Gillies v Forrest
[2014] NSWSC 408
•04 April 2014
Supreme Court
New South Wales
Medium Neutral Citation: Gillies v Forrest & Ors [2014] NSWSC 408 Hearing dates: 4 April 2014 Decision date: 04 April 2014 Jurisdiction: Common Law Before: Beech-Jones J Decision: 1. Order pursuant to s 74MA of the Real Property Act 1900 (NSW) that, by 4.30pm on Friday,11.04.14, the plaintiff do all things necessary to withdraw the caveat with registered dealing number AH260469N (Caveat) lodged in relation to the land contained in:
a) folio identifier 51/1188999, known as 219 Gan Gan Road, Anna Bay (also known as Unit 1/219 Gan Gan Road, Anna Bay) in the State of New South Wales; and
b) folio identifier 52/1188999, known as 219a Gan Gan Road, Anna Bay (also known as Unit 2/219 Gan Gan Road, Anna Bay) in the State of New South Wales,
(together, Properties).
2. An order directing the Registrar-General of New South Wales to remove the Caveat lodged in relation to the Properties by the plaintiff, in the event that the Caveat is not removed prior to 4.30pm on Friday, 11.04.14.
3. That the plaintiff be and is hereby restrained, without the leave of the court being first obtained, from placing or causing to be placed a caveat on:
a) folio identifier 51/1188999, known as 219 Gan Gan Road, Anna Bay (also known as Unit 1/219 Gan Gan Road, Anna Bay) in the State of New South Wales; and
b) folio identifier 52/1188999, known as 219a Gan Gan Road, Anna Bay (also known as Unit 2/219 Gan Gan Road, Anna Bay) in the State of New South Wales,
4. Prayer 1 of the notice of motion filed 21.03.14 be stood over to 05.05.14 at 9.00am before the Registrar.
5. Grant leave to the 1st and 2nd defendants to issue a subpoena to the plaintiff's trustee in bankruptcy, returnable on 05.05.14.
6. Order the plaintiff to pay the 1st and 2nd defendants' costs to date of the notice of motion filed on 21.03.14.
7. Order the plaintiff to pay the 3rd defendant's costs to date of the notice of motion filed on 02.04.14.
8. Direct that these orders be entered forthwith.
Catchwords: CAVEAT - removal - no question of principle. Legislation Cited: - Real Property Act 1900 (NSW), s74MA Category: Interlocutory applications Parties: Darrin Michael Gillies (Plaintiff)
Melissa Kate Forrest (First Defendant
Steven Forrest (Second Defendant
National Australia Bank Limited (Third Defendant)Representation: Counsel:
In person (Plaintiff)
B. Levet (First and Second Defendants)
A. Kaufmann (Third Defendant)
Solicitors:
Self represented (Plaintiff)
Gibbins Law Firm (First and Second Defendants)
Gadens Lawyers (Third Defendant)
File Number(s): 2012/231617
ex tempore Judgment
Before me are two applications, one by the first and second defendants, and the other by the third defendant, the National Australia Bank ("NAB"). In substance the seek the same relief, namely, an order under s 74MA of the Real Property Act 1900 (NSW) for the removal of a caveat lodged by the plaintiff, Darrin Michael Gillies, over two pieces of property in Anna Bay. To explain the context in which the applications are made, it is necessary to set out the background to the commercial relationship between the parties as best as can be ascertained from the materials available.
In 2012, Mr Gillies commenced proceedings against Melissa Kate Forrest and Stephen Forrest. He pleaded that Melissa Kate Forrest was the owner and registered proprietor of property at Anna Bay (the "property"). This property was subsequently subdivided into the two properties mentioned earlier. Stephen Forrest was pleaded to be the agent of Melissa Forrest and her father. The pleading has been amended a number of times since proceedings were commenced.
The most recent version of the statement of claim pleads that various agreements were entered into in late 2002 pursuant to which Mr Gillies agreed to contribute an amount of money to Melissa Forrest to enable her to purchase the property. It is further pleaded that the parties, in effect, had arranged to develop and subdivide the property and share the profits. On this application, the defendants have put in dispute that construction of the arrangements, at least to the extent that they were reduced to writing. For reasons that I will explain, it is not necessary to resolve that controversy.
It is far from clear on the materials available to me what, in fact, occurred subsequently with the property, at least for the remainder of that decade. It is known that in December 2004, the NAB advanced a loan to Melissa Forrest for $580,000. This was described as a building loan. From there, the trail appears to go cold until 2012.
In 2012, Mr Gillies lodged a caveat over the property, which to that point had not been subdivided. His first caveat lapsed after a lapsing notice was issued. He then lodged a second caveat. The subdivision of the property occurred subsequent to the lodging of the second caveat. The second caveat identifies the estate or interest in land as being:
"An equitable interest as joint tenants joint owner under a purchase agreement. An equitable interest as beneficiary under a resulting trust. An equitable interest as chargee under a collateral agreement to the purchase agreement."
The "nature of the instruments" listed in the caveat as giving rise to these estates or interests is said to be a "Purchase Agreement" and a "Collateral Agreement" to the Purchase Agreement, both dated 3 December 2002.
In March of this year, after the subdivision occurred, Melissa Kate Forrest entered into a contract to sell one of the lots for a sum price of $300,000. On 3 April 2013, she entered into a contract to sell the other lot for a sale price of $295,000. Not surprisingly, the position as between the parties to those agreements is that the sale cannot proceed unless the plaintiff's caveat on each property is removed. As at 17 March 2014, the NAB was owed the sum of $606,162.60. Thus it is expected there will be a shortfall on the sale.
Mr Gillies seeks to resist the order for the removal of the caveats. He contends that the sales were to persons related to or known to Melissa Forrest and Stephen Forrest, and says that they were at an under value. Bearing in mind that his claim is that ultimately he was entitled to share in the profits of the development of the property, he says that the caveat should not be removed because it protects his interests being prejudiced by a sale at an under value.
It is unnecessary on an application such as this to undertake an exegesis of the principles governing the approach the Court takes to an application to remove a caveat. It suffices to state that the task of deciding whether a caveat should be ordered to be removed is governed by the same considerations that a Court considers in determining an application for an interlocutory injunction to protect the interests claimed in the caveat.
The NAB claims that Mr Gillies does not have any equitable interest in the property capable of supporting a caveat. This argument, in part, turns upon a consideration of the various documents said to give rise to the agreements that Mr Gillies sues upon. As I have indicated, I do not consider it is necessary to resolve this contention on the application. However, there appears to be a more fundamental obstacle to Mr Gillies asserting that he is entitled to some form of equitable interest in the property. From the bar table he accepted that he was made bankrupt in 2006. There is a debate as to whether or not he disclosed to his trustee his interests in these transactions and his asserted interest in the property. That debate can be put to one side.
In the ordinary course, the fact that he was made bankrupt would operate to vest in Mr Gillies' Trustee in Bankruptcy all right, title and interest of the kind that he claims in these proceedings. Further, the fact that he was subsequently discharged would not operate to re-vest it from the Trustee to him. I am not prepared to make any final finding that he lost all interest that he may have had in the transactions the subject of these proceedings or the property, but it must be said that prima facie it appears that he has no such claim.
Further, nothing in the statement of claim or any other material before me is capable of demonstrating that somehow the Bank's indefeasible rights under its mortgage are somehow subrogated or subjected to the interest that he claims. Further, there is at present no material capable of supporting the assertion that the proposed sales are at an under value.
If the sale proceeds and if Mr Gillies is successful in demonstrating that somehow Melissa Forrest and Stephen Forrest are liable to him for not property developing the property, he will still have a claim against them in damages. True it is that he will not have the comfort, such as it is, of knowing that Melissa Forrest is the owner of property but, again, there is nothing before me capable of indicating that her net asset position will be made worse if these sales were to proceed.
In submissions Mr Gillies referred to an offer he had apparently made in Court some weeks ago to purchase both properties for a sum of $5,000 in excess of the prices offered by the purchasers under the sale agreements, noted above (at [7]). There is little, at least from the NAB's perspective, that it can do with such an offer. I do not know what material was available to the NAB concerning Mr Gillies' own asset position, but in any event, to pursue Mr Gillies' offer at that time would most likely have required some unwinding of the contracts already put in place, an exercise that could only be described as "messy".
When I come to consider the matters that I would consider, if there was an application for an interlocutory injunction to protect the interests referred to in the caveat, I would be left with a conclusion that Mr Gillies' prospects of success at trial in establishing that interests he claims would be very low in light of his bankruptcy in 2006.
When I consider the question of the balance of convenience then, in the absence of any proper material capable of demonstrating a sale at an under value, I would conclude that the balance of convenience overwhelmingly favours allowing the sale to proceed.
Those two conclusions, in my view, make it inevitable that the caveats will need to be removed. In that regard, I note an undertaking of all three defendants, through their counsel, that they will utilise the net proceeds of the sale of the two properties to discharge the third defendant's indebtedness.
Accordingly, I will make orders 1 and 2 in the third defendant's notice of motion filed 2 April 2014, but amending order 1 by inserting "N" after the dealing number so that it reads "AH260469N".
I will make order 4 in the first and second defendants' notice of motion filed 21 May 2014, but with the substitution of the words "Folio Identifier 51/1188999 known as 219 Gan Gan Road, Anna Bay, also known as Unit 1/219 Gan Gan Road, Anna Bay", and "Folio Identifier 52/1188999 known as 219A Gan Gan Road, Anna Bay, also known as Unit 2/219 Gan Gan Road, Anna Bay", after the word "title" and by deleting the words "of any property owned by the defendants or either of them".
I stand over the application in prayer 1 of the first and second defendant's notice of motion filed 21 March 2014 to 9.00am on 5 May 2014 before a Registrar.
I order the plaintiff to pay the second and third defendants' costs to date of their notice of motion dated 21 March 2014. I order the plaintiff to pay the third defendant's costs of its motion filed 2 April 2014.
I grant leave to the parties to take out these orders forthwith.
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Decision last updated: 10 April 2014
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