Harvestone Wellmas Pty Ltd v Yu

[2021] NSWSC 815

Supreme Court

New South Wales

Medium Neutral Citation:

Harvestone Wellmas Pty Ltd v Yu [2021] NSWSC 815

Hearing dates:

On the papers

Date of orders:

05 July 2021

Decision date:

05 July 2021

Jurisdiction:

Equity

Before:

Darke J

Decision:

No order as to costs, to the intent that each party bear its own costs of the proceedings.

Catchwords:

COSTS – proceedings seeking removal of unregistered dealing – dealing withdrawn following defendant’s failure to satisfy requisition – agreement made for proceedings to be dismissed – no determination on the merits – whether clear that plaintiff would have succeeded – whether defendant acted unreasonably – plaintiff failed to make further enquiries prior to commencing proceedings – appropriate to make no order as to costs.

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84

Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622

Category:

Costs

Parties:

Harvestone Wellmas Pty Ltd (Plaintiff)
Yunyun Yu (Defendant)

Representation:

Counsel:
Mr MK Condon SC (Plaintiff)
Mr DG Healey (Defendant)

Solicitors:
Juris Cor Legal (Plaintiff)
JC Legal Practice (Defendant)

File Number(s):

2021/142462

Publication restriction:

Nil

Judgment

1. These proceedings were commenced by Summons filed on 20 May 2021. On 26 May 2021, orders were made by consent which disposed of proceedings save as to the question of costs. Directions were made for the filing of evidence and submissions with a view to that question being dealt with on the papers. This judgment deals with that question.

2. The plaintiff seeks an order that the defendant pay its costs of the proceedings. The defendant contends that there should be no order as to the costs of the proceedings.

3. By its Summons, the plaintiff sought an order that the defendant cause the removal of an unregistered dealing that the defendant had lodged against the titles to certain lots in a strata scheme in Lindfield. The lots were owned by the plaintiff. The plaintiff was in the process of selling the lots.

4. The unregistered dealing, AQ960697 (incorrectly referred to in prayer 1 as AQ960067) had been lodged on 14 April 2021. It appears from searches made at Land Registry Services that the “dealing” was a caveat, but the form of caveat is not itself in evidence. (Strictly, a caveat is not a dealing for the purposes of the Real Property Act 1900 (NSW), but this inaccurate description can be ignored as nothing turns upon it.) It further appears that AQ960697, which was initially regarded as “under examination”, became “under requisition” on 23 April 2021. The requisition, issued to the lodging party, stated that a transfer (AQ412670) had been lodged prior to the caveat and had priority. The caveat was thus required to be amended to facilitate registration of the transfer. It was stated that the caveat would be rejected and the lodgement fees forfeited unless “placed in order” by 14 May 2021. A search obtained by the plaintiff on 30 April 2021 showed that the “requisition due date” was 14 May 2021.

5. The plaintiff’s solicitors had written to the defendant’s solicitors on 20 April 2021 about the caveat. It was asserted that the defendant did not have a legal or equitable interest in any of the strata lots. The defendant was requested to withdraw the caveat that day, failing which the plaintiff would “have no other option but to commence immediate legal proceedings”. The defendant’s solicitors responded by letter on 27 April 2021. It was stated that it was clear that the defendant had advanced money to the plaintiff that was used to acquire the land. Reference was made to the principles concerning resulting trusts, and it was stated that these principles supported the lodgement and registration of the caveat. It was stated that if proceedings were commenced, costs would be sought against both the plaintiff and its solicitors on an indemnity basis.

6. On 5 May 2021, the defendant commenced proceedings against the plaintiff and others in the Common Law Division of the Court. As against the plaintiff, a monetary judgment was sought for $610,000, and declarations were sought that the strata lots were held on trust for the plaintiff. The amount of $610,000 is alleged to be the amount unpaid pursuant to a loan agreement between the defendant and Mr Wang, a director of the plaintiff. It was alleged that the money advanced by the defendant was applied towards the purchase by the plaintiff of the land that is the subject of the strata scheme. This appears to be the basis of the claim that the strata lots are held on trust for the defendant. I observe that there is obvious tension between the trust claim and the claim for repayment of the loan. I also note that the defendant has since indicated that it intends to amend its pleading to allege that the borrower was the plaintiff.

7. In any event, it seems that the defendant took no steps to satisfy the requisition in respect of its caveat, which requisition was required to be satisfied by 14 May 2021. On 13 May 2021, a solicitor for the plaintiff made an enquiry by telephone to Land Registry Services concerning AQ960697. The solicitor was informed, inter alia, that the caveat would not necessarily be registered after the requisition deadline of 14 May 2021. The solicitor was informed that 17 May 2021 was the earliest date the caveat could be registered “and there is no guarantee when it will be registered”. There is no evidence that the plaintiff made any further enquiry with Land Registry Services prior to the commencement of proceedings on 20 May 2021.

8. On that day, orders were made for short service of the Summons which was made returnable on 26 May 2021. On 23 May 2021, the defendant’s solicitors sent a letter to the plaintiff’s solicitors. It was stated that the proceedings were premature as there was, as yet, no caveat registered on the titles, the unregistered dealing being subject to “an unresolved requisition process with NSW Land Registry”. It was stated that the defendant was yet to provide a response to the requisition served. The letter went on to state that given the defendant’s separate proceedings would likely be sufficient to protect her interests, and to minimise costs and time in resolving the present proceedings, the defendant would take steps to withdraw the unregistered dealing by 24 May 2021.

9. In fact, the defendant’s solicitors took such steps on 25 May 2021. Land Registry Services confirmed to the defendant’s solicitors at 12:24pm on that day that AQ960697 had been withdrawn.

10. On 26 May 2021, the Court made various orders and notations by consent, including:

1.   The Court notes that the dealing which constituted unregistered dealing AQ960697:

a.   has not been registered; and

b.   is no longer shown against any title as an unregistered dealing, that the defendant has requested and received confirmation from New South Wales Land Registry Services (NSWLRS) that this is the case and has confirmed with NSWLRS that it the unregistered dealing has been withdrawn.

2.   Without prejudice to the parties’ claims as to costs, order that the Summons filed on 20 May 2021 be dismissed.

11. The plaintiff accepts that the proceedings were not determined on the merits and there is no “event” for the purposes of Uniform Civil Procedure Rules 2005 (NSW), r 42.1. However, the plaintiff submitted that an award of costs in its favour was appropriate because it is a case where it can be said that the plaintiff was successful and, further, that the defendant has acted unreasonably. Reference was made to Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [2] and Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-5.

12. The plaintiff submitted that it would have succeeded because it was clear that the defendant had no proprietary interest in the land. It was said, in short, that any advance made by the defendant was in the nature of a loan rather than a contribution towards the acquisition of the land. The plaintiff suggested that it was unreasonable for the defendant to have lodged the caveat, and that it was also unreasonable to threaten the plaintiff’s solicitors with a personal costs order. The plaintiff submitted it should have its costs because it secured the outcome it had sought in the litigation, the defendant lacked a proprietary interest in the land, and the defendant did not inform the plaintiff prior to commencement of the proceedings that it would not be seeking to satisfy the requisition in relation to the caveat.

13. The defendant submitted that the plaintiff seeks to have the Court find, on the basis of untested evidence, that it would have succeeded on the merits. The defendant further submitted that the proceedings were premature and, at the very least, the plaintiff should have made further enquiries before commencing proceedings. It was pointed out that the plaintiff was aware of the requisition, the deadline of 14 May 2021 for satisfaction of the requisition, and the possibility that the caveat would be rejected and thus not be recorded on the register. The defendant submitted that had further enquiry been made, it is likely that the proceedings would not have been commenced.

14. The defendant submitted that it was not shown that it had acted unreasonably prior to the commencement of the proceedings, and it clearly acted reasonably after the commencement. Finally, the defendant submitted that any success obtained by the plaintiff was not the result of the proceedings.

15. It is clear from the evidence before the Court (including the pleading in the proceeding commenced by the defendant) that any claim by the defendant to have a caveatable interest in the land is doubtful. However, the evidence before the Court is necessarily incomplete and, as submitted by the defendant, untested. It is any event not appropriate for the Court to engage in a hypothetical hearing of the issue in order to determine the question of costs. In these circumstances, I do not think it can be concluded that the defendant acted unreasonably in lodging the caveat.

16. I agree that it was inappropriate for the defendant to threaten the plaintiff’s solicitors for a personal costs order, but this conduct does not seem to have caused any additional costs to be incurred and is thus of little significance.

17. It is true that the defendant’s caveat was ultimately not recorded on the register, but this success seems to have been as much a result of the defendant’s inaction in respect of the requisition as it was the result of the proceedings themselves. There is some force in the defendant’s submission to the effect that the plaintiff ought to have undertaken further enquiries with Land Registry Services before launching the proceedings. It could have at least ascertained that the requisition had not been satisfied and that there was thus a likelihood that the caveat would not be recorded. Further dialogue with the defendant could then have ensued.

18. Viewing the overall circumstances of the matter, I am not satisfied that the costs of the proceedings should be regarded as brought about by unreasonable conduct on the part of the defendant. Neither is it a case where the plaintiff should be regarded as having manifestly succeeded even though there has been no determination on the merits. It seems to me that in different ways both parties contributed to the commencement of the proceedings and the resultant incurring of costs. The parties then acted sensibly to promptly bring the proceedings to a conclusion, save for this application. In my opinion, it is appropriate to exercise the Court’s discretion as to costs by making no order as to costs, to the intent that each party bear its own costs of the proceedings. An order to that effect will be made.

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Decision last updated: 05 July 2021