SHAFTON & SHAFTON
[2012] FMCAfam 339
•16 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHAFTON & SHAFTON | [2012] FMCAfam 339 |
| FAMILY LAW – Property – Application by wife for an order extending the operation of caveats. |
| Federal Magistrates Court Act, s.18 Real Property Act (NSW), ss.74K, 74O |
| Applicant: | MS SHAFTON |
| Respondent: | MR SHAFTON |
| File Number: | NCC 1006 of 2009 |
| Judgment of: | Terry FM |
| Hearing date: | 5 April 2012 |
| Date of Last Submission: | 5 April 2012 |
| Delivered at: | Newcastle |
| Delivered on: | 16 April 2012 |
REPRESENTATION
| Solicitor Advocate for the Applicant: | Mr Gilbertson |
| Solicitors for the Applicant: | Turnbull Hill Lawyers |
| Solicitor Advocate for the Respondent: | Mr Doyle |
| Solicitors for the Respondent: | McDonald Johnson Lawyers |
ORDERS
That all previous orders extending the operation of caveats (omitted) and (omitted) are discharged.
That the wife’s application for orders as set out at 2 and 3 of her application in a case filed on 27 February 2012 is dismissed.
That the balance of the wife’s application in a case is listed at 2.15pm on Friday 20 April 2012 for mention.
IT IS NOTED that publication of this judgment under the pseudonym Shafton & Shafton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1006 of 2009
| MS SHAFTON |
Applicant
And
| MR SHAFTON |
Respondent
REASONS FOR JUDGMENT
Introduction
The wife has applied for an order extending the operation of caveats she has lodged over a number of properties being developed by the husband.
The husband opposes the wife’s application.
Background
On 28 April 2009 the husband and wife finalised their property matters by way of consent orders.
The orders are complex, but among other things they provide for the husband to pay the wife $2,166,000.00.
The Recitals to the orders made note of the fact that the husband had no present capacity to pay this amount, and would only be able to pay it once he had made progress with the development of land owned by the Property D Unit Trust and the Property C Unit Trust.
The orders themselves however did not make payment to the wife conditional on the development projects reaching any particular stage, rather they provided for the amount to be paid in two instalments, one on 19 January 2011 and one on 19 January 2012.
The development projects have not proceeded as quickly as envisaged and husband has not paid either of the instalments.
On 28 September 2011 the wife caused a Bankruptcy Notice to be served on the husband.
On 11 October 2011 the husband filed what was in essence an application pursuant to s.79A of the Family Law Act to set aside or vary the 28 April 2009 orders.
On 18 October 2011 the husband filed an application in which he sought to have the Bankruptcy Notice set aside or alternatively an order that time for compliance with it be extended until his s.79A application had been heard and determined.
An interim order was subsequently made extending time for compliance with the Bankruptcy Notice until further order.
On 26 October 2011 the wife filed a response to the husband’s s.79A application in which she sought among other things that the application be summarily dismissed.
On 30 November 2011 a hearing was conducted in respect of the summary dismissal application. Judgment is pending. On a number of occasions earlier this year the court was informed that the parties were close to agreement on all matters and in the circumstances preparation of the judgment was deferred. It will now be given priority.
The husband is still trying to progress the development projects, and has received provisional approval from the (bank omitted) for construction funding. The (bank omitted) are unwilling to advance any money to the husband however while the family law matters are unresolved.
The discrete issue which currently requires determination is whether the operation of caveats lodged by the wife over the land which is the subject of the development projects should be extended.
The caveats
On or about 6 January 2012 the wife lodged caveats over the land owned by the Property D Unit Trust (the trustee of which is Property D Pty Ltd) and the Property C Unit Trust (the trustee of which is (omitted) Pty Ltd).
On 22 February 2012 the wife was served with a Lapsing Notice in respect of both caveats.
On 27 February 2012 the wife filed an application in a case seeking either:
i)An order extending the operation of the caveats until further order; or
ii)An injunction restraining the husband from registering any further dealings against the titles in question.
The husband filed a response in which he sought to have the wife’s application in a case dismissed.
The wife’s application in a case was first listed before me on 1 March 2012. On that day I made interim orders extending the operation of the caveats pending a full argument about the matter. That order has since been re-made on several occasions and the matter adjourned at the request of the parties to allow time for discussions.
Recently, however I was asked to list the discrete application concerning the caveats for argument and it was listed on 5 April 2012.
The applicable law
Pursuant to s.74K of the Real Property Act (NSW) the Supreme Court of NSW may extend the operation of a caveat lodged under s.74F of the Act for such period as it thinks fit, if it is satisfied that the caveator’s claim has or may have substance.
It was common ground between the parties that pursuant to S.18 of the Federal Magistrates Act this court had the power to make the same order.
The husband’s primary argument in opposition to wife’s application was based on s.74O of the RPA. This section provides that if a caveat lodged under the Act subsequently lapses and the caveator lodges a further caveat in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat, the subsequent caveat has no effect unless an order has been made giving leave for its lodgement or the requisite parties had consented to its lodgement.
The husband also argued that the court should not in the exercise of it discretion extend the operation of the caveats, but it is worth dealing with the s.74O argument first because if it is successful then the wife’s application for an extension can go no further – it is a TKO, to use the colourful words of the husband’s solicitor.
Discussion
There was no dispute that the wife had previously lodged caveats over the same properties. She was served with a Lapsing Notice in respect of those caveats on 8 December 2011 and the caveats lapsed 21 days later.
On or about 6 January 2012 the wife lodged the fresh caveats.
The husband argued that the fresh caveats had been lodged to protect the same estate, interest or right as the previous caveats, and had been lodged without leave of the court or consent of the requisite parties and were therefore of no effect.
The wife’s counsel argued that the caveats lodged on or about 6 January 2012 were lodged to protect a different right, title or interest.
The basis given by the wife for the lodgement on or about 6 January 2012 of Caveat (omitted) over (omitted), (omitted), (omitted), (omitted) and (omitted) all owned by Property D Pty Limited, and Caveat (omitted) over (omitted) and (omitted) both owned by (omitted) Pty Ltd was that the caveator was a mortgagee under a mortgage given by the respective companies in her favour.
This would certainly give the wife a caveatable interest and it was not in dispute that these mortgages existed. They were executed by the husband some time ago pursuant to Orders 17 & 18 of the 28 April 2009 orders, which provide as follows:
17. The husband must do all acts and things at his expense so as to cause the Trustees of the Property D Pty Limited Unit Trust:
17.1 To execute second mortgages in favour of the wife secured on the Property D Road Unit Trust properties to protect the wife’s entitlements pursuant to these Orders.
17.2To register the second mortgages on title of the said properties.
18.The husband must do all acts and things at his expense so as to cause the Trustees of the Property C Unit Trust:
18.1 To execute third mortgages in favour of the wife secured on the Property C Unit Trust properties to protect the wife’s entitlements pursuant to these Orders.
18.2To register the third mortgages on title of the said properties.
The wife annexed a copy of the mortgages to her affidavit filed on 27 February 2012. They are signed by the husband as Sole/Director Secretary of Property D Pty Limited and (omitted) Pty Ltd respectively, but they are undated and have not been registered.
I am unclear as to why the mortgage over the Property D Pty Limited properties has never been registered. The husband said that the third mortgage over the (omitted) Pty Ltd properties had not been registered because there was as yet no second mortgage.
The wife did not give any evidence about when the mortgages were signed. There is reference in the body of documents to the blank day of blank 2009, suggesting that they were prepared in 2009, and this is reinforced by the fact that on 23 December 2009, Caveat (omitted) was lodged on the wife’s behalf over the properties owned by Property D Pty Limited.
The nature of the estate or interest claimed in that caveat is as follows:
Equitable charge as a result of Order (sic) that require the Director of the Registered Proprietor to cause the Registered Proprietor to grant a second mortgage to the Caveator over the subject properties.
By virtue of the instrument referred to below
Orders of the Family Court of Australia 28 April 2009 Parties Ms Shafton and Mr Shafton.
On 24 December 2010 Caveat (omitted) was lodged over the properties owned by (omitted) Pty Ltd. The nature of the estate or interest is described as
Equitable interest
Orders of the Family Court of Australia 28 April 2009. Parties Ms Shafton and Mr Shafton.
In my view it is beyond doubt that Caveats (omitted) and (omitted) were lodged to protect the same right title and interest as Caveats (omitted) and (omitted)
Caveat (omitted) specifically refers to the unregistered mortgage as the basis of the caveat. A more general claim is made in Caveat (omitted), but there is strength in the argument by the husband’s solicitor that there can be no other basis for a caveat over the (omitted) Pty Ltd properties than the unregistered mortgage.
The 28 April 2009 orders specifically give the wife the right to lodge a caveat over two other properties, but they do not specifically give her the right to lodge a caveat over the properties owned by Property D Pty Limited or (omitted) Pty Ltd.
The only thing which gave the wife the right to lodge a caveat over those properties was the existence of unregistered mortgages.
The same basis was used to justify the caveats lodged on or about 6 January 2012.
No application was made to the court for leave to lodge the current caveats before they were lodged and no consent was given by the requisite parties prior to their lodgement and therefore the wife’s application for an extension of the current caveats must fail.
Further proceedings
The wife’s application in a case seeking injunctions remains on foot, and I intend to list the wife’s application before me for mention at 2.15pm on Friday 20 April 2012.
I also intend to expedite the decision in respect of the wife’s application for summary dismissal of the husband’s s.79A application, preparation of which has been deferred in the light of indications by the parties that the matter may resolve overall, an outcome which now seems most unlikely.
I certify that the preceding forty four (44) paragraphs are a true copy of the reasons for judgment of Terry FM
Date: 16 April 2012
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