Martorella v Innovision Developments Pty Ltd
[2011] VSC 282
•24 June 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
No. S CI 2011 02184
| STEPHEN ANTHONY MARTORELLA and DONNA MARIE MARTORELLA | Plaintiffs |
| v | |
| INNOVISION DEVELOPMENTS PTY LTD | First Defendant |
| and | |
| THE REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | DIXON J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 6, 14 June 2011 | |
DATE OF JUDGMENT: | 24 June 2011 | |
CASE MAY BE CITED AS: | Martorella v Innovision Developments Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 282 | |
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REAL PROPERTY – Caveat – Application to remove caveat claiming estate in fee simple pursuant to an uncompleted contract of sale – Contract rescinded by vendor for caveator’s default at settlement – Purchaser to seek relief from forfeiture of deposit – No caveatable interest - Application to amend caveat to substitute interest claimed - Whether caveat should be amended - Application refused - Whether prima facie case of sufficient probability to justify maintenance of proposed caveatable interest - Whether equitable lien – Property for sale – Undertakings to preserve part of the proceeds of sale – Balance of convenience - Transfer of Land Act 1958 (Vic) s 90(3).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Kendall QC with Mr M La Pirow | Davies Moloney |
| For the first Defendant | Mr Wikramanayake SC with Mr A Phillips | Lewenberg & Lewenberg |
TABLE OF CONTENTS
The issues............................................................................................................................................ 1
What happened?................................................................................................................................. 1
(a) The caveat................................................................................................................................. 1
(b) The purchaser’s first default.................................................................................................. 2
(c) The deed of variation.............................................................................................................. 3
(d) The defendant’s second default and rescission.................................................................. 5
(e) The key terms of the contract................................................................................................. 7
(f) Further negotiations: February to May 2011........................................................................ 8
The plaintiffs’ contentions............................................................................................................... 9
The defendant‘s contentions.......................................................................................................... 10
Further deposit: an earnest or a penalty?................................................................................ 10
Plaintiffs’ contentions in reply...................................................................................................... 12
Consequences for the plaintiffs of termination of the contract............................................... 14
The application to amend the caveat............................................................................................ 15
Applicable legal principles............................................................................................................. 16
Specifying an estate or interest in land.................................................................................... 16
Amending a caveat: are there limits on a wide power?........................................................ 19
The discretion to amend a caveat............................................................................................. 22
When ought a caveat be removed?.......................................................................................... 23
Resolution of the applications....................................................................................................... 24
HIS HONOUR:
The issues
In this proceeding, the plaintiff seeks the summary removal of the first defendant’s caveat. During the course of the hearing, the first defendant filed a summons seeking to amend the caveat. The second defendant is the Registrar of Titles who is not appearing in the action. For convenience, I will refer to the first defendant as ‘the defendant’.
During the hearing of the application, the issues before the Court were fluid. They have now resolved and are as follows:
· Should the caveat be amended?
· If no, should the caveat be removed?
· If yes, is there a probability that the defendant will be found to have the equitable interest asserted by the amended caveat?
· Is that probability sufficient to justify the restriction on the rights of the registered proprietor flowing from the presence of the caveat?
The defendant now asserts an equitable lien arising from its entitlement to relief against forfeiture of the deposit. In this respect, there are further issues to be determined. Is there a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat that the:
· deposit, or at least the second tranche of it, is a penalty.
· defendant is presently entitled, in equity, to relief from forfeiture of the deposit or at least part of it.
What happened?
(a) The caveat
The caveat affects the land in Volume 09317 Folio 125 of the Register of Land maintained at the Office of Titles. The land is situated at 55 Herberts Lane, Diamond Creek. It is, apparently, zoned to enable residential subdivision. The plaintiffs first put the property on the market in August 2008.
On 18 September 2009, the plaintiffs and the defendant entered into a written contract of sale of real estate. The contract price was $6 million. The deposit was $500,000 payable by 8 December 2009. The defendant paid $10,000 on execution of the contract. A further sum of $240,000 was to be paid on 6 October 2009 and the balance by 8 December 2009. The deposit was paid. The completion date, when the residue of $5.5 million was to be paid, was 8 September 2010.
On 28 September 2009, the defendant lodged a caveat under dealing number AG780769D. The caveat claimed ‘an estate in fee simple’, stating the grounds of claim to be ‘as purchaser under a contract of sale dated 18 September 2009 from [the plaintiffs]’.
In December 2009, early release of the deposit was agreed by the usual process under s 27 of the Sale of Land Act 1962. Following the release of the deposit, the plaintiffs refinanced borrowings secured over the property, entering into a mortgage to Bellmar Holdings Pty Ltd. The facility secured was for one year, repayable on 19 February 2011, with interest paid annually in advance for the term of the loan.
(b) The purchaser’s first default
The balance of the deposit was paid late and, when the time for completion arrived, the defendant was unable to settle the contract. The defendant expected to apply the profits from a 46-apartment development in Kew towards the purchase of this property. When the anticipated profit on that development was not realised, the defendant did not have alternate funding available to settle the contract.
On 9 September 2010 the plaintiff served a 14-day Notice of Rescission by which the contract may have been rescinded on 23 September 2010, but circumstances intervened.
(c) The deed of variation
During that 14-day period, the parties agreed to vary the contract. The key terms of the variation were as follows:
· The particulars of sale were amended to provide for a deposit of $1.4 million, payable as $500,000 on the date of the contract and $900,000 on 8 October 2010, with the residue of $4.6 million payable on 20 January 2011. The sum of $900,000 was described in the deed as the second instalment of the deposit.
· The defendant pay the plaintiffs $71,013.84 representing interest, fees and costs arising from its default.
· General Condition 28.4(a) of the contract was amended to provide that on default, the deposit of $1,400,000 be forfeited to the vendor as the vendor’s absolute property whether paid or not.
· The plaintiffs withdraw the Notice of Rescission.
As it is contended that this payment of $900,000 infected the deposit with the stigma of being a penalty, I take a step back in the narrative at this point. The plaintiffs had contracted to buy another property, to settle after settlement of the contract of sale with the defendant. They proposed to apply the proceeds of sale of 55 Herberts Lane to this other contract. The plaintiffs were financially embarrassed by the defendant’s default in failing to complete the contract.
The defendant contended it did not know of the plaintiffs’ intended purchase when entering into the contract. The defendant’s director, Mr Pau l Riggs, explained the defendant’s knowledge of the plaintiffs further purchase. His statements were contradictory. At one point, Mr Riggs stated that he only became aware of the plaintiffs’ intended purchase in late August 2010. Following the defendant’s failure to settle on 7 September 2010, Mr Riggs sought to negotiate a new contract. On or around 15 September 2010, he received a proposal from Ian Mawson, an estate agent, that as the vendors had a commitment on a purchase, an additional payment of $900,000 was required prior to any renegotiation of the contract or new contract. This was, it was contended, an inequitable “demand” for a penalty rather than an appropriate demand for a further earnest from a defaulting purchaser seeking redemption.
The contradiction in Mr Rigg’s statements, which I need not resolve, is that at another point in his affidavits he deposes that he learned of the plaintiffs’ other purchase in December 2009, when early release of the deposit was sought, some 10 months before the time when the contract was due to be settled.
I note that in providing instructions to his solicitor in September 2010 about the negotiated variation of the contract, Mr Riggs acknowledged that “with the great help of Ian Mawson” an arrangement had been reached with the plaintiffs, including an offer by the defendant to “hand over an additional $900,000 of which, if any part is to be treated as a deposit for lot B contract, we will immediately sign a section 27 and release that portion with the signing of the new contracts”. By way of explanation, the negotiation at that stage envisaged a split into two contracts at a price of $3 million each for the same property but now described as lots A and B. The inequitable extraction of $900,000 from the defendant for personal purposes as a penalty is not apparent in the contemporaneous correspondence. The plaintiffs contend that the additional $900,000 was offered by a defaulting purchaser keen to re-establish the transaction. I need not, and do not, make any finding about such matters. At a trial, there may be other evidence.
The plaintiffs rejected this split contract proposal. They suggested the only way the transaction might proceed would be if the defendant made some form of a loan to the plaintiffs of an amount sufficient to enable them to settle their purchase contract with the loan possibly being an offset against the contract price. It is clear that this suggestion was not a firm proposal. It was merely a step in negotiations and lead to nought.
The defendant proposed that the $900,000 be categorised as an instalment of the balance owing on the purchase price, submitting a draft deed of variation to that effect. The draft deed was re-drawn by the plaintiffs’ solicitors with the further payment of $900,000 categorised as part of the deposit. By entering into the deed, the defendant accepted such characterisation. Mr Riggs stated, “I believe I had no alternative but to proceed with the deed of variation proposed by the plaintiffs as the plaintiffs’ solicitor made it clear to me through his refusal to negotiate the wording of the deed that the purchase of the property was only able to proceed on the plaintiffs’ terms”. It was faintly suggested that when Mr Riggs referred to “having no alternative”, he was not referring to the consequences of default in observing a freely negotiated bargain. Rather, he was alleging that he agreed to pay the additional $900,000 under some form of economic duress.
The defendant paid the second instalment of deposit of $900,000, and the damages and costs of $71,013.84 to the plaintiffs.
(d) The defendant’s second default and rescission
The defendant realised shortly prior to the scheduled settlement on 20 January 2011, that it had insufficient funds to complete the contract. Its shortfall was approximately $500,000. Mr Riggs stated that he met with Mr Martorella on 18 January 2011. Mr Riggs believed they reached an agreement at that meeting that the plaintiffs would provide vendor finance in the range of $500,000 to a maximum of $1 million. There are significant inconsistencies between what Mr Riggs deposed to in his affidavit of 20 May 2011 about this meeting and a letter, dated 18 January 2011, sent by the defendant’s solicitor. There is no further mention of this alleged agreement.
Settlement was scheduled initially for 21 January 2011 then rescheduled to 24 January 2011. Being short of funds the defendant failed to settle. Neither the defendant’s solicitor in correspondence at the time, nor Mr Riggs in his affidavits, suggested that the rescission notice served on 25 January 2011 was inappropriate because the transaction had been renegotiated on 18 January 2011. No arrangement to preserve the defendant’s position on and from 24 January 2011was negotiated with the plaintiffs.
On 25 January 2011, the plaintiffs’ solicitors served a Notice of Rescission. The notice provided that unless the default, specified as the purchaser’s failure to pay the adjusted balance of purchase monies at settlement, was remedied within 14 days of service, the contract would be rescinded, pursuant to General Condition 28 of the contract.
Following the Rescission Notice, the defendant attempted to remedy its default. Its solicitors served a statement of adjustments on 4 February 2011, nominating 8 February 2011 for settlement. On 7 February 2011 a disbursement statement was sought from the plaintiffs. The plaintiffs prepared for settlement on 8 February 2011, but that settlement appointment too was cancelled; the explanation was that “Previous funding arrangement has been reneged upon forcing our client to seek alternative finance”. The period specified by the Notice of Rescission expired that day. It is clear from contemporaneous correspondence between solicitors that the defendant faced an apparent shortfall of $220,000 to $230,000. Although the defendant expressed an ongoing desire to complete the purchase, it did not have the funds available to it to complete the contract. The defendant was unable to remedy the default.
The plaintiffs maintain that the original contract of sale, as varied, was rescinded on 8 February 2011. Although the defendant admitted that it did not pay the balance of the settlement monies before the expiration of the rescission notice, it initially contended that the contract was not rescinded because the notice had not been served in accordance with the contract. The defendant maintained an unattractive argument to this effect, notwithstanding the admission of Mr Riggs, that he received the Notice of Rescission from his solicitor by email on 25 January 2011 at 6.12 pm. I need not pause to consider either the evidence of service or the contention advanced on this point as Mr Wikramanayake SC, who appeared with Mr A Phillips for the defendant, abandoned that argument. Ultimately, it was not in dispute that, by 9 February 2011, the contract was rescinded by operation of this notice.
A caveat claiming ‘an estate in fee simple’ on the grounds ‘as purchaser under a contract of sale dated 18 September 2009’ now no longer appeared maintainable.
The defendant also contended that by entering into negotiations with it for a new contract in substantially the same terms, the plaintiffs waived the rescission notice of 25 January 2011. However, I could not discern on the evidence any basis for waiver of the rescission notice. The further negotiations followed the termination of the contract by rescission.
(e) The key terms of the contract
It is convenient at this point to note that on each occasion, the plaintiffs’ rescission notice was pursuant to clause 28 of the contract. Prior to the deed of variation, that term was in the following form:
28.4 If the Contract ends by default notice given by the Vendor:
(a)the Deposit up to 10 percent of the price is forfeited to the Vendor as the Vendor’s absolute property, whether the Deposit has been paid or not; and
(b)…
(c)in addition to any other remedy, the Vendor may within one year of the Contract ending: either
(i)retain the property and sue for damages for breach of contract; or
(ii)re-sell the property in any manner and recover any deficiency in the Price on the re-sale and any resulting expenses by way of liquidated damages; and
(d)the Vendor may retain any part of the Price paid until the Vendor’s damages have been determined and may apply that money towards those damages; and
(e)any determination of the Vendor’s damages must take into account the amount forfeited to the Vendor.
Upon rescission under the September 2010 rescission notice, had that occurred, the sum of $500,000 would have been forfeited, subject to its retention for application in determining damages, if any, on a re-sale, had the plaintiffs elected to re-sell. Importantly, there was a contractual right of retention of any part of the price paid, to be applied by set off against any shortfall on re-sale.
It will be recalled that the deed of variation replaced subparagraph (a) of this clause with the following:
The deposit of $1.4 million is forfeited to the vendor as the vendor’s absolute property, whether the deposit has been paid or not.
Upon rescission under the January 2011 rescission notice, the sum of $1.4 million was forfeited, subject to its retention for application against any deficiency in determining damages on completion of the resale. As I will later explain, the property is to be resold and is on the market. The contractual right of retention of any part of the price paid, to be applied by set off against any shortfall on resale may yet be called upon. While it was contended that forfeiture of the sum of $1.4 million was a penalty, it was not in issue that the sum was part of the Price paid. There is no challenge made now or foreshadowed by the defendant to the plaintiffs’ entitlement under clause 28.4(d) to retain the $1.4 million pending re-sale.
(f) Further negotiations: February to May 2011
On 15 February 2011, the plaintiffs’ solicitor informed the defendant’s solicitor that the plaintiff would not be prepared to enter into a new contract with the defendant for the sale of the land without proof of the defendant’s capacity to pay the residue of purchase price. The contemporaneous correspondence discloses that negotiations continued between the parties from February to May. Of these further negotiations, two observations may be made. The first is that the parties did not enter into a new contract of sale. The second is that, based on these further negotiations, the defendant pleads the plaintiffs are estopped from denying that a new contract of sale was agreed, which I shall refer to as the contract by estoppel. I have not been able to determine whether, there being no other suggestion made, the contract by estoppel must necessarily apply the forfeited deposit as the deposit for that contract. Whether the defendant can adduce evidence to satisfy a court that the contract by estoppel did not include a term for an earnest of performance by a deposit in the circumstances is a matter for another occasion. It is not necessary for the resolution of these applications, that I consider these further negotiations in any detail or recite all of the arguments made concerning that aspect of the transaction.
I need not pause to consider whether there is, in the sense required by s 63 of the Civil Procedure Act 2010, any real prospect of success for that part of the claim of the defendant (as the plaintiff in the proposed proceeding). Even if it is thought that the prospect of estopping the plaintiffs from denying the new contract is not fanciful, the interest claimed by the caveat is not to be an estate in fee simple as a purchaser under a contract by estoppel. As I will explain, the defendant now contends for a different interest in the land, not based in any equitable entitlement to an estate in fee simple whether pursuant to a contract by estoppel or the alleged continued enforceability of the original contract, as varied.
The plaintiffs’ contentions
In summary, the plaintiffs contended the caveat should be removed because:
· The contract of sale, as varied, was terminated. The plaintiffs have no caveatable interest.
· If that is not so, and the contract remains on foot, the defendant has not sought specific performance. It is unable to obtain that relief, as it cannot pay the residue of the purchase price. It has no caveatable interest.
· The deposit has been forfeited to the plaintiffs pursuant to the terms of the contract and the plaintiffs, having rescinded pursuant to clause 28 of the contract, intend to, and are, reselling the property. The plaintiffs are contractually entitled to retain any part of the purchase price paid, to be applied towards damages suffered on re-sale.
· The plaintiffs are obliged to their lender to sell the property and the presence of the caveat on the title is prejudicial, hampering re-sale efforts. Further, the plaintiffs will, if the defendant issues proceeding to substantiate its claims, undertake to secure $900,000 from the proceeds of any sale pending the resolution of the defendant’s proceeding. Thus, the balance of convenience favours the removal of the caveat.
The defendant‘s contentions
The defendant now contends there is a prima facie case with sufficient prospect of success to warrant a claim to an interest in the land commensurate with the sum of $1.4M secured by a lien or charge. The defendant contends that it is the holder of a lien or charge by operation of law, arising from its entitlement to relief against forfeiture of the deposit paid pursuant to the varied contract of sale. The defendant’s primary contention is for relief from forfeiture of the whole of the deposit of $1.4 million paid. In the alternative, forfeiture of the lesser sum of $900,000 is, arguably, a penalty. To maintain this contention as to its estate or interest in the land, the defendant seeks to amend the caveat. I will return to the issue of amendment after explaining how this claimed interest is put.
Further deposit: an earnest or a penalty?
The original deposit of $500,000 is unexceptional. It is less than 10% of the purchase price. Such a deposit is well within the bounds of accepted conveyancing practice in this State as an earnest for performance, which may be forfeited on default. It is not a penalty. Considered alone, Mr Wikramanayake did not contend otherwise. He relied on Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd.[1]
One exception to this general rule is the provision for the payment of the deposit by the purchaser on a contract for the sale of land. Ancient law has established that the forfeiture of such a deposit (customarily 10% of the contract price) does not fall within the general rule and can be validly forfeited even though the amount of the deposit bears no reference to the anticipated loss to the vendor flowing from the breach of contract. This exception is anomalous… the special treatment afforded to such a deposit derives from the ancient custom of providing an earnest for the performance of a contract in the form of giving either some physical token of earnest (such as a ring) or earnest money… In the event of completion of the contract a deposit is applicable towards payment of the purchase price; in the event of the purchaser’s failure to complete in accordance with the terms of the contract, the deposit is forfeit, equity having no power to relieve against such forfeiture.
[1][1993] AC 573, 578.
This exclusion of an earnest from the general application of the principles of penalty in contracts for the sale of land is restricted to amounts not exceeding 10% of the purchase price. Mr Wikramanayake submitted that there was a serious question for trial, as the deposit here exceeded 23% of the price. The plaintiffs could not establish special circumstances to justify forfeiture of a deposit exceeding 10%. The whole deposit was a penalty. Although the sum that exceeds 10% of the purchase price in this instance is $800,000, the defendant’s contention was that either the whole deposit of $1.4 million or, alternatively, the second instalment of the deposit of $900,000 was a penalty.
Mr Wikramanayake submitted, relying on McDonald v Dennys Lascelles Ltd,[2] that instalments of purchase money, other than the deposit, on a sale of land cannot be retained or recovered by the vendor after the contract has been determined by the vendor’s election to treat the purchaser’s default as a discharge. He submitted I should accept that that is exactly what has happened in this instance. In McDonald v Dennys Lascelles Ltd,[3] Dixon J stated:
It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract. Although the parties might by express agreement give the vendor an absolute right at law to retain the instalments in the event of the contract going off, yet in equity such a contract is considered to involve a forfeiture from which the purchaser is entitled to be relieved. The view adopted in Re Dagenham (Thames Dock) Company, Ex parte Hulse, seems to have been that relief should be granted, not against the forfeiture of the instalments, but against the forfeiture of the estate under a contract which involved the retention of the purchase money. (citations omitted)
[2](1933) 48 CLR 457.
[3]Ibid at 478.
Mr Wikramanayake pointed to Cox v Parker[4] as a plain example of the application of the principle. In that case a payment required by the contract, of $20,000, was held not to be deposit. It was an advance payment on account of the purchase moneys payable on completion and was, accordingly, not capable of forfeiture by the plaintiff. The court acknowledged that a purchaser’s equitable lien, protecting an entitlement to the return of the instalments of the price upon discharge, may constitute a caveatable interest, notwithstanding that the purchaser’s default has resulted in termination of the contract.
[4][1987] NSWSC 4307 (26 November 1987) (Kearney J).
Plaintiffs’ contentions in reply
Mr Kendall submitted, and I agree, the most important circumstance prevailing when the second instalment of deposit was agreed was that the defendant had defaulted under the contract and faced a valid rescission notice. Unless it either remedied its default or renegotiated the transaction, forfeiture of the initial deposit of $500,000 would follow.
The plaintiffs contended that, irrespective of any issue of penalty or of forfeiture, there was a contractual entitlement, expressed in clause 28.4, to retain the sum of $1.4 million pending the resale. There were two consequences. First, the terms of the contract may be distinguished from the contract considered in McDonald v Dennys Lascelles and, second, any question of relief from forfeiture may be premature. The question of relief from forfeiture may not be appropriately determined before the deficiency on re-sale is resolved, because of the right to retain any part of the price paid.
Mr Kendall contended there was no prima facie case on the material of unconscientious use of legal rights by the plaintiffs in the negotiation of the deed of variation. There was no serious question that the plaintiffs’ reliance on their rights under the terminated contract was inequitable.[5]
[5]Relying on Tanwar Enterprises Pty Ltd v Cauchi & Ors [2003] HCA 57 and Romanos & Anor v Pentagold Investments Pty Ltd & Anor [2003] HCA 58.
Mr Kendall referred me to In re Hoobin deceased; Perpetual Executors and Trustees Association of Australia Ltd v Hoobin.[6] In this proceeding, court approval was sought of a settlement by executors of a deceased estate involving a repayment by the estate to defaulting purchasers of part of a forfeited deposit. The purchasers had defaulted under a terms contract for the purchase of a hotel. After deducting the total loss on the resale, the vendors, if they retained the deposit, were better off by ₤5,919. O’Bryan J refused to approve the compromise, holding that the deposit was a true deposit and not a penalty and was properly forfeited to the vendors.
[6][1957] VR 341.
Mr Kendall drew from this decision the proposition that while a mere consideration of what percentage the deposit bears to the total purchase price is a relevant consideration, it is not a complete answer. The subject-matter and circumstances of the sale are an important considerations. Mr Kendall contended that the sale of a large parcel of land, suitable for residential development in the current economic climate, raised like considerations to those which O’Bryan J found applicable to a terms contract over eight years for the sale of a hotel, including the premises, business and liquor licence.
The plaintiffs also submitted that the defendant cannot contend that the increased deposit is a penalty or that it is entitled to relief from forfeiture, because it offered from its position of default to pay the additional sum as a further earnest. Any suggestion that the requirement of the additional sum was “forced” out of the defendant was fanciful. The financial circumstances facing the defendant when the variation of the contract was agreed were the consequence of the freely negotiated bargain that it had breached. For these reasons, the varied deposit was not a penalty, although it was now 23% of the price. It remained a true earnest of performance.
An alternative submission in estoppel was put for the plaintiffs. They contended the defendant is estopped by its conduct from claiming that the whole deposit of $1.4 million is a penalty. By entering into the deed of variation, both parties proceeded on the assumption that if there was a default by the defendant in completing the contract, the whole sum of $1.4 million would be forfeited as a deposit and that the defendant would not seek to argue otherwise. The defendant stood to forfeit the initial deposit of $500,000. It was both to avoid that loss and to retain the opportunity of thebargain, that the defendant offered to pay a further $900,000. Accordingly, it was submitted the parties acted on the assumption that the plaintiffs had the benefit of the whole of the $1.4 million as an earnest, if a further default occurred. Having achieved the reinstatement of the contract at the same price, it would be unconscionable for the defendant to resile from this assumption.
There are not matters that I need, or ought, determine on this application. Whether such contentions may succeed at trial when relief from forfeiture is determined, does not affect the considerations I need bear in mind on this application.
Consequences for the plaintiffs of termination of the contract
Following the defendant’s default in failing to complete the contract in January 2011, on 19 February 2011 when it fell due for repayment, the plaintiffs fell in default in respect of their facility with Bellmar Holdings Pty Ltd. Interest accrued for the months of March, April and May 2011 at the default rate of 18.75% per annum. Refinancing of that facility was initially prevented by the defendant’s caveat. Following negotiations, the plaintiffs have varied that facility. It has been extended to 19 February 2012.
This variation of the mortgage required payment of further interest in advance, the sum of $344,437.50. Further, by a special condition, the plaintiffs acknowledge that they will on or before 19 December 2011 enter into an unconditional contract of sale of the property for a price which is sufficient to discharge the mortgage in full before 19 February 2012. Alternatively the plaintiffs must provide evidence of acceptance of an unconditional offer of finance in an amount which is sufficient to discharge the mortgage in full when due for repayment.
The plaintiffs contended that the property was uncommon, being a large undeveloped parcel suitable for residential development, as opposed to a suburban house. Past sale history demonstrated that the property would not be easily re-sold. There are statements on affidavit, comment really, by an estate agent, which I have not taken into account about this issue. I do not find them at all persuasive. The plaintiffs contended, although this was disputed by the defendant, that the continued presence of the caveat upon the title caused prejudice to them in seeking to comply with the special conditions of their mortgage[7]. Purchasers were less likely to treat with the plaintiffs either at the asking price, or at all, due to possible complications presented by the presence of the caveat.
[7]Compare Goldstraw v Goldstraw [2002] VSC 491.
The application to amend the caveat
The hearing of the application proceeded in the Practice Court over two days. On the first day an issue was raised, following the concession by counsel for the defendant that the contract as varied was rescinded, whether the estate or interest claimed by the caveat was that for which the defendant now contended. The difficulty, highlighted during submissions, was identifying precisely the defendant’s position in respect of the transaction. It was unclear whether the defendant contended for an estate in fee simple and if so, on what basis, or alternatively for an equitable lien. The defendant foreshadowed an application to amend the caveat. The foreshadowed application impliedly acknowledged the difficulty. A month was sought by the defendant in which to commence a proceeding justifying whatever interest the defendant would maintain. I directed that by day two of the hearing, about eight days later, the defendant file its proceeding, including a statement of claim, justifying the interest in the land for which it now contended.
On the second day of the hearing the defendant sought, and was granted, leave to file a summons seeking to amend its caveat. Alternative amendments were proposed. The first proposal was to amend only the grounds of claim by substituting: “As the holder of the lien or charge arising by operation of law namely the caveator’s entitlement to relief against a forfeiture in respect of a deposit paid pursuant to the terms of a contract of sale dated 18 September 2009”. The caveat, if so amended, would claim an estate in fee simple on the ground of an equitable lien. The alternative proposal was to amend the estate or interest claimed by the caveat to: “an interest in the land commensurate with the sum secured by the lien or charge referred to below”. This alternative amendment also required the same amendment to the grounds of claim, that is, to allege the entitlement to an equitable lien.
In an affidavit filed in support of the summons, the defendant’s solicitor deposes that the defendant did not seek to change the estate or interest claimed by the caveat earlier, as it was only when the defendant conceded valid rescission, that the first contract was no longer on foot, that it was open to it to seek an amendment of the caveat. The explanation for the timing of the amendment application is not convincing. It appeared to me that the amendment was sought because of the strength of the contentions being put against the caveator that there was no prima facie case with a sufficient prospect of success to justify retention of a caveat in its original form.
I was provided with a form of proposed statement of claim. I am presently unaware whether this proceeding has been issued. However, submissions were put to me on the basis that this statement of claim now represents the claims made by the defendant against the plaintiff arising out of the circumstances I have described.
By the proposed statement of claim, the defendant alleges that the higher deposit forfeited under the variation of the contract was a penalty. It was not a payment in earnest of performance. The defendant contends that by clause 28.4(a), as varied, the higher deposit has been forfeited absolutely. The defendant further contends that it is entitled to relief against the forfeiture in respect of the penalty, that is, the sum of $1.4 million, and that in the premises it has a lien or charge over the property commensurate with the amount of the penalty. Further, and alternatively, the defendant contends that by the new contract negotiations between 15 February and 25 March 2011 the defendant has acted in reliance upon an expectation or an assumption that a new contract was entered into between the parties and that the failure of the plaintiffs to enter into this new contract will cause it detriment. The defendant contends that the plaintiffs are estopped from denying that it has entered into a new contract of sale with the plaintiff.
Applicable legal principles
Specifying an estate or interest in land
The right to lodge with the Registrar a caveat against dealings is granted by s 89 of the Transfer of Land Act 1958. A caveat may be lodged by any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise. As is well understood, a caveat forbids the registration of any transferee or proprietor of, and of any instrument affecting, such estate or interest either absolutely or conditionally. The claimed estate or interest in land is a central concept in a caveat. The purpose of a caveat is to operate as an injunction against registration of an inconsistent dealing otherwise than in accordance with the caveat so as to enable determination of conflicting claims.
In Leros Pty Ltd v Terara Pty Ltd,[8] Mason CJ and Dawson and McHugh JJ said:
It has been said that the purpose of requiring the caveator to ‘specify’ the estate or interest claimed is to enable the registered proprietor to know, or find out, the claim which he or she will have to meet. It has also been said that another purpose is to enable the Registrar-General to determine whether a dealing lodged for registration is inconsistent with the estate or interest claimed by the caveator.
Their Honours then stated what, with respect, is in my view the appropriate test to apply under the Transfer of Land Act 1958, when they said:
In the ultimate analysis it seems to us that ‘specify’ should be understood in the sense of ‘mention definitely or explicitly’.
[8](1992) 174 CLR 407, 422-423.
There is a further reason to require definite or explicit specification of the estate or interest claimed when the question of its removal is the issue. Removal can be sought either by application to the Registrar or, as in this case, by application for summary removal by the court. Under the former process, the caveat will not lapse if the Registrar receives notice that court proceedings are on foot to substantiate the estate or interest claimed by the caveator in relation to the land. There is, where that process is engaged by a person affected by a caveat, the further purpose of enabling the Registrar to determine whether a caveator’s notice of proceeding satisfies the requirement of s 89A(3)(b) of the Act; that the notice of proceeding is of a proceeding to substantiate the estate or interest claimed by the caveator in the caveat.
In this statutory context, whether the caveator may have some estate or interest capable of supporting a caveat, which is not itself claimed in the caveat, is not to the point. Further, the need for care in drafting a caveat, to provide proper protection by notice in the Register of the caveator’s claimed estate or interest, is well recognised in the cases. In this court, the Chief Justice, in Piroshenko v Grojsman & Ors[9] recently stated:
Finally, it should be noted that the onus which the caveator must discharge is an onus with respect to an interest or rights in land. A caveat is not a ‘bargaining chip’. It is not sufficient for the caveator to establish a prima facie case that they have contractual, equitable or statutory rights against the caveatee; their interest or rights must attach to the property with respect to which the caveat has been lodged.
[9][2010] VSC 240 at [23]; see also Goldstraw v Goldstraw [2002] VSC 491 at [42].
In 1954, a leading commentator on the Torrens System, John Baalman, demonstrated in an article in the Australian Law Journal[10] that the ineffectiveness of a caveat to do more than provide protection, by way of notice, commensurate with the extent of the notified estate or interest is a principle of long standing. The reason lies in the purpose I have described. A person proposing to deal with the land is entitled to assume that the claim expressed is the only one made, for the express mention of one ground is to the exclusion of the other.[11] If a caveator enjoyed more, or different, rights in land than claimed in the caveat, it is proper and appropriate to lodge another, or a different, caveat notifying such interests.[12]
[10]John Baalman, ‘The Drafting of Caveats’ (1957) 31 Australian Law Journal 17.
[11]Expressio unius est exclusio alterius.
[12]Ruptash v Zawick (1956) 2 DLR 145 quoted by Baalman, op cit.
The like position has been reached in New South Wales in respect of the terms of the Real Property Act 1900 (NSW). In Multi-Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd,[13] Barrett J, affirming the contemporary relevance of the observations of John Baalman, declared that a caveat is not an ambulatory or flexible means of maintaining a blocking position in aid of whatever interest, if any, the caveator may have from time to time.
[13][2001] NSWSC 696 at [127].
Where summary removal by the court is sought under s 90(3) of the Act, issues can also arise whether the estate or interest claimed is appropriately specified and whether, if it is not, amendment of the caveat can be sought. As Macaulay J recently noted in Percy & Michele Pty Ltd v Gangemi & Anor[14], the authorities on whether or not an amendment may be made to a caveat upon an application for removal of the caveat, are not entirely consistent. The power to amend a caveat is founded on the discretionary power contained in s 90(3) to “make such order as the court thinks fit”. That power has been recognised in various cases to be broad enough to permit an amendment to a caveat.[15]
[14][2010] VSC 530 at [92]; See also Crampton v French (1995) V ConvR 54-529 where Harper J described the law as blurred.
[15]Re The Victorian Farmers’ Loan and Agency Co Limited [1897] VicLawRp 117; (1897) 22 VLR 629; Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 515; Queensland Estates Pty Ltd v Co-Ownership Land Development Pty Ltd [1969] Qd R 150 (FC); S & D International Pty Ltd (in liq) v Malhotra [2006] VSC 280; Connector Park Pty Ltd v RV Pty Ltd [2006] TASSC 9.
Amending a caveat: are there limits on a wide power?
In Percy & Michele, Macaulay J, with respect correctly, rejected the submission that the limitation identified by Menhennit J in Midwarren Estates Pty Ltd v Retek & Stivic[16] was old law. His Honour affirmed that there is force in the argument that s 90(3) should not be construed to empower the court to amend a caveat by substituting an entirely different estate or interest claimed. In doing so, Macaulay J distinguished what Gillard J said in S & D International Pty Ltd (in liq) v Malhotra,[17] it being plain that in that case Gillard J was not dealing with the amendment of an estate or interest claimed, but rather the grounds upon which that estate or interest was claimed. This distinction is pertinent in understanding the proper limits of the discretion to amend under s 90(3).
[16][1975] VR 575, 576-7.
[17][2006] VSC 280.
I was not referred to Malhotra. Rather, I was taken to Depas Pty Ltd v Dimitriou[18] another decision of Gillard J where his Honour considered he did not need to determine whether the power to amend should be restricted to amendment other than to the estate or interest claimed. Gillard J acknowledged a strong argument can be made that it should not be so limited. If the caveat was removed on the ground that it was defective, the caveator may lodge another caveat immediately, setting out the proper estate or interest claimed. In the circumstances, the new caveat would not be prohibited by s 91(4). The parties would then return to court on another application. While that may, or may not, in any individual case be so, I do not consider, for the reasons stated above, that it is inappropriate that the correct specification of the estate or interest being claimed and notified on the Register should be made by the caveat lodged from the date of its notation in the Register of Land, irrespective of whether some further or other application may be made to the court. The argument has more obvious force where the irregularity affects matter such as the grounds of claim or the extent of the prohibition.
[18][2006] VSC 281.
It will be apparent from what I have said above, that I agree, with respect, with the reasons advanced by Macaulay J in Percy & Michele, justifying the distinction between amendment of the estate or interest claimed by a caveat and amendment of other matters such as, for example, the grounds of claim or the scope of protection. Having noted the statutory regime, in which the Court is given a discretion to make “such order as [it] thinks fit”, Macaulay J observed that it is arguable that the power to make such orders as the Court thinks fit, in the context of an application for the removal of “the” caveat, is a power in respect of that caveat and not some other caveat. A power, in effect, to substitute an entirely different caveat for the one that was lodged pursuant to s 89(1) does not seem to fall comfortably within the ambit of the discretion. His Honour also noted that in some circumstances, lodging a caveat may affect the rights of third parties in the context of potential priority disputes.
It is in this context that the answer to the argument, acknowledged but not decided by Gillard J in Depas, may lie. The notification of claimed interests in the Register assists in an orderly determination of conflicting claims to interests in the land. Third parties dealing with the Register expect certainty. The interests of others may potentially be affected where a notified estate or interest in land cannot be sustained or is in truth a bargaining chip or a warning sign reserved “for whatever later might be contended”. There may be questions of priority of competing interests. In other cases, to the detriment of the holders of registered interests, third parties may simply decline to deal in relation to the land. If the caveator’s claimed interest is amended on a summary application under the s 90(3) discretion, other interests and considerations may not be properly exposed and considered.
In both Midwarren Estates and Percy & Michele the facts were similar to this case. The defendant had claimed an estate in fee simple whereas the facts will, as I will explain, only justify, if any interest be made out, a claim in the nature of an equitable lien over the land. An interest under a lien, said to arise as relief from forfeiture is being sought, is wholly inconsistent with an interest as registered proprietor of the estate in fee simple by virtue of an uncompleted contract of sale.
In contrast, reference can be made to the litigation in George v Biztole Corporation Pty Ltd (in liq) and Anor.[19] The issues were not analogous. On the first application, Smith J was satisfied that a caveat where the estate or interest claimed was “an estate in fee simple” but the grounds of claim indicated that the estate or interest that was claimed was an equitable interest of a limited nature, not specified with particularity. Noting that the court has upheld caveats notifying limited interests expressed in broad terms,[20] where the point had not been taken before or discussed by the respective courts, Smith J considered it reasonable to impose a general prohibition on dealing with the land to protect the, albeit limited, interest claimed. He declared that the caveat was irregular but having regard to the limited matters for his determination, he did not order its removal.
[19]There appear to be two decisions of the same name in respect of the same matter being the decision of Smith J reported in [2005] V Conv R ¶54-519 and the decision of Ashley J BC9600471 6940 of 1994, 26 February 1996.
[20]Costa & Duppe Properties Pty Ltd v Duppe & Ors [1986] VR 90; Sinn v National Westminister Finance Ltd & Anor [1985] VR 363.
On the basis, in part, of that finding of irregularity, the question of removal or amendment of that caveat, arose before Ashley J (as his Honour was) on an application for summary judgment. Noting the debate in the cases,[21] Ashley J observed that it could not be said, if the effect of the proposed amendment was to alter the description of the estate or interest claimed, that the law unambiguously rejects such an amendment. However, he did not consider the proposed amendment in that case involved a change in the description of the estate or interest claimed. In the result, summary judgment was refused.
[21]Ashley J noted that other Judges of this court have accepted that amendment to correctly describe the estate or interest claimed is or may in some circumstances be possible: Simons v David Benge Motors Pty Ltd [1974] VR 585; Brooks v Quartz Holdings Pty Ltd [1989] V ConvR 54-328 and that the learned author of Lindsay's Caveats against Dealings in Australia and New Zealand (1995) prefers, at 168-169, the more expansive view.
The discretion to amend a caveat
It remains the fact that the power expressed in s 90(3) is wide and unqualified. As Macaulay J concluded in Percy & Michele, the better view may be that although the power may be construed as enabling amendment of the estate or interest claimed in appropriate circumstances, when exercising its discretion the court should generally be less inclined to amend the interest or estate claimed than to amend the grounds of the claim or the scope of the protection asserted. In that case, Macaulay J identified four relevant matters going to discretion:
· the amendment sought is to the interest claimed and not just the grounds of claim or the scope of the protection;
· the circumstances in which the error was made;
· the court should not readily act in a way which might encourage the belief that caveats can be imprecisely formulated and then “fixed up later”. As has been pointed out, caveats act as an interlocutory injunction (albeit by an administrative act) and can have powerful and serious consequences. Wrongly formulated caveats should not easily be tolerated; and
· the overall merits of the claim for a caveatable interest of the kind that is sought by the amendment. In other words, the court should have regard to all of the same considerations that arise on applying for removal of a caveat in the terms sought.
In determining this application, I do need to read down the wide language of the Act by denying a power to amend the estate or interest claimed by a caveat under s 90(3). There may be circumstances where the power can properly be exercised for that purpose. For the reasons I have stated above, where the amendment sought is to the estate or interest claimed, and not just the grounds of claim or the scope of the protection, the circumstances where amendment will be permitted will likely be special or exceptional. The nature of the amendment sought will always be a relevant and important consideration. The need to exercise care in drafting caveats remains.
When ought a caveat be removed?
Before explaining how the applications will be resolved, I will record that I approach the exercise of the discretion whether to order that the caveat be removed in accordance with recent decisions[22] of the trial division of this court, which have reformulated the approach to be taken in light of the High Court’s decision in Australian Broadcasting Corporation v O’Neill.[23]
[22]Piroshenko v Grojsman [2010] VSC 240: Percy & Michele, op cit.: Kearsley & Anor v Robson & Anor [2011] VSC 50.
[23][2006] HCA 46; [2006] 227 CLR 57, 83-4.
What the statute requires is that the caveator show that there is at least some probability on the evidence before the Court, that it will be found to have the equitable rights or interest in the land asserted by it in the caveat. Further, that that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietors to deal with the property in question in accordance with their normal proprietary rights.
If a prima facie case in this sense is not made out, the question of the balance of convenience never arises. If it does, when considering the balance of convenience, the Court should take whichever course appears to carry the lower risk of injustice if the Court should turn out to have been ‘wrong’, in the sense of declining to order summary removal of a caveat where the caveator fails to establish its right at trial, or in failing to order summary removal of a caveat where the registered proprietors succeed at trial.
Resolution of the applications
The application to amend the caveat will be rejected. I am not persuaded that it is appropriate to make the amendments required of the caveat: a new and different caveat is proposed.
I am satisfied that the defendant has used the existing caveat as a bargaining chip. It has only been prepared to relax the absolute prohibition on dealings when pressed, this occurred first when the plaintiff sought to re-finance the property, following the defendant’s default in completion of the contract of sale and during the course of the hearing, when under pressure to demonstrate why the contract should not be regarded as rescinded, the point taken in relation to service of the notice was described as a highly technical argument and abandoned. In context, the defendant having deposed to receipt of the notice from his solicitor on the day it was served, the point was without merit.
It is understandable that the defendant may desire to take whatever action is apparently available to it to facilitate recovery of the $1.4 million. Its exposure to that potential loss is a consequence of the bargain it made, the terms of which continue to govern how the dispute is to be resolved. The defendant’s desire to protect itself from the consequences of its bargain provide no warrant for extending, beyond its proper role, the function of a caveat as a mechanism for notification of interests claimed in land in the Register, and the prohibition of dealings which may adversely affect legitimate caveatable interests, prior to the resolution of disputes.
The defendant was not entitled to maintain its caveat from the date of rescission, that is, from 9 February 2011, the grounds having failed. The appropriate course, as a matter of proper conveyancing practice, was to immediately withdraw the caveat if, as appears to be the case, the defendant contends that it is entitled to an equitable lien based upon its right to relief from forfeiture. A caveat, claiming such an interest and properly stating the grounds upon which it was claimed, could have been lodged. The nature of the interest to ultimately be asserted by the defendant would then have been evident on the Register on and from the time such interest arose.
If a new agreement had been negotiated giving rise to an estate or interest in fee simple, upon the unconscionable refusal of the plaintiffs to accept the assumed state of affairs, again, prudent conveyancing practice would require that the caveat claiming an equitable lien be withdrawn and a further caveat lodged claiming an estate in fee simple. That none of these steps were taken is a matter which points reasonably to the inference that the caveat has been employed as a blocking position in aid of whatever interest, if any, the caveator may have from time to time. There are other factors evident in the events as described above that support such inference.
In such circumstances, persuading a court to exercise the wide and unfettered discretion under s 90(3) to amend the caveat requires a more frank and fulsome explanation of the circumstances warranting the amendment than has been provided by the defendant. The amendment proposed creates a new, and different, caveat. It might have been appropriate to make minor amendments to the grounds of claim or the extent of prohibition on superficial material, but that is not this case.
For the reasons given above, my reticence to amend the estate or interest claimed by the caveat, is reinforced by a perception that to do so in this case may encourage the belief that caveats can be imprecisely formulated and then fixed up later. The defendant has been assisted by solicitors and counsel who, presumably, understand and apply prudent conveyancing practice, including the importance of carefully drafting caveats and the Court’s expressed aversion to the inappropriate use of caveats in negotiations following failed property transactions. That fact, too, tends to support the inference that the defendant is maintaining a bargaining chip to escape the consequences of a bargain gone sour.
I will not limit an amendment to just the grounds of claim or the scope of the protection, since the caveat will then be nonsensical. The claimed lien cannot give rise to an estate in fee simple.
Further, in case the defendant later seeks to lodge the caveat in an amended form, I am not satisfied, particularly in the context of the provisions of clause 28.4, which permits the vendor where resale is proceeding to retain any part of the purchaser price paid, that the claim of the defendant to presently obtain relief from forfeiture of the sum of $1.4 million, or even the sum of $900,000, has sufficient prospect of success to justify any interference with the right of the plaintiffs, whether as registered proprietors, or as innocent vendors under a sale contract discharged for breach, to re-sell the property. The right to retain and apply any part of the price received, and the sum of $1.4 million meets that contractual description, prior to default, is a condition of the bargain between the parties that is not challenged. There is not, I consider, any basis on the material to find some prospect that the defendant might establish unconscientious or inequitable relance by the plaintiffs on clauses 28.4 (c)(ii), (d) and (e) of the contract.
I do not think that McDonald v Dennys Lascelles Ltd and Cox v Parker assist the defendant. McDonald v Dennys Lascelles Ltd does not stand for a proposition that would support the caveat, if amended, in the circumstances of these dealings. It is distinguishable on its facts by reason of clause 28.4. Dixon J goes on, after the passage on which Mr Wikramanayake relies, to state that the cases, which establish the purchaser’s right to recover the instalments, other than the deposit and the implication made at law by which the instalments become repayable upon the discharge of the obligation to convey, explain that these consequences may be qualified by express agreement to the contrary, as where the vendor has a contractual right to retain the whole of the amount paid towards the price against the loss occasioned by the purchaser’s failure to complete.
On a careful reading of the facts in Cox v Parker, it is clear that Kearney J recognised that the plaintiff in that case was, as is the case here, entitled to retain physical control of the sum of $20,000 as security pursuant to a term of the contract pending determination of proceedings for damages. The case is distinguishable from present circumstances because the court also determined that the plaintiff did not elect to proceed for liquidated damages on resale. The plaintiff had relied on an alternative claim for damages for breach of contract, an election which on the terms of the contract considered in that case was material. In this context, had the plaintiffs proceeded under clause 28.4(c)(i) rather than 28.4(c)(ii), Cox v Parker might warrant closer consideration. True, it is that the court recognised that a purchaser’s equitable lien will constitute a caveatable interest, notwithstanding that the purchaser’s default has resulted in termination of the contract. That is a matter I need not consider. The difficulty facing the defendant is not the existence of the principle for which they contend but, rather, its application in the context of this proceeding.
Were the caveat amended, I am not persuaded that the defendant caveator can show that there is at least some probability on the evidence before the Court that it will be found to have an entitlement to a lien or charge on the ground of relief from forfeiture as asserted by it in the proposed amendment to the caveat. If I am wrong about that, I would go further to say that the probability of establishing that entitlement to a caveatable interest, before the re-sale of the property, is not sufficient to justify the practical effect that the caveat has on the ability of the registered proprietor to sell the property in accordance with their normal proprietary and contractual rights.
The plaintiffs contend, and I accept, that the sale of a substantial property for residential development may be rendered problematical by the presence of the caveat.
It was baldly submitted for the defendant, that there was a risk that if the caveat was lifted the plaintiffs might refinance or otherwise dissipate, to the ultimate detriment of the defendant, any equity in the property. Having regards to the terms of the extension of the finance facility with its mortgagee by the plaintiffs, and to the whole of the circumstances as they are disclosed to me on this application, I do not consider that risk significant. I have already concluded that the merits of the defendant’s proposed action for relief from forfeiture, prior to the sale that is proposed, are not sufficient to warrant the interference with the registered proprietor’s rights to effect a sale of the property. It appears to me that in the circumstances, were the application for relief from forfeiture to be brought on for hearing immediately, it may well be regarded as premature, because the re-sale is yet to occur and the entitlement to retain and set off against loss on resale is extant.
In the view that I have reached, it is unnecessary to turn to the balance of convenience. The appropriate order is that the caveat be removed forthwith. However, the plaintiffs have offered an undertaking to pay from the proceeds of any sale of the property the sum of $900,000 into court or to otherwise appropriately secure it on the terms to which I have already referred. Should it turn out at trial that the defendant has, following the resale, become entitled to relief from forfeiture, the lesser risk of injustice, in all of the circumstances, will be occasioned if I require that the plaintiffs give that undertaking to the court as a condition of the removal of the caveat. I will order accordingly.
Subject to hearing further from counsel as to the form of the undertaking, the order and in respect of costs, I will order:
Upon the plaintiffs undertaking to the court by their counsel to pay sum of $900,000 from the proceeds of settlement of any contract of sale of the property situated at and known as 55 Herberts Lane, Diamond Creek, into court or to otherwise secure to the mutual satisfaction of the plaintiffs and the first defendant that sum, to thereafter be disbursed by order of the court or by the written consent of the parties first had and obtained:
that:
(a) The caveat lodged at the Office of Titles under dealing No. AG780769D affecting Certificate of Title Volume 09317 Folio 125 of the Register of Land be forthwith removed.
(b) The first defendant’s summons filed 10 June, 2011 is dismissed with costs.
(c) The first defendant pay the costs of the plaintiffs of the proceeding.
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