Nigam v Divjakoski - [2010] WASC 185

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NIGAM -v- DIVJAKOSKI [2010] WASC 185

CORAM: SIMMONDS J

HEARD: 6 JULY 2010

DELIVERED : 6 JULY 2010

FILE NO/S: CIV 1990 of 2010

BETWEEN: SHARAD CHANDRA NIGAM
Plaintiff
AND
DRAGAN DIVJAKOSKI
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Conveyancing - Real property - Caveats - Application to extend caveat - Lien under solicitor's costs agreement - Balance of convenience - Whether requirement of conferral should be waived

Legislation:

Rules of the Supreme Court 1971 (WA), O 59 r 9
Transfer of Land Act 1893 (WA), s 138B, s 138C, s 138D

Result:

Caveat extended

Category: B

Representation:

Counsel:

Plaintiff:     Mr R E Lindsay
First Defendant            :     Mr D S Romano
Second Defendant        :     No appearance

Solicitors:

Plaintiff:     S C Nigam & Co
First Defendant            :     Wilson & Atkinson
Second Defendant        :     No appearance

Case(s) referred to in judgment(s):

Bashford v Bashford [2008] WASC 138
Griffith v Hodge (1979) 2 BPR 9474
Lydon v Ryding [2002] WASC 308

SIMMONDS J: (This judgment was delivered extemporaneously on 6 July 2010 and has been edited from the transcript).

It seems to me that the appropriate orders today are to order an injunction in terms of order 5 in the plaintiff's chamber summons. It seems to me there is no reasonable doubt the plaintiff has an interest, in the nature of an equitable charge, arising under the costs agreement of 14 May 2010. The plaintiff entered into this agreement with its client, the first defendant, in respect of an appeal against a District Court judgment. The plaintiff also acted for the first defendant in those proceedings in the District Court which were instigated by the first defendant.
The injunction is appropriate in response to the application by the first defendant, pursuant to s 138B of the Transfer of Land Act 1893 (WA) (the Act), for the lapse of the caveat in absolute form, lodged by the plaintiff against the first defendant's interest, as a tenant in common, in certain property. In view of the absolute form of the caveat, an injunction is the appropriate order to make in relation to that application for the caveat to be dealt with under s 138B and s 138C of the Act.
The authority which the plaintiff refers to in his outline of submissions, Lydon v Ryding [2002] WASC 308 [21] ‑ [22], makes it clear to me that the caveat could not be maintained in its present form as an absolute caveat. As it was an irregularity appearing on the face of the caveat, it was not a matter of making an amendment to the caveat, or at least it was not the appropriate response to amend it to become a subject to claim caveat. Nor am I attracted to a s 138D disposition of the matter, in view of the approach in Lydon, which has been referred to with approval most notably in Bashford v Bashford [2008] WASC 138 (Beech J).
However, it seems to me that the caveatable interest, which is the foundation for an injunction on the basis that it establishes that there is a serious question to be tried is one that arose at the time of entering into the costs agreement. This is even though, at that point, there may have been no amount outstanding in respect of the appeal work to which the 14 May 2010 costs agreement exclusively related.
The charge was one that appeared (from the affidavit filed on behalf of the first defendant, sworn 6 July 2010, which annexes a copy of the costs agreement as annexure B to that affidavit), in sch 2 at cl 13.4 of the costs agreement, as an agreement to charge in the law practice's favour:
all your right title and interest in any and all real property in which you have an interest and you knowledge [sic] that the law practice at its discretion shall be entitled to use and rely upon this Costs Agreement in support of a caveat to be registered upon such real property as security for the payment of any outstanding costs and any further costs that may be incurred in the future.
It seems to me that this gives rise to a charge interest, as I have indicated, at the time of entry into the costs agreement, even if no amount is then outstanding. I would interpret the costs agreement as referring at least to costs incurred and conceivably, in a more limited way, to costs invoiced, which had created an obligation to pay a sum of money because the time for payment under the invoice had expired.
In any event, the charge relates to further costs that may be incurred in the future, and that seems to me to be capable of covering work, whether invoiced or not, that might be done after the date of the costs agreement. I refer for this purpose to Griffith v Hodge (1979) 2 BPR 9474 (NSWSC), a decision of Waddell J on a clause in a building agreement which read:
The owner hereby charges the parcel of land on which or on part of which the works are to be erected with the due payment to the builder of all moneys that may become payable to the builder by virtue of this contract or otherwise arising from the carrying out of the works.
At pages 9475 ‑ 9476 of the report of the judgment, it is clear to me that his Honour recognised that the charge given under the agreement extended to amounts which might become due in the future.
The difficulty in relation to this matter has to do with two aspects. The first is a consideration of the balance of convenience, which I have resolved in favour of the grant of an injunction. Counsel for the first defendant did not strongly press the contrary against me; however, it is important that I address balance of convenience in that context.
The second aspect is also a further matter of a balance of convenience kind, having to do with the fact that one of the orders sought by the plaintiff was to dispense with the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA). Apparently this was on the basis that there had been an exchange of correspondence between the parties in which it had become apparent to the plaintiff that there was no likelihood of payment being made on the one invoice rendered in respect of work done under the costs agreement, which was payable by 9 July.
That one invoice appears to be the only invoice that will be rendered under the costs agreement. The costs agreement has, it seems to be common ground, come to an end with the substitution for the plaintiff of another firm, as the solicitor in the first defendant's appeal. The amount under that invoice is not a very large one and not a very large one in relation to, I would have to assume, the interest of the first defendant in the land that is the subject of the caveat.
The amount involved in the invoice, which appears at page 30 of the affidavit filed on behalf of the first defendant, to which I made earlier reference, is a sum of $6,006.77, against which moneys that were held in trust have been transferred. The defendant appears to have some dispute with that application of that sum. I note, however, from the itemisation of work attached to the invoice, that at least some work was done before 14 May 2010, but no issue is taken with that before me.
It seems to me, then, that there was a question whether or not it would be necessary, given that the caveat would lapse on 15 July 2010, after the due date for payment under the invoice, for the plaintiff to secure either an extension or amendment of the caveat or, in the alternative, an injunction or s 138D order. This was because it was not evident to me that precluded consultation between the plaintiff and the first defendant of the kind that O 59 r 9 calls for. That is to say, it calls for something going beyond simply an exchange of correspondence. Those factors included the application made by the first defendant for removal of the caveat; correspondence, to which my attention was drawn, in which the first defendant took the position that, first, the invoice should be taxed and, secondly, that there was an incorrect application of sums in the trust account; and a prior history in which the plaintiff believed it had encountered difficulty with the payment of its costs in the District Court action, which, it was said, reflected on the expectation the plaintiff could reasonably have as to whether its bill would be met on this occasion. It was frankly acknowledged by counsel for the plaintiff that an exchange of correspondence was all that had occurred and, as I have already indicated, his minute of orders sought dispensation from O 59 r 9.
For the first defendant, it was strongly pressed on me that in view of correspondence annexed to the affidavit filed on behalf of the first defendant, there were, regardless of what had gone before, strong indications, both from the first defendant and his solicitors, that the first defendant would indeed pay the full amount invoiced, under the 14 May 2010 costs agreement, on or before 9 July.
Of course, the lack of conferral had meant, the first defendant's submissions would lead me to conclude, that there was not an opportunity for the first defendant to make those representations to the plaintiff.
The plaintiff might well have concluded, however, in view of the history that I have described, that it was still appropriate to proceed with its application. Alternatively, there might well have been no need for the hearing today because an assurance, satisfactory to the plaintiff, that there would be satisfaction of its invoice could have been provided. The first defendant does not deny that work was done and, as I have indicated, has provided indications close to the hearing today that there would be payment.
In my view, the plaintiff was entitled to assume that there was a basis for concern. The concern was one that rested upon its own apprehension as to the appropriateness of the form of the caveat that it had lodged, as well as the prior payment history that I have described. The balance of convenience for the making of an injunctive order of an interlocutory kind is, in my view, met, particularly in view of the strength of the plaintiff's case for the property interest that it relies upon.
At the same time, it seems to me that it is necessary to reflect, in an appropriate way, the concern that I have indicated, that has not been allayed, with respect to the course of action the plaintiff determined upon in not engaging in conferral with the first defendant. The first defendant was unrepresented until very recently, but it seems to me that O 59 r 9 is not limited to conferral between solicitors and the contrary was not strongly pressed upon me.
At the same time, the experience with what happens by 9 July 2010 may well show that conferral would clearly have been inappropriate because there was no likelihood of satisfactory assurance as to payment being provided by the first defendant, as indicated by the fact that payment was not made by 9 July 2010.
In my view then, the appropriate orders today are the ones that I have described, together with a liberty to apply. That liberty would clearly be appropriate in the event that payment was made on the invoice, such that the reason for the charge fell away and no further costs, of course, are to be incurred.
Now, there is also the question of the costs of the application to have orders made under s 138C and, if appropriate, s 138D of the Transfer of Land Act. The question of whether those costs are covered by the charge is not altogether a straightforward one and it may well be that those costs would also require to be addressed before there could be a dissolution of the injunction. I do not believe it is necessary, however, for me to address that matter today.
That then leaves the costs of today. That, it seems to me, is a matter which likewise is appropriately to be addressed at the point when either the injunction falls away or when 9 July passes without the payment on the invoice that I have referred to. I would therefore make the orders that will allow for the costs both of the application made under s 138C, as well as the costs of today, to be matters to be dealt with at the time when the liberty to apply, which would be available to both parties, was exercised.
I will therefore hear from the parties as to the precise terms of the orders that should be made to reflect those views.