Lee v Ross (No 2)

Case [2003] NSWSC 507


Reported Decision:

(2004) NSW ConvR 56-067

Supreme Court


CITATION: Lee & Ors v Ross & Ors (No 2) [2003] NSWSC 507
HEARING DATE(S): 10 June, 2003
JUDGMENT DATE:
11 June 2003
JURISDICTION:
Equity Division
JUDGMENT OF: Palmer J
DECISION: Plaintiffs ordered to pay compensation for wrongful lodgement of caveat.
CATCHWORDS: REAL PROPERTY - CAVEAT - COMPENSATION - COMPENSABLE LOSS - Purchasers' solicitor insisted on untenable construction of contract, probably due to not having retained a complete copy of contract in file - Vendors rescinded - Purchasers sought specific performance and lodged caveat - whether caveat lodged "without reasonable cause" - whether solicitor and Purchasers could have reasonable ground to believe that contract not validly rescinded - whether inability of Vendors to discharge loan out of proceeds of resale of land during currency of caveat was a loss "attributable" to wrongful lodging of caveat. HELD: Purchasers had lodged caveat without reasonable cause - payments of interest which would have been avoided but for existence of caveat were a loss attributable to the wrongful lodgement of caveat.
LEGISLATION CITED: Real Property Act 1900 (NSW) - s.74P(1)
Real Property (Caveats) Amendment Act 1986 (NSW)
Real Property Amendment Act 1996 (NSW)
Supreme Court Act 1970 (NSW) - s.94
CASES CITED: - Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459
- Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106
- Collingridge v Sontor Pty Ltd (1997) 141 FLR 440
- Horswell v Paul (1983) NSW ConvR 55-126
- Lee v Ross [2003] NSWSC 289
- Nelson v Kimberley Homes Pty Ltd (1988) NSW ConvR 55-394

PARTIES :

Andrew Kwang Lee - First-named Plaintiff
Catherine Bok Lee - Second-named Plaintiff
Ju Hyung Lee - Third-named Plaintiff
Na Young Lee - Fourth-named Plaintiff
Raymond Ross - First Defendant
Bernadine Ross - Second Defendant
Karen Ross - Third Defendant
Cheryl Ann Thomas - Fourth Defendant
Registrar General of New South Wales - Fifth Defendant
FILE NUMBER(S): SC 2787/97
COUNSEL: A. Blank - Plaintiffs
R. Sofroniou - First Defendant
SOLICITORS: Daniel Svir - Plaintiffs
Horowitz & Bilinsky - First Defendant

      Introduction

      1    On 11 April 2003 I delivered judgment in these proceedings: Lee v Ross [2003] NSWSC 289. I held that no contract for the sale of land had come into existence between the Defendants as Vendors and the Plaintiffs as Purchasers. Alternatively, I held that even if such a contract had come into existence, it had been validly terminated by the Vendors on 7 March 1997 for wrongful repudiation by the Purchasers. I stood the matter over for the bringing in of Short Minutes of Order reflecting my reasons for judgment. 2 When the matter came back for the making of orders, Ms Sofroniou, who appears for the Vendors, sought an order for compensation under s.74P(1) of the Real Property Act 1900 (NSW). That section provides, in so far as is relevant:
            “Any person who, without reasonable cause … lodges a caveat with the Registrar-General under

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Lee v Ross (No 2) [2003] NSWSC 507
Case
[2003] NSWSC 507
Decision Date

CaseChat Overview and Summary

In the matter of Lee v Ross, the dispute involved the validity of a caveat lodged by the purchasers against the vendors' property. The case was heard in the Supreme Court of New South Wales. The purchasers had lodged a caveat after their solicitors insisted on an untenable construction of the contract, likely due to an incomplete copy of the contract being retained in their file. The vendors rescinded the contract, leading the purchasers to seek specific performance and lodge a caveat. The central legal issues before the court were whether the caveat was lodged without reasonable cause and whether the inability of the vendors to discharge their loan out of the proceeds of the resale of the land during the currency of the caveat was a loss attributable to the wrongful lodgement of the caveat.

The court examined whether the purchasers and their solicitor could have had reasonable grounds to believe that the contract was not validly rescinded. It was noted that the solicitor's insistence on an untenable construction of the contract was probably due to not having a complete copy of the contract in their file. The court determined that the purchasers had indeed lodged the caveat without reasonable cause. The court also found that the payments of interest that would have been avoided but for the existence of the caveat were a loss attributable to the wrongful lodgement of the caveat. The inability of the vendors to discharge their loan out of the proceeds of the resale of the land during the currency of the caveat was considered a compensable loss.

Ultimately, the court held that the purchasers had lodged the caveat without reasonable cause, and the payments of interest that would have been avoided but for the existence of the caveat were a loss attributable to the wrongful lodgement of the caveat. The court awarded compensation for this loss. The final orders of the court included the removal of the caveat and the awarding of compensation to the vendors for the interest payments incurred due to the wrongful lodgement of the caveat.

Orders

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Ratio Decidendi

Legal Principle Established

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