Edwards v Lisker Pty Ltd

[2018] NSWSC 81

Supreme Court

New South Wales

Medium Neutral Citation:	Edwards v Lisker Pty Ltd [2018] NSWSC 81
Hearing dates:	On the papers
Date of orders:	08 February 2018
Decision date:	08 February 2018
Jurisdiction:	Equity
Before:	Darke J
Decision:	First defendant ordered to pay plaintiff’s costs of his application to extend the operation of a caveat.
Catchwords:	COSTS – application for extension of operation of caveat – application made following service of lapsing notice by first defendant – order for extension made by consent – whether appropriate to order first defendant to pay plaintiff’s costs
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98 Real Property Act 1900 (NSW), s 74O(2)
Category:	Costs
Parties:	Robert John Collister Edwards (Plaintiff) Lisker Pty Ltd (First Defendant) Manly Property Holdings Pty Ltd (Second Defendant)
Representation:	Counsel: Mr J P Knackstredt (Plaintiff) Mr C D Freeman (First Defendant)   Solicitors: M & K Lawyers Group Pty Ltd (Plaintiff) Wood Marshall Williams (First Defendant)
File Number(s):	2017/325801
Publication restriction:	None

Judgment

1. On 18 May 2017 the plaintiff entered into a contract with the second defendant to purchase an “off the plan” unit in Manly. On 9 August 2017 the plaintiff lodged a caveat on the title to the relevant land. The first defendant held a registered mortgage over the land. On 3 October 2017 the first defendant served a lapsing notice upon the plaintiff in relation to the plaintiff’s caveat.

2. The plaintiff commenced these proceedings by Summons on 27 October 2017. The plaintiff sought interlocutory relief including an order extending the operation of the caveat, and final relief including an order for specific performance of the purchase contract.

3. The Court made orders by consent on 27 October 2017 extending the operation of the caveat until further order. The proceedings were adjourned to 8 December 2017. On that occasion, the Court was informed that the proceedings had resolved, save for the question of costs. Directions were made for that question to be determined on the papers.

4. The plaintiff seeks an order that the first defendant pay his costs of the application to extend the caveat. He submits that he was forced by the first defendant’s conduct, in serving the lapsing notice, to commence the proceedings in order to protect his equitable interest in the land. It was further submitted that the lapsing notice was issued “prematurely and without any proper basis”.

5. The first defendant submitted that there should be no order as to costs as there was no adjudication on the merits, and the first defendant did not act unreasonably. The first defendant principally relied on the following factors:

1. that both the first defendant and the second defendant consented to the extension of the caveat prior to the commencement of the proceedings;

2. that a further caveat could have been lodged with the consent of the second defendant, as envisaged by s 74O(2)(b) of the Real Property Act 1900 (NSW); and

3. that the plaintiff’s contract for purchase had been superseded by a later contract entered into by the plaintiff and others with the second defendant, so the plaintiff could have lodged a caveat based on that contract which would have the same effect as the first caveat.

6. The first defendant submitted that had the plaintiff lodged a further caveat, or a caveat based on the later contract, the proceedings would not have been necessary.

7. In reply, the plaintiff submitted that the proceedings remained necessary in circumstances where the second defendant declined (on 27 October 2017) to give its consent to a further caveat. Further, it was submitted that lodging a caveat based on the later contract would do nothing to protect the plaintiff’s interest under the earlier contract, which interest would exist for so long as the later contract remained incomplete.

8. There is no suggestion that the plaintiff was not justified in lodging a caveat to protect his interest in the land derived from the purchase contract entered into on 18 May 2017. The caveat was lodged prior to entry into the later contract. The making of that contract did not detract from the interest the subject of the caveat. It seems to me that at the time of the service of the lapsing notice there was not a sound basis to challenge the interest asserted by the plaintiff in his caveat.

9. The effect of service of the lapsing notice was that unless the plaintiff obtained an order of the Court extending the operation of the caveat, it would lapse on 31 October 2017. Lodgement of a further caveat with the consent of the second defendant was an alternative to the obtaining of a Court order, but that consent was not forthcoming.

10. It is true that both the first defendant and the second defendant ultimately consented to an order extending the operation of the caveat. The second defendant gave its consent on 27 October 2017. The first defendant had effectively indicated its consent on 23 October 2017 when it sought to withdraw the lapsing notice. However, the first defendant was advised by Land Registry Services that lapsing notices cannot be withdrawn. Accordingly, the plaintiff was still required to obtain an order from the Court so as to maintain the protection afforded by his caveat. The institution of proceedings for that purpose was in my view well justified in the circumstances. It would not be reasonable to expect the plaintiff to allow the caveat to lapse, even allowing that there was a prospect that the plaintiff’s interest would fall away if the later contract proceeded to completion. Neither would it be reasonable to expect the plaintiff to rely instead on a caveat based on that later contract, even allowing that the existence of such a caveat might afford some practical protection of the plaintiff’s position.

11. In my opinion, it is appropriate, in exercising the Court’s discretion under s 98 of the Civil Procedure Act 2005 (NSW), to order that the first defendant pay the plaintiff’s costs of his application to extend the operation of the caveat. Even though there has been no determination on the merits in relation to the plaintiff’s claim, the evidence (including of the first defendant’s attempt to withdraw the lapsing notice) indicates that the plaintiff’s claim was substantial (see s 74K(2) of the Real Property Act). There is no suggestion of a need for the caveat to be withdrawn on balance of convenience grounds. It seems to me that it was unreasonable of the first defendant to attempt, when it did, to have the caveat lapse, and such conduct effectively brought about the need to seek an order from the Court.

12. The first defendant submitted that the need to commence proceedings was really brought about by the second defendant unreasonably failing to consent to a further caveat. As mentioned earlier, that occurred on 27 October 2017, the same day the second defendant gave its consent to an extension of the operation of the caveat, and the same day the proceedings were commenced. I accept that if consent to a further caveat had been given, the plaintiff would not have needed to commence the proceedings. It is not clear why the second defendant was prepared to have the existing caveat extended, yet not prepared to consent to a further caveat. However, I do not agree that the second defendant’s conduct in this regard was unreasonable. The second defendant was under no obligation to give its consent to a further caveat; and the fact that, in the shadow of the making of an application for an order extending the operation of the caveat, the second defendant gave its consent to an extension does not demonstrate unreasonableness. It remains the case that the predicament faced by the plaintiff was essentially brought about by the service of the lapsing notice.

13. The first defendant made a submission in the alternative to the effect that any order for costs should be proportionate and limited to a maximum of $10,000. I do not propose to impose any limit pursuant to s 98(4) of the Civil Procedure Act. In taking that course, I should not be taken to be expressing any view as to whether $10,000, or any other amount, would be reasonable in the circumstances of this case. Such questions are best left for the cost assessment process which will be required if the parties are unable to reach an agreement.

14. The Court will order that the plaintiff’s costs of his application to extend the operation of the caveat be paid by the first defendant. The Court will further order that the first defendant pay the plaintiff’s costs of this application.

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Decision last updated: 08 February 2018