The Woodsman Pty Ltd v Jozic [2018] NSWSC 1311

Supreme Court New South Wales

Medium Neutral Citation: The Woodsman Pty Ltd v Jozic [2018] NSWSC 1311 Hearing dates: 16 August 2018 Date of orders: 16 August 2018 Decision date: 16 August 2018 Jurisdiction: Equity Before: Darke J Decision: Summons seeking orders in respect of a caveat dismissed with costs. Catchwords: LAND LAW – caveats – where the nature of the claimed interest is uncertain on its face – deficiency in caveat cannot be overcome by s 74L of the Real Property Act 1900 (NSW) or by orders permitting the amendment of the caveat – inappropriate to grant leave to lodge a further caveat under s 74O of the Real Property Act 1900 (NSW) where the interest to be claimed in a fresh caveat would not be in respect of the same estate, interest or right Legislation Cited: Real Property Act 1900 (NSW), s 74K, s 74L, s 74O Cases Cited: Allen Taylor & Co Pty Ltd v Harrison [2010] NSWSC 1021 Circuit Finance Pty Ltd v Crown and Gleeson Securities Pty Ltd [2005] NSWSC 997 Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) 5 BPR 11,314 FTFS Holdings Pty Ltd v Business Acquisitions Australia Pty Ltd [2006] NSWSC 846 Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880 In The Marriage of Stevens (1991) 105 FLR 459 Multi-Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696 Ron Medich Properties Pty Ltd v McGurk [2010] NSWSC 552 Windella (NSW) Pty Ltd v Hughes (1999) 49 NSWLR 158 Warner v Andrews [2011] NSWSC 956 Category: Principal judgment Parties: The Woodsman Pty Ltd (Plaintiff) Alen Jozic (Defendant) Representation: Counsel: Mr D W Robertson (Plaintiff) Mr J A Rose (Defendant)

Solicitors: E C Legal (Plaintiff) Sewell & Kettle Lawyers (Defendant) File Number(s): 2018/198467 Publication restriction: None

Judgment – EX TEMPORE 1. By a Summons filed on 27 June 2018, the plaintiff seeks an order under s 74K of the Real Property Act 1900 (NSW) extending the operation of a caveat it has lodged against the titles to two properties owned by the defendant. In the alternative, an order is sought pursuant to s 74O of the Real Property Act for leave to lodge a further caveat. The proceedings were initiated following the service of a lapsing notice in respect of the caveat. 2. On 2 July 2018, an order was made by the Chief Judge in Equity extending the operation of the caveat to 23 July 2018. On 20 July 2018, I ordered that the operation of the caveat be extended up to 5pm today. 3. In support of the application, the plaintiff read two affidavits, affirmed by Kyle Ogden, on 27 June 2018 and 9 August 2018. In opposition to the application, the defendant read his affidavit affirmed on 20 July 2018. 4. I note that a number of objections to parts of the affidavits were notified but were not dealt with. As will become apparent, this was because I considered it was not necessary to do so because the matter could be determined essentially on the basis of the nature of the caveat itself. The parties provided written submissions to the Court in advance of the hearing today, and made further oral submissions at the hearing. 5. The caveat (AM308028) is lodged against the titles to lot 1 in Strata Plan 35144 and lot 2 in Strata Plan 35144. Those titles are also affected by a registered mortgage in favour of Perpetual Corporate Trust Ltd. It appears that the mortgagee has recently commenced proceedings in this Court against the defendant for possession of the properties. 6. In Schedule 1 of the caveat the particulars of the estate or interest claimed are expressed as: "The whole of the Registered Proprietors interest in the land". The claimed interest is said to arise by virtue of a General Security Agreement made between the plaintiff and the defendant and said to be dated 31/09/15. The date is obviously an error. 7. It is apparent from Mr Ogden's evidence that the plaintiff seeks to rely upon a General Security Agreement dated 31 August 2015. The agreement is between the plaintiff as the Secured Party and the defendant as the Grantor. Clause 2.1.1 contains a charge by the Grantor in favour of the Secured Party over "all of its assets whatsoever both present and future". Clause 2.2.1 makes it clear that the charge extends to land. It seems that the purpose of the charge was to secure the payment of money under a Funding Agreement between the plaintiff and Platinum Automotive Smash Repairs Pty Ltd. 8. Prima facie, the plaintiff is the chargee under a charge granted by the defendant that extends over the two properties. In my view, notwithstanding submissions to the contrary by the defendant, the plaintiff would thus have an interest in land sufficient to sustain a caveat by which such interest is claimed. 9. However, no such interest is sought to be claimed in the present caveat. As I have said, the estate or interest claimed is the whole of the registered proprietor's interest in the land. I do not understand what is meant by that claim, and in any event it is plainly not an adequate description of the claim the evidence suggests that the plaintiff may have, namely, a claim to be a chargee under an equitable charge. 10. The plaintiff seeks to overcome this difficulty by resort to s 74L of the Real Property Act which provides: If in any legal proceedings a question arises as to the validity of a caveat lodged under a provision of this Part, the court shall disregard any failure of the caveator to comply strictly with the requirements of this Part, and of any regulations or conveyancing rules made for the purposes of this Part, with respect to the form of the caveat. 1. The plaintiff referred to some authorities where s 74L was held to operate so as to overcome defects in the form of a caveat, including Allen Taylor & Co Pty Ltd v Harrison [2010] NSWSC 1021 at [19] to [23] and Warner v Andrews [2011] NSWSC 956 at [9]. In particular, reliance was placed on the statement made by Santow J in Windella (NSW) Pty Ltd v Hughes (1999) 49 NSWLR 158 at 162 to the effect that the Court has the power to overlook any deficiency in the drafting of a caveat provided that the caveator possesses a caveatable interest and even though the interest is not specified at all. In making that statement, Santow J relied in part on In The Marriage of Stevens (1991) 105 FLR 459 in which Cohen J of the Family Court expressed the view that: It is no longer the case that a caveat will be struck down for technical fault if the caveator has any caveatable interest. The Court has power to extend the operation of any caveat lodged, and this extension can be in relation to both time and substance. 1. However, in Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880, Campbell J referred to that view and stated at [36] to [38]: If by that view, his Honour intended to hold that the existence of a caveatable interest which is not disclosed on the face of the document can support the validity of the caveat, that view is not one with which I agree. In Multi-Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696 at [130] Barrett J came to a similar view. His Honour went on to say: It is true that, in proceedings for the extension of a caveat's operation, any defect in the form of the caveat will be disregarded under s 74L. But that does not mean that some wholly new substratum can be substituted by reference to some estate or interest simply not contemplated by the caveat, whatever its deficiency of form may be. I respectfully agree with that view, and would add that I would not regard an expression of enormous generality, like "equitable interest" as one which "contemplates" some specific type of interest, such as an equitable charge, which is claimed. 1. Shortly thereafter, Brereton J considered the matter in Circuit Finance Pty Ltd v Crown and Gleeson Securities Pty Ltd [2005] NSWSC 997 at [17] to [27] by reference to the provisions of the Act and the Real Property Regulation concerning the requirements for caveats. His Honour stated (at [21]): These provisions, taken together, make clear that the characterisation and description of the nature of the estate, interest or right claimed by a caveator is more than a mere formal requirement of the provisions of the Act relating to caveats, but goes to the heart and substance of the operation of those provisions. Without the estate, interest or right claimed being described, neither the Registrar General nor a person reading the caveat can know, for purposes of s 74H(1)(b), whether a dealing would affect the estate claimed. Nor can the Court know, for purposes of s 74K(2), whether the caveator's claim has, or may have, substance. 1. After referring to further authorities, including Hanson Construction (supra), Brereton J continued (at [27]): Those authorities, coupled with what I have said about the significance of the role of the description of the estate, interest or right claimed in the operation of Part 7A of the Real Property Act 1900, compel the conclusion that an inadequately described claim cannot sustain a caveat. 1. That case and Hanson Construction (supra) involved caveats that described the claimed interest as an "equitable interest". That is not this case, but in my opinion the description of the interest claimed here is similarly deficient. The nature of the claimed interest is uncertain on its face. It might be read as a claim to be entitled to become the registered proprietor of the properties, but if so, the basis of such is left entirely unexplained. 2. The case is unlike Allen Taylor (supra) which involved an obvious mistake as to the name of the chargee, or Warner v Andrews (supra), where the error concerned only the extent of a claimed interest arising from contributions made towards the acquisition of a property. 3. In these circumstances it seems to me that the deficiency in this case cannot be overlooked by resort to s 74L. Neither can it be overcome by orders permitting the amendment of the caveat (see Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) 5 BPR 11,314; Ron Medich Properties Pty Ltd v McGurk [2010] NSWSC 552 at [9]). It follows in my view that the caveat is incurably deficient, and even though the plaintiff may have a caveatable interest, it would not be appropriate to make an order that the operation of this caveat be extended. 4. It is also not appropriate in these circumstances to grant leave to the plaintiff under section 74O of the Real Property Act to lodge a further caveat. The section applies to successive caveats that claim the same estate, interest or right and purport to be based on the same facts. Even if a fresh caveat claiming an interest under an equitable charge based on the General Security Agreement of 31 August 2015 could be said to be one purporting to be based on the same facts, it would not be a caveat in respect of the same estate, interest or right (see FTFS Holdings Pty Ltd v Business Acquisitions Australia Pty Ltd [2006] NSWSC 846 at [12] to [13]). The defendant seems to accept that leave under s 74O would not be appropriate in the circumstances of this case. 5. For the above reasons, the Summons will be dismissed. The plaintiff will be ordered to pay the defendant's costs of the proceedings. 6. Finally, I note that it was unnecessary in view of the conclusion I reached to deal with a number of other arguments that were raised by the defendant as to why the operation of the caveat should not be extended.

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