his unpaid vendor’s lien as a basis for the relief sought before Ball J. Westpac accepted in oral argument that a vendor’s lien may be characterised as a personal equity, referring to the observation of Santow J (as his Honour then was) in Vella v Aliperti (1995) 7 BPR 97586 at 14,664, that “… a vendor’s lien, as a right in equity to have the property applied in satisfaction of the obligation owed, gives an interest in the land recognisable as a caveatable interest under s 74” of the Real Property Act.

167. That equity would not have assisted Mr Despot to be restored as registered proprietor of the property. As already indicated, a vendor’s lien arises by operation of law to secure the actual or potential rights of the vendor under a contract for the sale of land to payment or payment of the balance of the purchase price. Its implication can be precluded or qualified by express or implied agreement of the parties. Although called a lien, it is, more accurately, a form of equitable charge over the property. It may be enforced in the same way as any other equitable charge, namely by sale pursuant to a court order: Hewett v Court [1983] HCA 7; 149 CLR 639 at 663 (Deane J).

168. Mr Despot never sought the relief which a court in personam might grant to enforce his unpaid vendor’s lien, namely an order for sale of the property. He ultimately did not need to do so because he later recovered the judgment in the 2013 appeal for the unpaid purchase price plus interest.

169. Further, no basis has been demonstrated for finding that Mr Despot had any personal equity against Westpac, which equity would impose on a mortgagee which secures registration of its mortgage in circumstances where part of the purchase price remained unpaid. Mr Despot did not point to any conduct by Westpac involving some form of acknowledgment of any unregistered interest of Mr Despot, or an agreement to act in accordance with it, from which Westpac as registered proprietor later resiled: Heggies Bulkhaul vGlobal Minerals Australia [2003] NSWSC 851; 59 NSWLR 312 at [103] – [104] (Austin J).

170. Accordingly, I do not consider that his Honour’s reasons for upholding the indefeasible titles of Stelli and Westpac disclose appellable error.

171. Finally, I have considered in accordance with Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 at [12], whether the other grounds of appeal should be resolved, although this is unnecessary for the determination of the appeal. Given Mr Despot’s failure on the matters raised by Westpac’s notice of contention which have been addressed above, I am satisfied that good reason exists not to deal with the other grounds of appeal. The resources of the Court should not be taken up in dealing with multiple contentions, none of which, either on their own or taken together, are sufficient to overcome the fundamental flaws in Mr Despot’s application before the primary judge.

Conclusion and orders

172. The appeal by Mr Despot has failed. There is no reason for departing from the general rule that costs should follow the event: UCPR r 42.1.

173. Accordingly, the orders which I propose are as follows:

1.   Appeal dismissed.

2.   Appellant to pay the costs of the second, third and fourth respondents.

174. LEEMING JA: I agree with Gleeson JA. I also agree with the additional comments of Sackville AJA.

175. SACKVILLE AJA: I agree with the orders proposed by Gleeson JA and with his Honour’s reasons. I add the following brief observations.

176. The appellant (Mr Despot) did not receive the full benefit of the purchase price payable by the second respondent (Stelli) under the contract for the sale of the Double Bay property of which Mr Despot was the registered proprietor. As Gleeson JA has explained, the contract of sale was entered into by Mr Maalouf acting as Mr Despot’s attorney, pursuant to the general power of attorney executed by Mr Despot on 5 September 2007.

177. The losses sustained by Mr Despot are attributable to his decision to execute a power of attorney in favour of Mr Maalouf. Armed with the power of attorney, Mr Maalouf (as this Court held in 2013 [1] ) breached the fiduciary duties which he, as donee of the power, owed to Mr Despot. The problem facing Mr Despot in the litigation, as he recognised, was that any judgment against Mr Maalouf or his company (Sky Constructions Pty Ltd) might prove to be unenforceable.

     1. Despot v Registrar-General of NSW [2013] NSWCA 313 at [65]-[68] (Meagher JA, Ward JA and Bergin CJ in Eq agreeing).

178. Faced with this difficulty, Mr Despot pursued multiple claims in order to recoup his losses. He sought relief against Stelli (the purchaser), Ms Azzi (the sole director and shareholder of Stelli), Westpac Banking Corporation (which partly financed Stelli’s purchase and ultimately became registered as the mortgagee of the property) and Mr Carbone (a solicitor who, as Macready AsJ found, [2] acted for Mr Maalouf in relation to the power of attorney).

     2. Despot v Registrar-General of New South Wales [2011] NSWSC 273 at [298].

179. In the proceedings determined by Macready AsJ, Mr Despot obtained a money judgment against Mr Maalouf. He also obtained an order that upon payment by Stelli of the sum of $91,086 (which was unpaid on settlement of its purchase of the Double Bay property), the contract of sale between Mr Despot and Stelli should be specifically performed. Otherwise Mr Despot’s claims were dismissed.

180. Mr Despot was granted an extension of time in which to file a notice of appeal against the decision of Macready AsJ. The appeal was unsuccessful save in two respects. Mr Despot succeeded in obtaining a money judgment against Sky Constructions Pty Ltd in addition to the judgment against Mr Maalouf. He also obtained a judgment against Stelli for $91,086, plus interest.

181. Mr Despot purported to terminate the contract of sale on 6 May 2014. He did so in reliance on what was said to be Stelli’s default in observing the condition Macready AsJ imposed on the order for specific performance of the contract of sale (that is, payment of the sum of $91,086).

174. Mr Despot then filed what amounted to fresh proceedings seeking relief not only against Stelli and Ms Azzi, but against Westpac. By the time Mr Despot filed the motion seeking relief, Stelli had been registered as proprietor of the property and Westpac had been registered as the mortgagee.

175. It is not clear to me how Mr Despot could have hoped to obtain orders setting aside Westpac’s title as the registered mortgagee of the property. Although Mr Hewitt, who appeared for Mr Despot, referred in general terms to fraud on the part of Westpac, no precise allegation was ever formulated and the argument was not pressed. As Ball J found, [3] the contention that Westpac was bound by a personal equity arising from its participation in an alleged breach of court orders, lacked a factual foundation. Mr Hewitt’s submission that Westpac knew when it asked the Registrar-General on 30 May 2011 to register the unregistered dealings in respect of the property that Stelli had not paid the balance of the purchase ($91,086), was inconsistent with findings made by Macready AsJ that were not challenged in the 2013 appeal.

     3. Despot v Registrar-General of NSW [2014] NSWSC 1002.

176. As Gleeson JA has explained, Mr Despot’s claims for relief against Stelli and Ms Azzi based on the purported termination of the contract of sale were fundamentally inconsistent with the way in which Mr Despot had hitherto conducted the litigation. For the reasons given by Gleeson JA, this cannot be permitted.

**********

Endnotes

Amendments

27 September 2016 - Coversheet - citation changed from “Buckman v Rose (1980) 1 BPR 9558” to “Buckman v Rose (1980) 1 BPR 97,059”

[61] – citation changed from” Buckman v Rose (1980) 1 BPR at 9559” to “Buckman v Rose (1980) 1 BPR 97,059”

05 February 2016 - [98] insertion of the word "appeal" following "2013" - line 9

Decision last updated: 27 September 2016