Chan v Grimston

These reasons are intended to record what has taken place in this matter yesterday afternoon and then this morning.

Shortly before 4 pm yesterday afternoon, Mr Le, solicitor, appeared before me in the duty list seeking leave to file a summons on behalf of the plaintiffs, with an affidavit in support affirmed by the second plaintiff, Ms Camcuc Tran. Mr Le explained that he had instructions to seek the urgent extension of a caveat (the “Caveat”), which, on his instructions, would lapse that afternoon by reason of the operation of a lapsing notice which had been prepared and served pursuant to the provisions of s 74J of the Real Property Act 1900 (NSW).

With no disrespect to Mr Le, whose instructions had obviously come very late, there were significant deficiencies in both the summons and Ms Tran’s affidavit. The summons sought an order for the extension of the Caveat but did not include any claim for final relief. Ms Tran’s affidavit was missing certain key material including the second page of the Caveat and some other potentially critical documents, about which Mr Le had to tell me from the Bar table. The reason for the unsatisfactory nature of both the summons and the affidavit was, according to Mr Le, the lateness with which he had been instructed and that he had done the best he could while counsel was working on a more extensive summons and more fulsome evidence.

The material before the Court strictly proved that the plaintiffs had executed a contract (the “Contract”) to purchase from the defendants land at Theresa Park for a purchase price of $1,330,000. The counterpart of the Contract signed by the plaintiffs is undated but the second plaintiff deposes that they executed it on 11 December 2015. That counterpart has had written in a completion date of “56 days from exchange”.

The second plaintiff says that the defendants executed the Contract on or about 12 December 2015. The execution page of the counterpart apparently executed by the defendants specifies a contract date of 14 December 2015 and has had handwritten in a completion date of “90 days from exchange”.

Ms Tran’s affidavit, in addition to the Contract, annexes a notice of termination:

Finally, the evidence establishes that on 8 January 2016 the Caveat was lodged on behalf of the plaintiffs by Mr Le.

The formal evidence, as far as it goes, does not make clear precisely how the plaintiffs say that they still may have an interest in the land the subject of the Contract based upon an allegation that the defendants wrongly terminated the Contract. To explain that, Mr Le informed the Court from the bar table that his instructions were that the parties had also agreed that there would be a cooling-off period of 10 business days from the date of exchange, during which the deposit would be payable. The reference in the notice of termination reproduced above to a cooling-off period allows the Court to infer, as it does for present purposes, that a cooling-off period was agreed. It was not immediately clear to me, from Mr Le’s explanation, how much of that further or side agreement in relation to the cooling-off period was written or oral.

Mr Le informed the Court that the defendants said the Contract had been exchanged on 16 December 2015, which meant that, allowing for the various Christmas public holidays, the cooling-off period expired and the deposit was payable by 30 December 2015. Mr Le says his client disputed that factual analysis. The plaintiffs, he said, would demonstrate that the Contract had not been exchanged until two days later. If the plaintiffs’ version was correct, so Mr Le submitted, then the defendants’ termination of the contract on 31 December 2015 was wrongful.

When pressed by the Court to explain why the revocation of the Caveat was brought at literally the very last possible hour, Mr Le explained the parties had for some weeks been trying to settle the matter amicably. Importantly, by way of explanation for the lateness of the application, Mr Le informed the Court that he had never actually seen the lapsing notice which had been sent in relation to the Caveat and that he had only become aware of it shortly before the Easter break. This was notwithstanding that the address for service on the Caveat was Mr Le’s own practice address. He explained that, because there are a number of tenants at the premises which he occupied, it had to be the case that the lapsing notice simply never reached his attention. On hearing of the Caveat, Mr Le explained that he had contacted Land and Property Information (“LPI”) to find out when the notice would lapse and was told it was yesterday. If anything was to be done to extend the Caveat it had to be done before 5 pm yesterday to give Mr Le time to lodge the Court’s order at the LPI that day.

I took the view that if the additional matters to which Mr Le referred from the bar table could be properly proven, then there was a serious question to be tried so as to justify a relatively short extension of the Caveat. The balance of convenience also supported such a short extension. Mr Le confirmed his instructions, referred to in Ms Tran’s affidavit, that the plaintiffs intended to bring proceedings for specific performance of the Contract against the defendants and that counsel was currently engaged in finalising an amended form of summons and evidence in proper form. He also informed the Court that he had instructions to give the usual undertaking as to damages to support extension.

Because of the time pressure yesterday afternoon, I only made orders extending the Caveat and providing for the matter to come back before me this morning so that the necessary further directions would be made to regularise matters with a view to the proceedings being stood over to next Tuesday for a hearing on the question of whether the Caveat should be further extended beyond that date. In addition to making a further order for service of the order yesterday on the defendants’ solicitors, I asked Mr Le to contact the defendants’ solicitors to inform them of this morning’s hearing.

This morning the defendants have been represented by their solicitor, who has filed an appearance on their behalf.

Mr Le has informed me that he was unable to register or to provide the LPI with the copy of the order, which I had made yesterday at about 4.30pm, notwithstanding his attendance at the LPI before 5 pm. He informed me that the doors were closed. He has been back to the LPI this morning and will continue to have discussions with them about the order.

The solicitor for the defendants has informed me that, on his current instructions, it may be that the issues in this case are quite narrow. That is a matter which the Court will consider next Tuesday when the proceedings are back for the purposes of considering whether or not the Caveat should be further extended. For the purposes of preparing for that hearing, the Court made the following orders:

Mr Le returned to Court this afternoon to inform me that he had been advised by the legal branch of the LPI that the Caveat had lapsed. This is because notwithstanding my having made the order extending the Caveat at or about 4.30pm yesterday afternoon, by the time Mr Le arrived only a few minutes later at the LPI (still before 5pm) the LPI was closed. I understand that the LPI’s advertised business hours are that it closes for public business at 4.30pm.

The lapsing has come about by reason of the operation of s 74J of the Act:

In the events which happened, Mr Le, on behalf of his clients, was unable to ensure that s 74J(4)(b) had been complied with. In those circumstances, the Registrar General is required by the concluding words of s 74J to record the Caveat as having lapsed. The Registrar-General has no discretion in the matter: Patel v H Lal and Associates [2008] NSWSC 964.

After discussions with the legal section of the LPI, Mr Le has approached the Court to make an order under s 74O granting leave for a further caveat to be lodged in the same terms as the Caveat.

If I may respectfully say so, the defendants and their legal advisers have sensibly agreed to that course, provided that the result is simply to put the parties in the position they would have been had the Court's orders been received by the LPI before 4.30pm yesterday. To achieve that result, some additional orders will be required.

Any fresh caveat filed pursuant to leave under s 74O will itself stand until either withdrawn voluntarily by the plaintiffs or be itself the subject of further proceedings pursuant to the issue of a fresh lapsing notice. There is also the practical issue that the plaintiffs’ summons seeks the extension of the Caveat that has now lapsed.

Whatever the Court now does should preserve the position that the onus at next Tuesday's hearing must be on the plaintiffs to justify the continued presence of a caveat in the form of the Caveat on the title to the defendants’ land. That will be done, it seems to me, and Mr Le does not disagree, by the Court granting leave to file a fresh caveat under s 74O and at the same time making an order that subject to any further application by the plaintiffs, they will be required to withdraw the fresh caveat next Wednesday, 6 April.

This course will mean that at next Tuesday's hearing the onus will be on the plaintiffs to seek to set aside the order requiring them to withdraw the fresh caveat. They will meet that onus if they satisfy the Court that they have an interest of a kind that, in accordance with the usual principles, would have justified an extension of the Caveat.

The Court makes the following orders additional to those made this morning: