Mills v Ruthol

[1999] NSWSC 400

CITATION:	Mills v Ruthol [1999] NSWSC 400
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	2101 of 1999
HEARING DATE(S):	28 April 1999
JUDGMENT DATE:	28 April 1999
PARTIES :	Brian Mills (First Plaintiff) Elaine Mills (Second Plaintiff) Ruthol Pty. Ltd. (Defendant
JUDGMENT OF:	Windeyer J at 1

COUNSEL :
SOLICITORS:	McCabes (Plaintiffs) David Landa Stewart (Defendant)
CATCHWORDS:	CONVEYANCING - Torrens System - caveats against dealings - application under s74K of the Real property Act 1900 - order extending the operation of a caveat
ACTS CITED:	Real Property Act 1900 s74K
DECISION:

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THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

WEDNESDAY 28 APRIL 1999

2101/99 MILLS & MILLS v RUTHOL PTY LTD

JUDGMENT

HIS HONOUR: This is an application by the plaintiff under section 74 K of the Real Property Act 1900 for an order extending the operation of caveat number 564585 until further order. That order can be made if the Court is satisfied that the caveat has or may have substance. The claim in the caveat is for an equitable interest to restrain dealings which are not consistent with provisions of an option dated 25 January 1997 between the plaintiffs and the defendant for the sale by the defendant and the purchase by the plaintiffs of the land, the subject of the caveat.

Under the option deed which is dated 25 February 1997 the defendant granted to the plaintiffs an option to purchase the subject property during the option period, namely, from 7 April 1997 until 30 June 1997, in consideration of the payment of the option fee set out in item 4 of the schedule to the deed, namely, $5,000. The option was to be exercised by notice in a prescribed form given within the option period together with a cheque for the deposit payable under a contract the terms of which were set out in a draft contract annexed to the option document. The option deed provided in clause 11 A as follows - (non-exercise of option to renew) the option shall be subject to and conditional upon the non-exercise of the right to renew contained in the lease by 7 April 1997.

That right to renew was a right under lease registered number E 542841 as set out in item 5 of the schedule. Clause 4.01 of that lease gives to the lessee a right to take a further lease for a term of five years from the expiration of the term of the original lease. That would mean if the option were exercised a new lease from 1 July 1997 for a term of five years. The notice of exercise of the right of renewal was required to be given not less than three months and not more than six months before the expiration of the term. In other words it could not be given earlier than 1 January 1997 nor later than 31 March 1997. Why clause 11 of the option had a date of 7 April 1997 is not clear.

By letter dated 21 March 1997 the solicitors for the defendant gave to the solicitors for the plaintiffs notice that the lessee had exercised his option to take a further term and stated that in those circumstances the option was of no effect. They sent back the $5,000. That letter was written after a letter had been sent on the letterhead of Alphega Medical Practice ACN 060527442 signed by Nichole Bateman stated to be a director presumably of that company giving notice of exercise of the right to renew the lease.

Matters then stood between the parties on the basis that the option was no longer of any effect. Later, however, the plaintiffs appear to have become aware of certain things which led them to believe that the option for a new lease had not been exercised. In fact, there is now registered on the title a lease for five years from 1 July 1998 to Tricon Austin Pty Ltd.

The plaintiffs also became aware of a statutory declaration of Mr Barry Milch, solicitor, made on 2 July 1998 as solicitor for the defendant under which he states that Alphega Management Services Pty Ltd, the lessee under the relevant lease referred to in the option document has not exercised the option for renewal and vacated the property on 13 June 1998. It is obvious enough that declaration was made for the purpose of obtaining registration of the lease which is presently entered on the title.

Having become aware of those circumstances, the plaintiffs claim that as they had been wrongly informed the option had been exercised, that amounted to, at the least, misleading information therefore their rights under the option had not become nugatory. They then purported to exercise the option.

They have stated through their solicitor that they intend to bring proceedings in this Court for relief against forfeiture of their rights as grantees of the option. The question then is whether or not there is a serious issue to be tried on whether or not there is an extant interest in the subject land which would justify the Court in continuing the caveat in force.

There are two matters which support the claim of the plaintiff, although the first may be rather weak. The letter of 18 March 1997 if it purports to be an exercise of option by the company, the ACN number of which is set out at the top of the letter, is not an exercise of option by the lessee company which has a different ACN number. Secondly, the declaration of Mr Milch states that the option for renewal was not exercised. While counsel for the defendant says that the letter of 18 March 1997 was an exercise by the lessee of the right of renewal under clause 0.41 of the lease and it doesn't matter what happened thereafter, that may be the position as if it were an exercise by the lessee of its right to a further lease, but if it were not an exercise of that right as the solicitor for the lessor defendant says it was not, then it is not possible to rely on that letter of 18 March 1997 as being a valid exercise of the right to take a renewed lease. On any basis it cannot be said there was not a serious question to be tried on that issue.

The next question is whether, assuming that was right, the plaintiffs may be able to maintain their claim for relief against forfeiture based on some improper conduct of the defendant company. That would, in the long run, depend upon what evidence is given as to the letter of 18 March, its validity and its effect, and the conduct of the lessor in respect of that letter. There doesn't appear to be any decision which has established that a right to relief against forfeiture will arise or that relief would be given in a case such as this, but one cannot say that such a claim would fail.

In the circumstances, as there has been nothing put forward by the defendant to show that the balance of convenience is otherwise, it seems to me that it is proper to extend the caveat on terms that the plaintiffs bring the action which is foreshadowed by them within 21 days of this date. There is, in my view no reason why that claim cannot be made in the proceedings.

Orders and directions

Upon the plaintiffs, through their counsel giving the usual undertaking as to damages, I make the orders as sought in para 2 of the summons.

I direct the plaintiff to file and serve within 21 days a statement of claim substantially in accordance with the draft document annexed to the affidavit of Mr T S McCabe sworn 27 April 1999.

I direct if such statement of claim is not so filed, the defendant may apply to me on 24 hours notice for an order that the caveat be removed.

I order the costs of the proceedings to date be costs in the action.

I further order that exhibit A be returned to the plaintiff's solicitor to enable him to comply with the undertaking given to the Court.

Order other exhibits be returned to the plaintiff's solicitor to be brought back to court for the hearing.

Last Modified: 05/04/1999