PCI Equity Pty Ltd (In Liquidation) v Lepore - [2010] SASC 84

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
PCI EQUITY PTY LTD (IN LIQUIDATION) v LEPORE
[2010] SASC 84
Reasons of Judge Lunn a Master of the Supreme Court
1 April 2010
REAL PROPERTY
Caveats - application to direct Registrar-General to cancel removal of a lapsed caveat from the title - Court had ordered extension of time for removal of the caveat but plaintiff's solicitors did not notify the Registrar-General of the order until after the removal of the caveat - held Registrar-General not at fault in removing caveat when he did not know of the extension of time - no proper basis to exercise discretion to cancel removal.

PROCEDURE
Whether order by consent for extension of caveat took effect when it was made or only when it was entered in the Court Record - 6R 226 - whether the order was an interlocutory judgment which had to be served under 6R 260 - application dismissed, but permission given to lodge a further caveat.

PCI EQUITY PTY LTD (IN LIQUIDATION) v LEPORE
[2010] SASC 84
Reasons on plaintiff’s application to direct the Registrar-General to cancel the removal of a caveat.

JUDGE LUNN: On 8 April 2009 the plaintiff lodged a caveat over land of which the defendant was the registered proprietor. It claimed an equitable interest in the land by virtue of it having contributed a portion of the purchase money for the land.
On 28 September 2009 the defendant applied to the Registrar-General to have the caveat removed. He issued a warning that the caveat would be removed if no order of the Court extending the time for its removal was made within 21 days, ie by 19 October 2009.
On 19 October 2009 the plaintiff instituted this action claiming a declaration of its equitable interest in the land and an order for the extension of the caveat. At an urgent hearing on that day I extended the time for the removal of the caveat until 3 November 2009. The plaintiff’s solicitors gave notice of that order to the Registrar-General and the caveat remained on the title.
On 2 November 2009 the plaintiff’s solicitors submitted to me minutes of order endorsed with the consent of the defendant’s solicitors for an extension of the caveat until further order. On 3 November 2009, and without any attendance of the solicitors, I made the following order by consent:
1The time for the removal of Caveat No 11153490 lodged in the Lands Titles Registration Office in respect of the land comprised and described in Certificate of Title Register Book Volume 5845 Folio 822 be extended until further order;
(Although the sealed order states that it is dated 2 November, it was not made until 3 November).
Prior to the close of business on 3 November the plaintiff’s solicitors took no steps to have this consent order sealed or to notify the Registrar-General of the further extension of the caveat. Shortly after 3 November the Registrar-General removed the caveat from the title.
Nothing further occurred until about 12 February 2010 when solicitors acting for Blue Sky Private Equity Ltd (“Blue Sky”), another caveator over the defendant’s land, informed the plaintiff’s solicitors that the plaintiff’s caveat had been removed.
On 15 February 2010 the plaintiff’s solicitors had the consent order of 3 November 2009 entered and sealed. On 5 March 2010 they issued an interlocutory application seeking that the Registrar-General be directed, pursuant to s 64 of the Real Property Act 1886 (“the RPA”), to cancel the removal of the caveat from the title. The application has been treated as seeking in the alternative an order under s 191(k) of the RPA for the plaintiff to lodge a second caveat in similar terms.
The Registrar-General was served with the application, but merely indicated he would abide by the order of the Court. Blue Sky and the trustee in bankruptcy of the defendant’s husband, who is also an interested party, took no part in the argument and indicated they would abide the order of the Court. The defendant was prepared to consent to the alternative order under s 191(k).
Without deciding the point I accept for purposes of this application that this Court does have jurisdiction under s 64 of the RPA to direct the Registrar-General to cancel the removal of a caveat from a title. S 64 confers a general judicial discretion on the Court whether to make such an order. The issue here is whether such an order should be made in the circumstances of this case.
The Court will be inclined to make the order where the Registrar-General had been at fault in removing the caveat: re Jobson (1950) 51 SRNSW 76. While the Court apparently has jurisdiction to cancel an entry in the Register Book where the Registrar-General has not been at fault: Elders Trustee Ltd v Bagots Executor Ltd (1964) SASR 306, it will require considerable persuading that it is proper to do so. Even though caveats are not registered instruments for the purposes of the RPA, it is still a basic principle of the RPA that a person should be able to rely on the accuracy of the face of the title. Thus anyone searching this title after 3 November 2009 would be entitled to infer that the plaintiff was not seeking to maintain its caveat for its alleged equitable interest in the land. (However, such person could not assume without further inquiry that the caveat had not been superseded by an interlocutory injunction made in the Court action which had previously extended the time for the removal of the caveat).
It was not disputed that the plaintiff by its solicitors had been at fault in not having notified the Registrar-General of the order made on 3 November extending the time for the removal of the caveat. By 6R 240(1) and (2) that order should have been sealed and entered into the Court’s record at the instigation of the plaintiff’s solicitors. It was their responsibility, and not that of the Court, to notify the Registrar-General of it. It was an oversight on their part. It is not necessary to go into the question of the means by which the Registrar-General could have been properly notified of the order, and whether it required a copy of the sealed order to be lodged at the Lands Titles Office, or whether some lesser means of notification would have been sufficient.
The plaintiff contended that the Register-General was also at fault in that he was not legally justified in removing the caveat on 3 November 2009. This involves consideration of the following parts of s 191 of the RPA dealing with caveats:
….. any person claiming to be interested at law or in equity ….. may lodge a caveat with the Registrar-General forbidding the registration of any dealing with such land,
…..
(c)Not to register dealings contrary to caveat
so long as any caveat shall remain in force the Registrar-General shall not, contrary to the requirements thereof, register any dealing with the land in respect of which such a caveat shall have been lodged: …..
…..
(e)Caveatee may apply to have caveat removed.
the caveatee may, ….. make application in writing to the Registrar-General to remove the caveat, ….. and the Registrar-General shall thereupon give twenty-one days’ notice in writing to the caveator, requiring that the caveat be withdrawn.
(f)Mode of removing or discharging the caveat
the Registrar-General shall, after the lapse of twenty-one days from the posting of such notice to the address mentioned in the caveat, or of such extended time as may be ordered by the Court, remove the caveat from the Register Book by entering therein a memorandum that the same is discharged.
…..
(g)Caveator may apply to the Court for order to extend time
the Court may, on the caveator’s application, extend the period of 21 days until an action under paragraph (fa) is determined or for any other period;
(h)May withdraw caveat: …..
any caveator may, by notice in writing to the Registrar-General, withdraw his caveat at any time; …..
(i)Entry to be made
an entry shall be made by the Registrar-General in the Register Book of any order made by the Court relating to any caveat, or of the withdrawal, lapse, or removal of any caveat.
…..
(k)Not to lodge further caveat without permission
it shall not be lawful for any caveator other than the Registrar-General, ….. to lodge a further caveat relating to the same matter without the permission of the Court;
The plaintiff’s argument centres on subs 191(f). It says that sub (f) should be read literally where it says “of such extended time as may be ordered by the Court” and there is nothing to make it dependent upon notice of the order having been first given to the Registrar-General. Thus the plaintiff says that once the order was made on 3 November the time for the removal of the caveat was extended until further order. The Registrar-General was then not justified in removing the caveat even though he did not know of the order. The defendant contended that sub (f) must be read as if the words “and notified the Registrar-General” were inserted after “ordered by the Court”.
The plaintiff’s argument is based on an order of the Court taking effect from when it is made: Church of the New Faith Inc v Bower (1979) 21 SASR 161 at 163. However, that is not exactly what the present Rules provide. 6R 226 provides:
226 When judgment takes effect
(1)A judgment that the Court gives following a process of adjudication takes effect when the Court pronounces judgment.
(2)A judgment that is entered without adjudication takes effect when it is entered in the records of the Court.
As the order of 3 November 2009 was made by consent it is arguable that it did not follow a process of adjudication. The Court did not turn its mind to the merits of whether the caveat should be extended until further order but merely gave effect by its order to what had been agreed between the parties: Rogers v Curnow (1979) 22 SASR 204. If there was no adjudication, under 6R 226(2) the order did not take effect until at least 15 February 2010 when it was sealed and entered in the records of the Court. If so, the Registrar-General was under no obligation under the order not to remove the caveat on 3 November 2009.
If the order did take effect on 3 November 2009 pursuant to 6R 226(1), it is necessary to consider the effect of 6R 260, which relevantly provides:
260 Service of judgment
(1)Subject to any contrary direction of the Court, a judgment must be served on a person against whom it is to be enforced.
Exception –
The following judgments do not need to be served –
(a)an interlocutory judgment;
…..
(2)The judgment need not, however, be served personally but, if it is not served personally, the Court will not issue a warrant to attach a person for contempt of the judgment, or take any other action against a person for contempt, unless satisfied that the judgment has actually come to the person’s attention.
Although it is straining the language of subr (1) to some extent an order extending the time for the removal of a caveat is an order which is enforceable against the Registrar-General. If effect is not given to such an order, the next step would apparently be some consequential proceeding against the Registrar-General.
6R 260 does not say when the judgment must be served, but it is implicit that it is not enforceable until service has occurred. The obligation to serve is on the party who would seek to enforce the judgment, which here is the plaintiff.
Although 6R 260 was not referred to in the course of argument, one potential difficulty in its application is whether the order of 3 November 2009 is an “interlocutory judgment” and so is excepted from the operation of subr (1). This raises the long-standing vexed question of what constitutes an “interlocutory judgment”. The term is not defined by the Rules, but some indication of its meaning would seem to be able to be derived from the definition in 6R 4 of the related term of “interlocutory proceeding”, which says:
interlocutory proceeding means a proceeding of any of the following kinds in which an order or direction of the Court is sought –
(a)a proceeding that is preliminary or ancillary to an action or appellate proceeding, or an intended action or appellate proceeding, in the Court;
Examples –
1An application to require production of evidentiary material that may assist in the formulation of an action.
2An application for a Mareva order.
(b)a proceeding for an order or direction about the course or conduct of an action or appellate proceeding;
Example –
An application for extension of time to take a step in an action.
(c)a proceeding related to the enforcement of a judgment;
Example –
An application for an order or direction under the Enforcement of Judgments Act 1991.
The application for an extension of the time for the removal of a caveat would only be an interlocutory proceeding within this definition if it was “ancillary to an action” under (a) of the definition. While a caveat is similar in its nature to an interlocutory injunction granted by the Court: Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198, it does not derive its force from the powers of the Court but by operation of s 191 of the RPA. Hence it is not ancillary to an action in the same way as an interlocutory injunction would be ancillary to it. While an order for an extension for the time for the removal of the caveat is part of the action, it is a species of primary relief, and not ancillary relief. Accordingly, I do not consider that the order of 3 November 2009 was an “interlocutory judgment” for the purposes of 6R 260(1).
Either s 191(f) is to be read as subject to an implied term that an order for an extension of time is only to bind the Registrar-General if he has proper notice of it, or it is to be read in conjunction with 6R 260 so that they together do not require the Registrar to give effect to a judgment which has not been served on him. Thus I do not find the Registrar-General to have been at fault in any way in having removed this caveat.
The defendant, Blue Sky and the trustee in bankruptcy of the defendant’s husband are the persons most likely to be adversely affected by the order sought. None have suggested to the Court that they would suffer any prejudice. However, there is the possibility that persons at present unknown may have searched the Register Book since 3 November 2009, and who could have acted in some way to their detriment on the belief that the plaintiff’s caveat was no longer in force. If no such persons exist, the plaintiff will not be prejudiced if the primary order sought is refused, but it is now given leave to lodge a second caveat. If such persons do exist, then they should not be prejudiced by a retrospective reinstatement of the plaintiff’s caveat. On the plaintiff’s argument a caveatee, who through inadvertence fails to notify the Registrar-General of an order for the extension of the time for the removal of the caveat, should be able to obtain an order to cancel the removal of the caveat if there is no evidence of actual prejudice to any known party. However, rather the caveator should not get a retrospective reinstatement of the caveat unless it can show fairly conclusively that no unknown person is likely to be have been prejudiced by acting of the face of the title after the caveat was removed. The plaintiff has not been able to satisfy me of that here, and so the order should be refused.
Counsel for the plaintiff also referred to an old New Zealand case of Howell v Union Bank (1888) 6 NZLR 567 that suggested that where a caveator allowed a caveat to lapse under the equivalent of s 191(f) it could be treated as an abandonment of the caveatable interest. Whether such interest has been waived or abandoned is a question of fact, and not of law, and that case is no more than a decision on its own facts. On the whole of the circumstances here there is no danger that the failure to extend the caveat would be so interpreted.
The plaintiff’s counsel conceded that the plaintiff should bear the costs of the application.
I have today made the following orders:
1Application for a direction to the Registrar-General to cancel the removal of the caveat number X11153490 is refused.
2Permission to the plaintiff within 14 days to lodge a further caveat in similar form to the caveat X 11153490.
3Costs of FDN 8 to be paid by the plaintiff to all persons who were served with the application.
4Fit for counsel.
5Directions Hearing adjourned to Thursday 5 May 2010 at 10.50 am.