Perpetual Trustee Company Ltd v English

[2011] NSWSC 264

Supreme Court

New South Wales

Medium Neutral Citation:

Perpetual Trustee Company Ltd v English [2011] NSWSC 264

Hearing dates:

23 March 2011

Decision date:

23 March 2011

Before:

Rein J

Decision:

1. Order under s 74MA of the Real Property Act 1900 (NSW) that the second defendant provide a withdrawal of caveat registered AG 116427 lodged on Title Folio 136/SP75167 for the land in Lot 136 in Strata Plan 75167 known as Suite 407, 250 Pitt St, Sydney NSW 2000 by 10am on 25 March 2011.

2. First defendant to pay the plaintiffs' costs on the usual basis.

Catchwords:

REAL PROPERTY - application under s 74MA of the Real Property Act 1900 (NSW) for the removal of a caveat lodged by the first defendant - whether the form of the caveat is inadequate and hence should be removed - PROCEDURE - costs - whether the first defendant should be ordered to pay the costs of the plaintiffs on an indemnity basis

Legislation Cited:

Real Property Act 1900 (NSW)

Cases Cited:

Brown v Heffer (1967) 116 CLR 344
Circuit Finance Pty Ltd v Crown & Gleeson Securities Pty Ltd [2005] NSWSC 997
Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880
Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406
Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Category:

Principal judgment

Parties:

Perpetual Trustee Company Ltd ACN 000 001 007 (first plaintiff)
Challenger Managed Investments Ltd ACN 002 835 592 (second plaintiff)
Trent English (first defendant)
T-Networks Pty Ltd ACN 090 591 950 (second defendant)

Representation:

Counsel:
P Dowdy (plaintiffs)
T English (first defendant in person)
Solicitors:
Norton Rose Australia (plaintiffs)

File Number(s):

SC 2011/90645

EX TEMPORE Judgment

1. This matter arises as a result of a caveat having been lodged by Mr Trent English, the first defendant. The property in question is a city office block with a significant number of strata units (" the Property" ). The Property is owned by Ashington No 250 Pty Ltd ( "Ashington" ) which had given a mortgage to the first named plaintiff ( "Perpetual" ). Ashington is in default of the mortgage terms. Perpetual is seeking to enforce that mortgage and has entered into a contract for sale for a substantial amount in excess of $4 million (and the second plaintiff is a party to these proceedings because of its relationship with Perpetual).

1. The caveat in question is actually a second caveat lodged by Mr English on the title ( "the Second Caveat" ) which is found at pages 134-135 of Exhibit A. The previous caveat that was lodged was lodged in October last year ( "the First Caveat" ) and it is found at pages 45-46 of Exhibit A.

1. The First Caveat describes the caveator as "Trent English as nominee". That caveat is bad in form for reasons similar to those which arise in relation to the Second Caveat. In any event, the First Caveat lapsed.

1. The Second Caveat names the caveator as "T-Networks Pty Ltd as nominee". It has been lodged by "Trent English as nominee" and it claims "Equitable Interest" as the nature of the estate or interest on the second page of the caveat. Under the heading "By virtue of the facts stated below" is the following:

"Property purchase payment deposit and lease"

1. In relation to the issue of lease, it appears that the second defendant, T-Networks Pty Ltd ( "T-Networks" ), currently leases one of the units in the Property which is to be sold. The contract for sale that Perpetual has entered into specifically notes that the sale is subject to existing tenancies and Perpetual does not seek to interfere with the lease that T-Networks has in relation to the Property, which is an unregistered lease for less than three years.

1. Returning to the Second Caveat, it is in a form which is inadequate for several reasons. Firstly, it uses the phrase "as nominee". It is not at all clear what is intended by that. There is no indication in the document as to who is the nominee. It is possible, having regard to the First Caveat, to imagine that it might be intended to be Mr English. If it was so intended, it would be a caveat that would fall foul of s 74O of the Real Property Act 1900 (NSW)("the Act") because in the First Caveat the caveator is described as Mr English, although yet again the phrase "as nominee" was utilised. In any event, the Second Caveat cannot be interpreted by reference to another caveat which has lapsed. Using the phrase "as nominee" does not in terms indicate who it is intended has the interest. There is nothing at all to indicate the basis for that assertion or that description.

1. The second problem with the form of the Second Caveat is that it uses the phrase "Equitable Interest". This is an inadequate description as has been held in a number of cases in this Court including a decision of Campbell J, as his Honour then was, in Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880 , Brereton J in Circuit Finance Pty Ltd v Crown & Gleeson Securities Pty Ltd [2005] NSWSC 997 and in a decision of Palmer J in Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870 . It is important that claimants or persons claiming under a caveat make clear the basis upon which they assert a right or interest in the property.

1. The third problem with the Second Caveat is the words "Property purchase payment deposit and lease". Although the phrase seems to cover a number of categories, no documentation of any kind is mentioned and it is totally uninformative.

1. Mr English, who appeared for himself today, has drawn my attention to a document which is found at pages 185-186 of Exhibit A. That document is headed "Schedule" and is signed by the mortgagor, Ashington, and Mr English. Even there it says, against Mr English's name, "as nominee". That document is not referred to in the caveat. Secondly, the document is incomplete, it being a schedule to something which is not identified. The document to which it is a schedule has not been produced to the Court and has not been tendered by Mr English. On the face of it, the document seems to relate to a call option. Even assuming the option to have been exercised, there is nothing to indicate on the face of that document that it was entered into by the caveator, T-Networks.

1. For these reasons, in my view, the Second Caveat is woefully inadequate and should be removed in accordance with the provisions of the Act. The application is made by Perpetual under s 74MA of the Act. It is clear that the Second Caveat is impeding the sale of the Property and there is no basis upon which it should be permitted to continue.

1. I should indicate that Mr English, in his oral submissions, made reference to circumstances, which if they were able to be supported by evidence in proper form, would suggest that he may have a claim against Ashington in relation to an agreement that he claims to have reached with Ashington at some time for the purchase of the Property, but this does not give him rights against the first registered mortgagee of the Property. I should note in that context that it is clear that the mortgage that Perpetual relies on was entered into in 2005 and that it was stamped for revenue purposes around that time. It might be possible to draw the inference that the mortgage was lodged at around that time as well, but even without that inference, what is clear from the document at page 46a of Exhibit A is that the mortgage was registered before the First Caveat was lodged. There was no dispute by Mr English as to that fact.

1. Mr English has indicated his belief, which I think is supported by the material before the Court, that Ashington is unlikely to have the funds to pay any claim against it but that does not give him a right in relation to the Property. Mr English referred me to Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 and Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 which may support his claim against Ashington , but neither case (nor Brown v Heffer (1967) 116 CLR 344, which Mr English also mentioned) has any bearing on the question of whether or not the Second Caveat should be removed.

1. Accordingly my view, it is appropriate for the relief sought by the plaintiffs to be granted. Therefore, I make an order under s 74MA of the Act made in terms of paragraph 3 of the summons.

Costs

1. The plaintiffs seek an order that Mr English pays their costs and on an indemnity basis. There can be no doubt as to the plaintiffs' entitlement to an order for costs on the usual basis, but given that Mr English has been acting for himself and that no warning was given to him that such an order would be sought, I do not think an order for indemnity costs should be made in this case.

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Decision last updated: 07 April 2011