.

Supreme Court New South Wales/ Caveats

Medium Neutral Citation

Schibaia v Elias [2013] NSWSC 1485

Hearing Dates

25/09/2013

Decision Date

25/09/2013

Jurisdiction

Equity Division - Technology and Construction List

Before

McDougall J

Decision

Decline to extend operation of existing caveats. Grant plaintiffs leave to lodge fresh caveats.

Catchwords

REAL PROPERTY - caveats - application to extend operation of caveats - where caveats not stamped - whether caveats sufficiently identify the nature of the estate or interest claimed

Legislation Cited

Duties Act 1997 (NSW)
Real Property Act 1900 (NSW)
Real Property Regulation 2003 (NSW
Stamp Duties Act 1920 (NSW)

Cases Cited

Albarran v Joe & Joe Developments [2010] NSWSC 1385
Arnautovic & Sutherland v Cvitanovic (2011) 199 FCR 1.
Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260
Boral Recycling v Wake [2009] NSWSC 712
Circuit Finance Pty Ltd v Crown & Gleason Securities Pty Ltd (2005) 12 BPR 23,403
Hanson Construction Materials v Vimwise Civil Engineering (2005) 12 BPR 23,355
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
McCallum v National Australia Bank Ltd [2000] NSWCA 218

Category

Procedural and other rulings

Parties

Peter George Schibaia (First plaintiff)
Violet Schibaia (Second plaintiff)
Anthony Elias (First defendant)
Jack Citraro (Second defendant)

Representation

Solicitors:
William Roberts Lawyers (Plaintiffs)
Kreisson Legal (Defendants)

Counsel:
C Jarmillo (Solicitor) (Plaintiffs)
B DeBuse (Defendants)

File Number(s)

2013/288244

Judgment (ex tempore - revised 25 september 2013)

1HIS HONOUR:

Procedural history

2This matter came before the Court yesterday in the duty list, on the application of the plaintiffs to extend the operation of caveats lodged by them against the title to land owned by the defendants.

3The defendants, having been notified of the application, appeared by counsel and put submissions as to the relief sought.

4In the course of argument, it became clear that there were significant problems with the caveats the subject of the application. One problem was as to whether the underlying instruments had been stamped. That problem required consideration of s 211 of the Duties Act 1997 (NSW).

5Another problem was as to the description of the interest claimed by the caveats. It was said to be in each case an "equitable interest created pursuant to clause 6" of a Deed that was identified, and to arise by virtue of that clause of that Deed. The problem thus identified is one that has been considered in a number of first instance decisions, commencing with the judgment of Campbell J in Hanson Construction Materials v Vimwise Civil Engineering (2005) 12 BPR 23,355. That decision has been considered by (among others) Brereton J in Circuit Finance Pty Ltd v Crown & Gleason Securities Pty Ltd (2005) 12 BPR 23,403. I referred to those decisions in my own judgment in Albarran v Joe & Joe Developments [2010] NSWSC 1385. There are numerous other first instance decisions in this Court applying the reasoning of Campbell J in Hanson, as explained by Brereton J in Circuit Finance.

6A third problem relates not to the form of the caveat or the question of stamping, but, rather, to whether the Deed relied upon gives any caveatable interest in the land in question. That requires some closer attention to the facts, and to the precise words of the Deed.

7The matter was adjourned for further hearing today, so that the solicitor for the plaintiffs, Mr Jaramillo, could consider the matters that had been raised in the course of argument yesterday. His response was to seek to rely upon an amended summons, filed in Court with leave, which, relevantly, claimed in the alternative relief under s 74O of the Real Property Act 1900 (NSW). Mr Jaramillo made it clear that he relied upon s 74O only in the alternative, and maintained his position that the caveats as lodged were valid.

Factual background

8The background to this is that the plaintiffs were partners with the defendants and another person, Ms Georgette Kairouz, in the development of a property at Long Jetty in the State of New South Wales. The purpose of the development appears to have been to construct four strata title lots, and their associated common property, on the land in question.

9The plaintiffs wished to retire from the partnership. To that end, they, the defendants and Ms Kairouz entered into a "Deed of Release and Agreement to Transfer Interests in Property" dated 25 July 2006. By that Deed, among other things, the plaintiffs retired (or, in the language of the Deed, "resigned") from the partnership. The parties gave each other individual releases. The defendants and Ms Kairouz, who were described as the Continuing Partners, gave an indemnity in favour of the first plaintiff, Mr Schibaia (described as "the builder") and a separately worded and somewhat different indemnity in favour of the second plaintiff, Mrs Schibaia (described, somewhat tersely, as "Schibaia"). I set out those indemnities, which are found in clauses 3.1 and 4.1 respectively of the Deed of Release (as I should call that Deed):

3. Indemnities by the Continuing Partners in favour of the Builder

3.1 Effective from the date of completion the Continuing Partners jointly and severally covenant with the Builder that they will indemnify and keep indemnified the Builder against all debts, costs, expenses, damages, causes of action, actions, suits, arbitrations and all claims, demands, proceedings whatsoever arising out of or in any way connected with the Building Contract and building works erected on the Land and (without limiting the generality of the foregoing) insofar as they may be permitted by law arising under the Home Building Act 1989 as amended and regulations made thereunder including but not limited to Home Owner's Warranty and any defects liability period which any person or body might make, claim or commence against the Builder at any time hereafter.

...

4. Indemnities by the Continuing Partners in favour of Schibaia

4.1 The Continuing Partners hereby jointly and severally covenant Schibaia that as and from the date of completion they will indemnify and keep indemnified her against all debts, costs, expenses, damages, causes of action, actions, suits, arbitrations and all claims, demands and proceedings whatsoever arising out of or in any way connected with the Partnership thereunder which any person or body might make, claim or commence against Partners at any time.

10Apparently also on 25 July 2006, the (former) partners entered into a "Deed of Variation". By that Deed, as its name suggests, they agreed to vary the Deed of Release (as I shall call the other Deed) in certain respects. The first and substantial variation was that Mrs Schibaia agreed to transfer her interest in one of the lots, lot 2, to a Mr Moses Nader. The continuing partners agreed to pay all taxes and other liabilities associated with that transfer and with Mrs Schibaia's resignation from the partnership, and agreed to indemnify her in respect of those matters. That is contained in clause 3, which I set out:

3. The Continuing Partners jointly and severally agree to pay all taxes including Capital Gains Tax, assessed on the sale Contract of the property as set out in Item 4 of the Schedule hereto, with Schibaia as Vendor and Moses Nader as Purchaser, and all taxes associated with the resignation of Schibaia from the Partnership, if any, and will indemnify Schibaia from any such taxes including Capital Gains Tax, and keep her indemnified from all obligations, taxes, covenants, debts, costs, expenses, damages, causes of action, actions, suits, arbitrations, and all claims, demands, and legal proceedings, whatsoever arising out of or in any way connected with the Partnership or the sale contract to Moses Nader as directed by the Continuing Partners and in all other respects the obligations imposed on all parties under the Deed remain unchanged.

11Clauses 5 and 6 of the Deed of Variation gave, respectively, Mrs Schibaia and Mr Schibaia the right to charge certain property and to lodge caveats. They are the clauses that are at the heart of the present disputes. I set them out:

5. The Continuing Partners agree that Schibaia in her sole discretion may charge the real property or chattels of the Continuing Partners to protect Schibaia's interests pursuant to this Deed and the earlier Deed and for this purpose Schibaia is authorised to register a caveat on the title of any such real property as set out in item 5 of the Schedule hereto to this Deed and in all other respects the obligations imposed on all parties under the Deed remain unchanged.

6. The Continuing Partners agree that the Builder in his sole discretion may charge the real property or chattels of the Continuing Partners to protect the Builder's interests pursuant to this Deed and the earlier Deed and for this purpose the Builder is authorised to register a caveat on the title of any such real property as set out in item 5 of the Schedule hereto to this Deed and in all other respects the obligations imposed on all parties under the Deed remain unchanged.

12The properties described in item 5 of the schedule were the other three lots (lots 1, 3 and 4) in the subject strata title development. They are not the properties in respect of which the present caveats were lodged.

13The caveats with which I am concerned appear to have been lodged in either February or July 2013 (the date is unclear, but nothing turns on whatever the correct date might be). I have referred to the nature of the estate or interest claimed, but I will set out that, together with the facts by which it was said to arise, for the purpose of clarity:

Caveat number: AH565782J

Torrens Title: 6/SP80998; 15/SP81369

Nature of claimed estate or interest: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO & Ors and Violette SCHIBAIA.

Facts supporting claim: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO & Ors and Violette SCHIBAIA.

...

Caveat number: AH579489D

Torrens Title: 700/1118333

Nature of claimed estate or interest: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Anthony ELIAS & Ors and Violette SCHIBAIA

Facts supporting claim: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Anthony ELIAS & Ors and Violette SCHIBAIA

...

Caveat number: AH565783G

Torrens Title: 6/SP80998; 15/SP81369

Nature of claimed estate or interest: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO &Ors and Peter SCHIBAIA

Facts supporting claim: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO &Ors and Peter SCHIBAIA

...

Caveat number: AH565783G

Torrens Title: 6/SP80998; 15/SP81369

Nature of claimed estate or interest: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO &Ors and Peter SCHIBAIA

Facts supporting claim: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Jack CITRARO &Ors and Peter SCHIBAIA

...

Caveat number: AH579491S

Torrens Title: 700/1118333

Nature of claimed estate or interest: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Anthony Elias & Ors and Peter SCHIBAIA

Facts supporting claim: Equitable interest created pursuant to clause 5 of the deed of variation dated 25 July 2006 between Anthony Elias & Ors and Peter SCHIBAIA

14If there were any difference between the two caveats (apart from the names of the caveators and the lands referred to) it is not material.

15The defendants caused a lapsing notice to be served on the plaintiffs. That notice was served on 5 September 2013. The application was therefore made two days before the notice was due to take effect. It is entirely unacceptable for parties seeking equitable relief, or the statutory equivalent of equitable relief, to delay in that manner. One of the reasons given for the delay (a health problem) may help to explain it to some extent. The other, that the plaintiffs did not put their solicitor in funds, is not an excuse. There have been numerous decision of this Court, in relation to caveats and in relation to equitable relief properly so called, where relief is refused by reason of delay in applying for it. Having said that, Mr DeBuse of counsel, who appeared for the defendants, was content to argue the matter on its substance rather than by reference to considerations of delay.

Defect of substance

16The starting point, it seems to me, is that the existing caveats are defective, and that the defects are defects as to substance, not defects of form that could, perhaps, be dealt with by amendments.

17In Hanson, Campbell J referred to the problem that arose because a caveat, of which extension was sought, claimed merely an "equitable interest". His Honour referred to the provisions of s 74F(5)(b)(v) of the Real Property Act. That subparagraph requires that a caveat lodged under s 74F (which is the section under which the present caveats were lodged) must specify the prescribed particulars of the legal or equitable estate or interest to which the caveator claims to be entitled.

18His Honour then referred to clause 7 and schedule 3 of the Real Property Regulation 2003 (NSW). That requires a statement of "particulars of the nature of the estate or interest claimed by the caveator". It does not require statement, or specification, of whether the estate or interest is legal or equitable, or (save as to monetary claims) the quantum of the estate or interest.

19Campbell J pointed out at [29] that a claim to an equitable interest could relate to many different kinds of interest: an equitable easement; the benefit of an option to purchase; the right to have an agreement for lease specifically performed; or the benefit of a restrictive covenant under a common building scheme. His Honour added that "as well", it could relate to an equitable mortgage or charge.

20His Honour pointed out at [30] that one of the functions of a caveat was to notify someone searching the Register of what the interest claimed was. That is a matter of significance, as Brereton J pointed out in Circuit Finance at [21], because both the Registrar General and any person searching have to know whether a dealing that is lodged or proposed to be lodged affects the estate or interest claimed by the caveator. That follows from schedule 2 of the caveat, which specifies the action prohibited by the caveat. Item 1 (which was one of the items called up by the caveats) refers to recording of any dealing other than a plan affecting the estate or interest claimed by the caveator. Item 2, which was likewise called up, again is based on effect on the estate or interest claimed, as is item 7 (which was also called up).

21As Brereton J pointed out in Circuit Finance at [21], unless the estate or interest or right is described, "neither the Registrar General nor a person reading the caveat can know...whether a dealing would affect the estate claimed". Further his Honour added the Court could not know either "whether the caveator's claim has, or may have, substance".

22The first of those comments refers to s 74H(1)(b) of the Real Property Act, which operates among other things whenever a dealing or plan is lodged and the recording of that dealing or plan is prohibited by the caveat. If that is so, the Registrar General is required to take certain steps. Unless the estate or interest is described, the Registrar General simply will not know whether the recording of the dealing or registration of the plan would be prohibited by the caveat.

23The second of the matters to which Brereton J referred calls up s 74K(2) of the Real Property Act. That is the section which empowers the Court "if satisfied that the caveator's claim has or may have substance" to extend the caveat. That assessment cannot be made unless the claim is properly described.

24In the present case, Mr Jaramillo submitted, the facts were different to those considered by Campbell J because the estate or interest described was one said to have been "created pursuant to clause 6 of the Deed of Variation"... Thus, he submitted, anyone who looked at the Deed of Variation would know what the estate or interest was.

25That submission cannot be correct. The whole purpose of the Real Property Act is to try and prevent the need for people to go behind the Register, in particular to go behind documents that have been recorded or lodged, to see what estates or interests there are in land that is subject to the provisions of the Real Property Act. The Deed of Variation was not annexed to the caveat. The relevant clauses (cl 5 in the case of Mrs Schibaia and cl 6 in the case of Mr Schibaia) were not set out. A person reading the caveat would not know whether clause 6 created a charge, or an equitable mortgage, or an option to purchase, or an agreement for lease, or any other equitable interest in land.

26Thus, had the matter been determined yesterday, the inevitable result is that the application must have failed, and that the claim for interlocutory relief must have been dismissed.

Stamp duty problem

27That conclusion does not depend on any consideration of the unfortunate problem arising from the failure (as at yesterday) to have stamped the Deed in question, nor does it depend on the submissions that have been addressed as to the ambit, or extent of the rights granted by, the two charging clauses in the Deed of Variation.

28The stamp duty problem has been complicated because, when the matter came back before me today, Mr Jaramillo informed the Court that the Deeds in question had been stamped. Copies of the stamped Deeds were tendered. If one were looking only at the question of the existing caveats, that would raise a question as to whether the stamping had retrospective effect, or as to whether it meant that the relevant clauses were effective from the date of stamping. There is some difference in the first instance authorities on that point. I have expressed the view that the effect of stamping is not retrospective. See Boral Recycling v Wake [2009] NSWSC 712. Other judges of this Court have followed that view. See for example the decision of White J in Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260. It is not necessary to give further citation.

29In the Federal Court of Australia, Katzmann J came to a different view in Arnautovic & Sutherland v Cvitanovic (2011) 199 FCR 1.

30A resolution of the difference would require a detailed consideration of her Honour's reasons, and of the underlying authorities on which her Honour relied. It would also require detailed consideration of the present invalidating section (s 211 of the Duties Act) with the legislation considered in the decisions on which her Honour relied, specifically s 84(4) of the Stamp Duties Act 1920 (NSW) and the consideration thereof in McCallum v National Australia Bank Ltd [2000] NSWCA 218.

31However, Mr DeBuse rightly (and very properly) accepted that, the Deeds now having been stamped, the question of retrospectivity ceased to have effect at least in so far as the application under s 74O was concerned. And since I have concluded that the existing caveats are hopelessly defective in any event, the plaintiffs' rights, if any, depend on s 74O.

32In those circumstances, I do not think it appropriate, in ex tempore reasons given on the basis of inadequate submissions (and I mean no criticism of Mr DeBuse in saying that) on a duty application, to add to the existing state of confusion in first instance authorities. I will however say that I do think that there are differences between ss 84(4) and 211, and that those differences, with respect, may not have been addressed with sufficient precision in the judgment of Katzmann J in Arnautovic.

Is there a charge?

33Thus, in relation to s 74O the essential question is whether clauses 5 and 6 of the Deed of Variation authorise, or arguably authorise, the creation of a charge, and the protection by caveat of that charge, over real property other than:

(1) that set out in item 5 of the schedule to the Deed; or
(2) perhaps, other real property then owned by the continuing partners.

34It has to be said that the Deed of Variation is not well drafted. The drafter's preference for jargon over plain English has led, in no small way, to the question on which the s 74O application depends. I will return to this point.

35The first submission put by Mr DeBuse was that the charges given by clauses 5 and 6 were given only to protect the indemnities provided under clause 3. That cannot be correct. There are two reasons for this. The first reason is that the clause 3 indemnities are given to Mrs Schibaia only, whereas the charges are given to each of Mrs Schibaia and Mr Schibaia. In the case of Mr Schibaia, the clause 6 charge could not be for the protection of his rights under clause 3, because he has no such rights. And since the two charges are effectively identical in their wording, it would be strange if one were so limited whereas the other were not.

36The second reason is that the charges in clauses 5 and 6 expressly call up the interests of Mrs and Mr Schibaia respectively both under the Deed of Variation and under the Deed of Release. And each charge concludes with the proposition that "in all other respects the obligations imposed on all parties under the Deed [of Release] remain unchanged". Those obligations include the obligation to indemnify given to Mr Schibaia by clause 3.1 of the Deed of Release and to Mrs Schibaia by clause 4.1 of that Deed.

37I do not think that, as a matter of construction, the charges conferred by clauses 5 and 6 of the Deed of Variation can be limited in the first way that Mr DeBuse suggested.

38Thus, the question for decision comes down to: what is "the real property" that, in their discretions, Mrs Schibaia and Mr Schibaia "may charge"?

39It will be observed that each clause falls into two parts. The first part of each is the discretion to charge the real property and chattels of the continuing partners, and the statement of the purpose for which that charge may be imposed. The second part is the authority to "register" (in more conventional parlance, "lodge") a caveat.

40Mr Jaramillo submitted that each of the clauses should be read as though it ended with the reference to "the earlier Deed". He submitted that what followed was an additional, mechanical, right, limited in the way that it appears, but not something which limited the rights given by the first part of each clause.

41In support of this, Mr Jaramillo noted that the indemnities given under the Deed of Release were continuing indemnities, and that they might require to be called upon (as in fact, according to the plaintiffs, they are now required to be called upon) for some years into the future following from the completion of the development. That position obtains because the Home Building Act 1989 (NSW) applied to the work in question, and rights under that Act in respect of defective work are available for exercise for at least seven years following completion of the residential building work in question

42Thus, Mr Jaramillo submitted, it could not be thought that the right to charge property was limited to property specifically identified as having been owned by the continuing partners in item 5 of the schedule to the Deed.

43As I have indicated, the drafting of each clause is obscure. It refers to "the real property or chattels of the continuing partners". And it authorises the lodgement of a caveat in respect of some property that is described. The authority to lodge a caveat commences with the words "and for this purpose". When read in context, the identified purpose is the protection of the interests of the relevant party, Mrs Schibaia (clause 5) or Mr Schibaia (clause 6). To put it another way, the general discretion to charge is for the purpose of protecting the interests of the person to whom the clause applies. And in pursuance of, or in other words to reinforce or aid in the achievement of, that purpose, the person described is authorised to lodge caveats on the item 5 properties.

44However, not content with erecting that scheme, the drafter introduced the words "any such" before the words "real property as set out in item 5". The question is whether the words "any such" are intended to refer back to "the real property" identified earlier in the clause, or whether they are intended to mean something such as "that" or "the". In other words, the question is whether the authority to lodge a caveat is intended to be given in respect of the real property referred to earlier in the clause - in which case one might think that the reference to item 5 was intended to limit the real property in respect of which that right (and the associated charge) were given - or whether it is an additional right (that is to say, additional to the general right to charge) to lodge caveats against the title to particular identified property.

45The question thus posed is one of law. In the ordinary way, the Court may deal with the question of law on an interlocutory application, if satisfied that it is appropriate to do so. But the Court need not do so. See Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535.

46In this case it seems to me, detailed consideration and final resolution of the question of construction would require the Court to be better informed than it is as to the background known to the parties at the time they made their Deed, and as to the nature of the indemnities that, in my view, were intended to be secured (in a loose sense) by clauses 5 and 6. That would require consideration of a very considerable volume of material. It is not appropriate, in the course of a duty application, to undertake such a task.

47Accordingly, and adopting on the language of s 74K(2) of the Real Property Act, I propose to deal with the application simply by reference to the question of whether the claim to be entitled to lodge a caveat against real property owned by the defendants other than that described in item 5 of the schedule, has or may have substance. It is clear that the claim may have substance even if, on detailed examination, it may be found to be incorrect. And it is clear that the requirement that the claim have substance does not dictate that the Court should conclude that, more likely than not, the construction underlying the claim is correct.

48To my mind, having had some opportunity to consider the clauses overnight, it cannot be said that they are so clear in their operation that the interest claimed by the plaintiffs does not arise. It seems to me that there is an available, and possibly correct, reading of the clauses under which, as Mr Jaramillo submitted, there is a general discretion to charge and a specific authorisation to lodge caveats. That requires reading the words "any such real property as set out in item 5" as meaning "the real property set out in item 5". I do not think that this is a far-fetched or fanciful reading. Nor, in my opinion, is it so clear that the words "any such" must relate back to the real property first referred to, rather than to the real property that is described immediately after them, that in effect the authority to lodge caveats defines not only a specific form of protection that is given but also the whole of the real property that is the subject of the general discretion to charge.

49For those reasons, I conclude that it cannot be said that clause 5 does not extend beyond the real property described in the schedule to other real property owned by the continuing partners.

50Some support for that is obtained from the wording of the general discretion to charge. It extends not only to "real property" but also to "chattels". If it were to be thought that the authority to lodge a caveat was intended to define the property that was the subject of the charge, then one is left with the conundrum that the "chattels" have no limitation, nor any description other than that they be owned from time to time by the continuing partners. That is not a strong argument, but it does provide some support for the view that the authority to lodge a caveat is not intended to confine the property that may be the subject of a charge.

51Mr DeBuse submitted, in the alternative, that the authority to charge real property could not extend beyond real property owned by the continuing partners at the time the Deed was made. He submitted that it would have been easy for the drafter to indicate clearly that the right extended beyond real property or chattels then owned to real property or chattels that would become owned by the continuing partners in the future. I agree that this could have been specifically stated. But any argument based on the clarity of the drafting of the clauses in question must confront the proposition that they are, in some respects, poorly drafted. And the fact that the drafter did not think to include words that are commonly included in such charges cannot be definitive. The question is whether, having regard to the evident purpose of the clauses and to the interests that they were intended to secure, the reference to real property should be limited to real property then owned, whether or not described in item 5. Again, a final resolution of that question would depend on examination of the relevant material facts known to all parties at the time they made their Deed. Again, that is not an appropriate question to be resolved on an interlocutory application if it requires (as it would) consideration of a substantial body of evidentiary material.

52It is sufficient to say that I do not think that the construction for which Mr Jaramillo contended is so obviously incorrect, or hopeless, that it may not have substance.

53It follows that, although the application to extend the operation of the existing caveats must fail, the plaintiffs have made out a case for relief under s 74O of the Real Property Act.

Discretionary considerations

54Mr DeBuse did not address the discretionary considerations that are relevant to the s 74O power. There is no evidence that the defendants have any present intention to sell, charge or otherwise deal with the properties that would be affected by the caveats in respect of which leave is sought. And it is clear from the material that the plaintiffs have put before the Court that there are substantial claims being made both by the Owners Corporation and by proprietors of lots in the development relating to defective work, and that those claims involve considerable sums of money.

55In circumstances where, on the face of things, the clauses of the Deed of Variation were intended to provide the plaintiffs with some security to support the indemnities that should protect them in respect of claims such as those that have been made, the balance of convenience seems to me, at least on the material presently available, to favour the granting of relief under s 74O.

56The caveats in respect of which leave under s 74O is sought now, or would, describe the interest claimed in an adequate way: an interest as chargee by virtue of a charge over the land pursuant to the relevant clause of the Deed of Variation. Mr DeBuse did not suggest that the wording of those proposed caveats was itself defective to an extent that would in any event justify refusal of leave.

57Thus, I am inclined to make the orders sought in respect of s 74O.

[Submissions as to costs]

58In reasons I gave before the luncheon adjournment, I concluded that the plaintiffs' claim for extension of the existing caveats must fail but that, on balance, the plaintiffs have made out a case for the grant of leave under s 74O of the Real Property Act 1900 (NSW). The parties are agreed on directions to be given to take the case forward and I will make those directions in a moment.

59The question of costs is a little more complicated. Had the matter proceeded to finality yesterday, the plaintiffs would have failed because the only relief they sought at that stage was for extension of the existing, and in my view, hopelessly defective caveats.

60The matter was stood over until this morning at the request of the plaintiff's solicitor, Mr Jaramillo. He was then able to rectify matters by propounding an amended summons and an amended form of caveat; but even then he would not concede that the existing caveats were defective.

61It is plain that the defendants should have their costs of yesterday. The costs of today are less plain. On the one hand, the plaintiffs persisted in advancing the validity of the existing caveats; and on the other hand they advanced their alternative case which, with some hesitation, I have concluded they have made out.

62I add to this that the defendants maintained their opposition to the alternative relief, but only on the basis that, on their proper construction the clauses of the deed, on which the plaintiffs rely, did not have the effect which I have concluded that arguably, they did.

63Balancing the considerations as best I can, and recognizing that much of the debate even today was taken up with issues as to the existing caveats, including not only the question of form but also the question of section 211 of the Duties Act 1997 (NSW), I conclude that the appropriate costs orders are that the defendants should have their costs of and referable to the hearing yesterday and half of their costs of and referable to the hearing today, and that otherwise costs should be costs in the proceedings.

64I make those costs orders.

65I order pursuant to section 74O of the Real Property Act 1900 (NSW) that the plaintiffs have leave to lodge caveats in the form of the several that have been marked as exhibit PX8 in these proceedings, each of which I shall initial and date today's date for further identification.

66I direct the defendants to file their list response by 23 October 2013.

67I list the matter for directions in the Technology and Construction List on 25 October 2013.

68I reserve liberty to apply on three days notice. I order that the exhibits on the applications be handed out.

69I direct that these orders be entered forthwith.

**********

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Last updated 11 October 2013