Reschke v Trevor Reschke Nominees Pty Ltd - [2018] SASC 22

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
RESCHKE v TREVOR RESCHKE NOMINEES PTY LTD
[2018] SASC 22
Judgment of The Honourable Justice Doyle
7 March 2018
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL
Appeal from decision of Master setting aside earlier order of another Master extending time for removal of a caveat on grounds of non-disclosure.
Held (per Doyle J), dismissing appeal:
1. No error identified in Master’s decision.

RESCHKE v TREVOR RESCHKE NOMINEES PTY LTD
[2018] SASC 22
Master’s Appeal: Civil

DOYLE J: The appellant appeals from a decision of Judge Roder dated 20 November 2017. The effect of the decision under appeal was to set aside an earlier decision of Judge Bochner, dated 11 May 2017, extending the time for removal of a caveat lodged by the appellant over certain real property (the Property) registered in the name of the respondent company.
Background
By way of background, the Property is part of a larger group of adjacent parcels of land, which was referred to in the course of argument as the Contiguous Land. In December 2016, the respondent had entered into a contract to sell the Property to a third party (Mr Gartner). In January 2017, the appellant lodged a caveat over the Property to prevent the sale of the Property under the respondent’s contract of sale. The appellant claimed that, in equity, the Property belonged to him.
At the March 2017 hearing before Judge Bochner of the application to extend the time for removal of the caveat, the appellant contended, in essence, that he had a proprietary right to the Property on the basis of promises made, and expectations generated, by his father and grandfather from the time he was about four years old. Despite these alleged promises, the appellant’s father, when he died back in 2008, left the Property in his will to the respondent company (being an entity controlled by the appellant’s brother). The respondent now wishes to the sell the Property to reduce debt.
At the hearing before Judge Bochner, the appellant gave, and relied upon in support of his asserted interest in the Property, extensive evidence as to the promises and expectations, and his reliance upon them. That evidence is summarised in Judge Bochner’s reasons at [4]-[6], and in the reasons of Judge Roder at [38] (referred to as the “legacy narrative”). There is no need for me to repeat that summary.
Judge Bochner was satisfied that the plaintiff had established a prima facie case as to the existence of the alleged proprietary interest. See Judge Bochner’s reasons at [40]-[41].
Her Honour then turned to consider the issue of balance of convenience, which was of course a necessary consideration in determining whether or not to extend the caveat. Her Honour noted that in circumstances where there were serious issues to be tried as to an interest in real property, then the balance of convenience would often, if not usually, lie in favour of permitting the caveat to remain in place until the issues had been determined. Her Honour referred to the appellant’s argument that the balance of convenience favoured extension of the caveat in this case because, were the land to be sold, the appellant would lose his inheritance in the land, this being something he could never recover. The respondent, on the other hand, pointed to the proposed sale being a high value sale to a neighbouring farmer, in circumstances where significant holding costs were being incurred and the cost of non-completion of the contract would be material.
Judge Bochner ultimately accepted that the balance of convenience lay in favour of extending the caveat, reasoning as follows (at [48]-[49]):
In ordinary circumstances I would allow the Property to be sold and the proceeds of sale to be paid into Court pending the outcome of the substantive action.
This is not, however, an ordinary case. This is land the plaintiff says he does not want to sell, and for which money would not be adequate compensation. There is conflicting evidence as to the plaintiff’s previous willingness to sell. Nevertheless, I am of the view that the status quo should be maintained while the trial of this action is heard.
This aspect of Judge Bochner’s reasoning reflected the fact that the appellant had argued (and adduced significant evidence to the effect) that there was substantial importance in a number of the parcels of the Contiguous Land being held together, rather than being sold (as was proposed by the respondent).
Her Honour then ordered that the caveat be extended until further order, and ordered that a statement of claim be filed within seven days.
These orders were made on 11 May 2017. It subsequently came to light that the appellant had in fact entered in to a contract (also with Mr Gartner) to sell to him another parcel of the Contiguous Land, which I shall refer to as the ‘Other Property’. The offer from Mr Gartner in relation to the Other Property had been made on 1 March 2017 (and hence prior to the hearing of the application before Judge Bochner), and the appellant signed a contract to sell the Other Property to Mr Gartner for the offered price on 19 April 2017 (and hence after the hearing, but while judgment on the application was reserved).
The respondent brought an application seeking to set aside Judge Bochner’s order extending the caveat.
Application to set aside order extending caveat
The application to set aside Judge Bochner’s order was heard by Judge Roder. His Honour received affidavit evidence from, and permitted cross-examination of, the appellant. The essential rationale for this was to enable the Judge to hear, and have tested, the appellant’s explanation for the apparent non-disclosure of his dealings in relation the Other Property. The Judge so expressed the rationale for permitting cross-examination during a 4 July 2017 hearing, and in some reasons he delivered on 18 August 2017.
Judge Roder described the appellant as a poor witness, explaining that he was argumentative, and gave answers that were non-responsive to the questions asked and attempts to argue his case. The Judge mentioned inconsistencies between the appellant’s affidavit evidence before Judge Bochner and both a 1998 letter from the appellant’s accountant and the appellant’s evidence in some Federal Court proceedings.
Judge Roder then set out the appellant’s evidence in relation to the non-disclosure. The Judge noted that in the course of his cross-examination the appellant gave the following evidence as to a considered decision on his part not to disclose the contract of sale:
Q.Then the second part of the question was, was there any reason for not disclosing the fact of the contract before Judge Bochner handed down her reasons.
A.Yeah, well that I actually, I’ve thought about in some detail and I even asked several – sorry.
Q.Don’t – you shouldn’t tell me anything about legal advice you sought or received.
A.No, sorry, and I won’t. But I did contemplate that a lot and it actually goes two ways: one, she might see that me selling the land is contrary to my moral obligation to a hereditary title, so I would have to go into more detail and state that I don’t feel bound by that, for a start; and secondly, that commercially or realistically sometimes you’re forced into doing this. But it also might have had the effect on her of me trying to put her in a position of speeding up her decision because it’s costing me money, and it might be seen by her as a way of me saying “Well, can you please speed up your decision because this has cost me that much that I’ve actually had to sell land that I didn’t ever want to sell now”.
Judge Roder said that it was significant that this evidence was not proffered until cross-examination; and had not been proffered in either the third or fourth affidavits of the appellant (both of which were filed after the respondent’s application to set aside had been filed). His Honour concluded that he was not prepared to accept what the appellant said in his evidence, except where it was against his interest or confirmed independently.
Judge Roder then addressed the legal principles guiding his decision whether to set aside for non-disclosure. No complaint is made on this appeal about the principles he applied; including in their application to inter partes as opposed to ex parte proceedings, particularly bearing in mind the interlocutory nature of the proceedings. Essentially there is a discretion conditioned upon a finding of non-disclosure of a material matter, with material meaning, in effect, the matter might have had an important influence on the outcome.
Judge Roder rejected the submission that the respondent had any knowledge of the sale prior to the decision of Judge Bochner.
Judge Roder summarised his conclusions of fact in the following terms (at [49]):
While Mr Stapleton submitted to the contrary, I have been unable to conclude that the defendant was aware of the contract in respect of the northern land before Judge Bochner made her orders. That being the case, I proceed on the basis that of the relevant parties the plaintiff and only the plaintiff was aware of the offer to purchase that had been made by Mr Gartner before the argument before her Honour and also of the fact of the contract of sale concluded after her Honour had reserved her decision but before she made orders. On the plaintiff’s own evidence he made a considered decision not to disclose the later fact. The evidence in respect of the fact of the contract being concluded after judgment had been reserved was particularly striking. The plaintiff said that he did not want to appear to be putting pressure on Judge Bochner to make a decision quickly. I accept that that is a possible state of mind. However he also said that he thought that such a disclosure would look bad for his case and would require much more explanation. The failure to disclose was clearly a considered, deliberate choice of the plaintiff. In my view he must take the consequences.
Judge Roder ultimately concluded that there had been a material non-disclosure, warranting the decision of Judge Bochner being set aside. His Honour explained (at [51]-[54]):
I consider that Judge Bochner’s decision might well have been different if disclosure had been made – either before, or after, her Honour reserved her decision. Given the basis on which the plaintiff’s case was put to her Honour – that the plaintiff had an expectation to continue as a fourth generation of farmer of all of the land and his case that he had an obligation to be a custodian of it, it seems to me to be material that he had received an offer to purchase the northern land from Mr Gartner – the same person who had contracted to purchase the subject land – at the same price of the contract in respect of the subject land.
I consider that it was also material that – after judgment had been reserved – the plaintiff entered into a contract of sale of the northern land at the same price to Mr Gartner.
Given the way in which the plaintiff put his case to her Honour, it seems to me that these were material and serious matters. They should have been disclosed to her Honour. They may or may not have made any difference to her Honour’s decision, but in my view they were both clearly relevant and serious. They were also – as I have found – only within the knowledge of the plaintiff.
In my opinion once the contract was entered into there was both a duty to disclose and a deliberate decision not to do so.
His Honour ordered that Judge Bochner’s order extending the caveat be set aside.
The appeal
The appellant’s notice of appeal relies upon five grounds. However, as counsel acknowledged, the appeal ultimately came down to two issues:
1. whether Judge Roder erred in permitting cross-examination of the appellant beyond the scope contemplated by his order permitting cross-examination of the appellant, and thereby caused prejudice to the appellant; and
2. whether Judge Roder erred in concluding that the appellant’s non-disclosure was material and/or of a kind that warranted setting aside Judge Bochner’s order.
Cross-examination of the appellant
The appellant filed two affidavits in opposition to the application to set aside Judge Bochner’s decision that was heard by Judge Roder. They were described as his third and fourth affidavits. As mentioned, Judge Roder made an order permitting cross-examination of the appellant on the application. His rationale for doing so was expressed as providing an opportunity for the appellant’s explanation for the non-disclosure to be tested.
The complaint on appeal was that the Judge erred in permitting the applicant to be cross-examined on matters that included the evidence he had given in the Federal Court proceedings and the 1998 letter from his accountant. The complaint was that the issues raised in these lines of cross-examination were not relevant, and were outside the scope of the cross-examination contemplated by Judge Roder’s orders.
The mere fact that the rationale for the permission to cross-examine was expressed in terms of explaining, and testing the explanation for, the non-disclosure does not mean that the scope of the questions was to be confined in any strict or rigid way to the bare facts in relation to the non-disclosure. In particular, the reference to “testing” must be understood as contemplating some ability for the cross-examiner to explore the credibility of the explanation for the non-disclosure in light of, and its consistency or otherwise with, other evidence given by the appellant on earlier occasions on related topics. It must have been contemplated, and appropriately so, that the cross-examiner would have some capacity to test the appellant’s credit in this way.
While it would not have been appropriate for the appellant to be cross-examined entirely at large on an application such as the one before Judge Roder, that did not occur. I do not consider that the questions asked, and in particular those relating to the Federal Court evidence and the accountant’s letter transgressed the boundary of appropriate cross-examination.
It is also significant that no objection was taken at the time to the relevant lines of cross-examination. Whilst objection was taken to particular aspects of that questioning, there was no objection to questioning on the topic more generally.
Further, and in any event, I do not consider that any cross-examination that might have transgressed the boundaries of appropriateness has ultimately been of any significance, or has otherwise caused any prejudice. So far as the accountant’s letter is concerned, the Judge expressly said that while there was an inconsistency he was not inclined to be critical of this given that it was an old letter. In relation to the appellant’s Federal Court evidence, while there was found to be an inconsistency with the case advanced to Judge Bochner, this is not a matter that appears to have ultimately been of any significance in his Honour’s reasoning. I accept that the inconsistency may have contributed to the Judge’s conclusion that the appellant was a poor witness. However, in terms of his operative reasoning on the application to set aside Judge Bochner’s decision, as earlier explained, Judge Roder relied upon the appellant’s own evidence as to his considered and deliberate decision not to disclose the fact of the contract of sale.
Insofar as the appellant maintains a complaint about being refused permission to issue a subpoena or cross-examine on the respondent’s affidavit material, in my view these complaints are of no consequence. No error has been demonstrated in the Judge’s decisions in this respect. Further, and in any event, it was conceded during the course of argument that these were not matters that were directed to the issue of non-disclosure.
Materiality of the non-disclosure
There was no factual challenge to the finding that the appellant did not disclose the offer from Mr Gartner (which occurred before the hearing of the application) or his signing of the contract of sale with Mr Gartner (which occurred after the hearing but before judgment). Nor was there any challenge to the legal principles applied by the Judge in determining whether the decision of Judge Bochner should be set aside.
However, the appellant made various criticisms of the Judge’s reasoning and approach in applying these principles to the facts, which, it was said, culminated in error.
First, it was contended that the non-disclosure did not relate in any way to the prima facie case. This is not strictly correct, at least in the sense that the fact of the (undisclosed) sale of the Other Property may be relevant to an overall assessment of the truthfulness and merit of the appellant’s claims in support of his equitable claim. The sale does at least have the potential to raise questions about the reliability of the appellant’s evidence in support of his equitable interest when expressed in the rather bald and absolute terms it was expressed before Judge Bochner. It suggests that the reality is a more qualified and nuanced position than the one articulated before Judge Bochner. That said, I accept that the non-disclosure does not go to the heart of, and is not necessarily inconsistent with, the applicant’s case as to the existence of an equitable interest in the Property. I also accept that it was unlikely to have had an impact or influence upon her Honour’s determination that there was a prima facie case as to the existence of that interest, given the relatively low threshold that this entails and the fact that at this stage of the inquiry the appellant’s evidence would ordinarily be taken at its highest.
But none of this conflicts with the approach taken by Judge Roder. The non-disclosure was plainly relevant to the issue of the balance of convenience. Indeed, in the passage from her reasons extracted earlier, Judge Bochner made express reference in this context to the appellant’s desire not to sell (despite what her Honour referred to as the earlier conflicting evidence in relation to his previous willingness to sell). On the face of Judge Bochner’s reasons, the plaintiff’s evidence on the topic was very relevant to, if not determinative of, this issue and hence the outcome of the application. The non-disclosure of the offer (at least insofar as it can now be seen that it was an offer that was being seriously entertained by the appellant) and the subsequent contract of sale was plainly relevant to this topic. As the appellant acknowledged, if his preparedness to sell the Other Property had been disclosed, his evidence about the importance of the Contiguous Land not being broken up or sold would require some explanation and qualification; and the strategic importance of the Property to the Contiguous Land would need to be considered more closely.
Related to this, it was next contended that even if relevant in this way, the non-disclosure was not material given that the offer and sale related to the Other Property, which was a different parcel of land to the Property the subject the caveat. The appellant said that his evidence about not wanting to sell was given in a context where the caveat land was a particularly strategically important piece of land within the Contiguous Land as a whole, whereas the same could not be said of the Other Property. The Other Property was less important and so it was not materially inconsistent with his evidence before Judge Bochner that he might (reluctantly) agree to sell it.

While these are relevant considerations, there is no reason to think that these matters were overlooked. Judge Roder was well aware that that two parcels were separate parcels. But the difficulty for the appellant is that he pitched his evidence and case before Judge Bochner in a much more blunt and absolute way than he might now wish he had done. His evidence and case were addressed to the Contiguous Land as a whole, of which the Property was part, and did not acknowledge the qualifications, and issues of fact and degree, to which the appellant now refers in relation to the various individual parcels of land. In my view, the differences are sufficiently material to justify the Judge’s conclusion that the decision of Judge Bochner be set aside.
The appellant also complains that immediately following Judge Roder’s reference to the appellant’s evidence in cross-examination (extracted above, and which his Honour characterised as acknowledging a considered decision not to disclose the sale), his Honour said that he considered it “significant” that this evidence was not offered until cross-examination, and hence not proffered in his third or fourth affidavits. The appellant pointed out that in his fourth affidavit, dated 4 July 2017, he had said:
It did not cross my mind that I had a duty to disclose the sale because I did not believe that selling the land was inconsistent with the arguments I advanced at the hearing on 14 March 2017.
After I had entered into the sale contract on 19 April 2017, I did wonder whether informing the Court would have an effect on how quickly the decision would be handed down, but I did not inform the Court because I understood that was not an appropriate reasons to tell the Court about the sale.
I accept that the appellant had in fact made some reference to the issue or possibility of disclosing the sale. That said, the affidavit evidence in this respect was in fairly general terms. The appellant’s evidence under cross-examination added some significant detail as to the nature and extent of the consideration the appellant gave to the issue, and his reasoning for not ultimately disclosing the offer or sale. For example, it was only during cross-examination that he acknowledged an appreciation that a decision to sell the Other Property might be seen as needing explanation given his (unqualified) evidence as to what he considered to be his moral obligations in relation to the Contiguous Land.
While the Judge perhaps overstated the position by saying in bald terms that the evidence was first offered in cross-examination, the substance of the Judge’s point, and the significance he attached to the evidence, remain valid. I do not consider the Judge’s overstatement to involve any error that would warrant my intervention. While the timing of the evidence as to the appellant’s considered decision was potentially a matter of significance in relation to the appellant’s credit, this was not ultimately determinative. Judge Roder decided the matter on the basis of the appellant’s own evidence as to non-disclosure. And the critical point was that the matter was not disclosed before judgment. In that context it did not much matter whether the appellant’s considered decision in that regard was first proffered in his affidavit of 4 July 2017 (which was still after Judge Bochner had delivered judgment and in the course of the application to set aside) or during his cross-examination on the hearing of the application.
Finally, the appellant challenged the Judge’s inability to make any finding that the respondent had notice of the sale that was not disclosed. Judge Roder had said in his reasons that the argument that Mr Dru Reschke (the appellant’s brother and a director of the respondent) was aware of at least the offer by Mr Gartner required him to accept that a solicitor acting for a party to a transaction “had advised his client in another matter of the other matter”. The Judge said that there was no evidence that that occurred, and that he was not prepared to draw that inference.
In this respect, the appellant referred to paragraph 19 of his fourth affidavit. He there gave evidence to the effect that Mr Dru Reschke was copied in on the 1 March 2017 email enclosing Mr Gartner’s offer. The appellant’s affidavit also stated that his brother and Mr Gartner shared a common solicitor, and that the appellant assumed from this that his brother was being kept up to date about the sale by that solicitor.
I accept that the Judge may again have slightly overstated or misstated the effect of the evidence, as there was some evidence that Mr Dru Reschke was aware of the offer. However, as counsel for the respondent pointed out, it was not a matter of contention or significance that there was an offer from a third party. It was the fact that this offer was at least at some point being seriously entertained by the appellant, and that a contract of sale was then entered into. There was no error in the Judge’s reasoning that Mr Dru Reschke’s knowledge of these matters was not the subject of direct evidence, and the Judge’s conclusion that there was ultimately not a sufficient evidential basis for him to draw an inference of knowledge.
Disposition of the appeal
In summary, for the reasons set out above, I do not consider that the appellant has established any relevant error in the Judge’s reasons. It follows that the appeal must be dismissed.