Lithgow State Mine Railway Ltd v City of Greater Lithgow Mining Museum Inc

These proceedings were commenced by Statement of Claim filed on 1 May 2019. The plaintiffs (Lithgow State Mine Railway Ltd and COC Ltd) seek specific performance of an alleged agreement to the effect that the defendant (City of Greater Lithgow Mining Museum Inc) would transfer certain land near Lithgow, being Lot 10 in Deposited Plan 1240259 (“Lot 10”) to one or other of the plaintiffs (see Statement of Claim at paragraphs 38 to 44). The principal relief sought is an order that the defendant “do all things necessary to facilitate the transfer” of Lot 10 to one or other of the plaintiffs.

The defendant has filed a submitting appearance.

Lithgow Railway Workshop Pty Ltd (“LRW”) claims to have an equitable interest in Lot 10 in the nature of a lease, by way of a proprietary estoppel. It has lodged a caveat on the title to Lot 10 claiming that interest. LRW is not presently a party to the proceedings, but by Notice of Motion filed on 5 July 2019 it seeks to be joined to the proceedings as a defendant, pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 6.24. UCPR r 6.24(1) provides:

LRW contends that it is a necessary party to the proceedings, essentially because it is a claimant in respect of the subject matter of the proceedings, namely Lot 10. LRW invokes the principles as stated in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [132]-[133] where the High Court stated:

LRW submitted that the plaintiffs and LRW assert competing equitable interests in Lot 10. Further, LRW submitted that if the plaintiffs succeed on their claim they will obtain orders for the transfer of Lot 10 to one or other of them, and upon registration of a transfer would obtain an indefeasible title to Lot 10. Accordingly, it was submitted, the relief claimed by the plaintiffs directly affects LRW’s claimed interest in Lot 10.

The plaintiffs oppose the joinder. They submit that they only seek contractual remedies (in respect of a contract to which LRW is not a party) which could not affect LRW’s claimed equitable interest. They submit that the principles stated in John Alexander’s Club Ltd v White City Tennis Club Ltd (supra) do not apply because the plaintiffs do not seek orders which establish or recognise a proprietary or security interest in Lot 10, and the equitable interest claimed by LRW would not be detrimentally affected by the orders sought. It was put that at most the orders would require the defendant to provide to one or other of the plaintiffs a transfer in registrable form. It was further put by the plaintiffs that LRW’s claim should be brought against the defendant “at the appropriate time, if and when the defendant attempts to lapse LRW’s caveat or negotiate (sic) its occupation”. Finally, the plaintiffs submitted that LRW had no standing to be involved (including by filing a Defence) in proceedings for the enforcement of a contract to which it is not party.

The plaintiffs’ position gains support from the general rule, deriving from Tasker v Small (1837) 3 My & Cr 63, that the only proper parties to a suit for specific performance of a contract are the parties to the contract. The rule was applied in respect of a suit for specific performance of a contract for the sale of land by Harvey CJ in Eq in Thomson v Richardson (1928) 29 SR (NSW) 221. In that case, the plaintiff purchaser was seeking specific performance against the defendant vendor. It was held that a third party caveator (the Public Trustee) who claimed an equitable interest in the land was not a necessary party and should not be joined to the proceedings. Harvey CJ in Eq stated (at 222-3):

The learned authors of Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (Fifth Edition) suggest that this general rule should be re-examined as it can cause inconvenience or injustice in some circumstances, and such problems may not always be able to be overcome by means of the concurrent hearing of separate proceedings (see at [20-250]). Even if it was open to a judge sitting at first instance to re-examine the general rule, it is not necessary to do so in order to answer the relevant question, namely, whether LRW is a person whose joinder is necessary to the determination of all matters in dispute in the proceedings. The existence of the general rule is not determinative of that question.

The proceedings are concerned with the existence and enforceability of the alleged agreement to transfer Lot 10. The claim as formulated in the Statement of Claim recognises that the plaintiffs may need to invoke the law relating to part performance (see Statement of Claim paragraphs 41-44). However, the defendant has chosen not to defend the proceedings, electing instead to file a submitting appearance.

In these circumstances a question arises as to what matters (if any) are in dispute in the proceedings for the purposes of UCPR r 6.24(1). No submissions were directed to this question. In the context of an application by a non-party to become a defendant, the matters in dispute for this purpose would generally be understood to be confined to the matters raised in the proceedings on the existing pleadings (see Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 at 37-8 and 53-4). I am inclined to think that in circumstances where the plaintiffs seek the discretionary remedy of specific performance so that, whatever attitude is taken by the defendant, they need to demonstrate to the Court that the grant of relief is appropriate, the matters in dispute for the purposes of the rule at least extend to the matter of whether on the facts ultimately established, relief in the nature of specific performance ought be granted and, if so, what relief ought be given.

The nature of the contract sought to be enforced is an agreement for the transfer of the fee simple in Lot 10. The plaintiffs therefore claim that one of them has an enforceable contractual entitlement to receive a transfer of the land so that the relevant plaintiff can become the registered proprietor of Lot 10.

There is room for debate about what is or may be encompassed by the orders for specific performance sought by the plaintiffs. In terms, the plaintiffs seek orders that require the defendant to do all things necessary to facilitate the transfer of Lot 10 to one or other of the plaintiffs. The plaintiffs have attempted to clarify the position by stating that at most the orders would require the defendant to provide a transfer in registrable form.

However, the scope of any orders for specific performance is governed by the content of the contractual obligations being enforced. Presumably, the plaintiffs claim that the defendant is obliged to transfer the fee simple free of any interest claimed by LRW. In the absence of clear statements by the plaintiffs to the contrary, the Court will proceed on that assumption. On that basis, the plaintiffs would not be obliged to accept a transfer from the defendant unless and until the defendant had removed LRW’s caveat or certainly assured its removal (see Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 at 537). The defendant would be contractually bound to seek the removal of LRW’s caveat. If in those circumstances LRW declined to withdraw the caveat, it would then become necessary for a determination to be made as to LRW’s claimed interest. That might occur in the course of proceedings commenced by the defendant under s 74MA of the Real Property Act 1900 (NSW) for the withdrawal of the caveat, or in the course of proceedings commenced by LRW pursuant to s 74K of the Real Property Act following the service of a lapsing notice in respect of the caveat.

In John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (supra) at [131], the High Court accepted as correct a submission that where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. In Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 Leeming JA (with whom Meagher JA and Tobias AJA agreed) stated (at [51]) that it was settled law that a person who is directly affected by the orders sought in a proceeding is a necessary party, and that the obligation to join that person rests upon the plaintiff or applicant or person applying for those orders.

The orders for specific performance sought by the plaintiffs in the present case do not in my view directly affect whatever rights LRW may have in respect of Lot 10. The orders, if made, would operate in personam against the defendant to require it to perform contractual obligations (cf Boyd v Thorn (2017) 96 NSWLR 390; [2017] NSWCA 210 at [87]-[90]). Insofar as LRW is concerned, those obligations would extend no further than a requirement to seek the removal of LRW’s caveat. It is true that the making of orders for specific performance of an agreement to transfer land is in a sense a recognition or reflection of the existence of an equitable interest in the land. Nonetheless, I do not think that the orders sought in this case would establish or recognise a proprietary interest in Lot 10 that is correspondingly detrimental to LRW (cf John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (supra) at [132]-[133]). The making of the orders themselves would not diminish or restrict any rights LRW may have over Lot 10.

The position differs from that faced in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (supra) where a declaration was made that an interest in land was held on constructive trust, and an order was made for the transfer of the relevant land to the beneficiary of the constructive trust. Those orders were detrimental to the interests of a non-party which claimed an interest in the land pursuant to an unregistered mortgage. By reason of the making of the orders the beneficiary of the constructive trust was placed in a position to obtain an indefeasible title on registration of the transfer.

The orders sought in the present case do not go so far. At most, the making of the orders would have an indirect effect upon LRW insofar as they would require the defendant to seek the removal of LRW’s caveat. The in personam orders sought might ultimately lead to one or other of the plaintiffs being in a position to become the registered proprietor of Lot 10, but the orders would not themselves have that effect. Registration cannot occur (without LRW’s consent) for so long as LRW’s caveat remains. LRW will thus have the opportunity to put its case in opposition to registration of any transfer that may be detrimental to its claimed interest. In these circumstances, I do not think that any denial of natural justice would arise if LRW is not joined as a party (see John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (supra) at [153]; Ross v Lane Cove Council (supra) at [57]-[58]).

For the above reasons, I do not consider that LRW is a person whose joinder is necessary to the determination of all matters in dispute in these proceedings. Neither do I consider that LRW is a person who ought to have been joined to these proceedings for specific performance. The Court therefore declines to make the order for joinder sought by LRW pursuant to UCPR r 6.24(1).

It may well turn out that in the course of the execution of any orders made for specific performance issues will arise that relate to LRW. A question could arise, for example, as to whether the claim asserted by LRW means that the defendant is unable to perform an obligation to transfer (see Thomson v Richardson (supra) at 224). Further, the execution of orders might be affected by separate proceedings involving LRW, including proceedings of the types referred to above (at [13]). However, these possibilities do not lead to the conclusion that LRW ought now be added as a party.

The Notice of Motion filed on 5 July 2019 will be dismissed with costs.