Fekete v Salfa Pty Ltd

CITATION:
Fekete v Salfa Pty Ltd [2005] NSWSC 1200

HEARING DATE(S): 23/11/05

JUDGMENT DATE :

23 November 2005

JURISDICTION:
Equity Division

JUDGMENT OF:
Young CJ in Eq

DECISION:
Plaintiff's caveat extended; Caveat to be withdrawn upon plaintiff being provided with bank guarantees of $1,028,500.00.

CATCHWORDS:
CONVEYANCING [191]- Torrens system- Caveat- Extension- Whether caveat should be extended if lodged in breach of contract- Whether injunction sufficient to protect plaintiff's interest instead of caveat.

PARTIES:
Katharina Fekete (P)
Salfa Pty Limited (D)

FILE NUMBER(S):
SC 5982/05

COUNSEL:
B DeBuse (P)

SOLICITORS:
McCooe & McCooe (P)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 23 November 2005

5982/05 – FEKETE v SALFA PTY LTD

JUDGMENT

1 HIS HONOUR: This is an application to extend a caveat, or alternatively, for leave to put on a new caveat or, alternatively, for an injunction.

2 The principal contract between the parties was that the plaintiff would sell to the defendant, a developer, her property at 28 Crown Road, Queenscliff for $2.15 million. The sale price would be paid as to $1,121,500 by bank cheque on completion, and this was done. The balance of $1,028,500 was to be paid by transfer to the plaintiff of one of the apartments to be built on the property which she had sold. This was to be a three bedroom unit on the top floor with an internal area of not less than 110 square metres with two security undercover car spaces and was identified as Unit 35; the car spaces being identified as 69 and 70 in an unregistered plan attached to the contract.

3 The second contract, that is, for the conveyance of the unit, was to be completed earlier this year because the contract provided that the strata plan should have been registered by 31 December 2004. The terms of the contract included that the purchase price, which has been fully paid by the plaintiff, was to be secured by bank guarantees. This occurred. Unfortunately, the bank guarantees expired on 31 January 2005. Requests for fresh guarantees appear just to have been ignored.

4 To protect her interest the plaintiff put a caveat on the title. The second contract contained a term that the plaintiff must not lodge a caveat until the certificates of title had issued. The defendant drew this to her attention and said that what she had done was wrong and it was financially imperative that the caveat be removed. The plaintiff replied that the caveat would be removed when the guarantees were renewed.

5 The proceedings commenced at 2pm before me this afternoon and were returnable at 3.15pm. They were duly served. There has been no appearance on the part of the defendant.

6 Ordinarily I would not feel inclined to extend a caveat where it was lodged in breach of a contract. However, I cannot really see any other way in which the plaintiff can protect her interest especially when her breach, if it be a breach, has been brought about by a worse breach by the defendant. There was some debate between Mr DeBuse, who appeared for the plaintiff, and myself as to whether it was possible for an injunction to be granted which would prevent the defendant dealing with Lot 35 and car spaces 69 and 70, but that does not really address the basal problem, that the developer might encumber the whole property so that it is unable to provide a clear title to the plaintiff of the unit for which she has fully paid.

7 Furthermore, as the injunction can be registered against the title there would be no benefit to the developer at all. Accordingly, it seems to me that the lesser of two evils is to order the caveat be extended.

8 The prevailing view is once extended, the lapsing notice is spent. In order to satisfy the rule that the plaintiff should get no more than she needs, I will make order 3 in the summons but add at the end:

(a) the plaintiff is to withdraw that caveat upon being provided with bank guarantees in the sum of $1,028,500 from a financial institution acceptable to her; or

9 I stand the matter over to my list on Monday 28 November 2005 at 9.50am. This order can be taken out forthwith.

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In the matter of Fekete v Salfa Pty Ltd, the dispute arose from a conflict concerning the lodgement of a caveat under the Torrens system. The plaintiff, Fekete, had entered into a contract for the sale of land with Salfa Pty Ltd, which included a term that a caveat would not be lodged against the transfer of title. Despite this contractual obligation, Fekete subsequently lodged a caveat to protect their interest in the property. The defendant, Salfa Pty Ltd, sought to have the caveat removed or extended, arguing it was lodged in breach of the contract, and requested an injunction to protect their interests instead.

The primary legal issues before the court were whether a caveat lodged in breach of a contractual agreement could be extended, and if an injunction would suffice as an alternative means of protecting the plaintiff's interests. The court had to consider the interplay between contractual obligations and statutory rights under the Torrens system, as well as the adequacy of an injunction as a substitute for a caveat.

The court found that the caveat was indeed lodged in breach of the contractual terms. However, it determined that the caveat could be extended as it served to protect the plaintiff's interest in the property, despite the breach. The court also concluded that an injunction would provide sufficient protection to the defendant's interests, thereby obviating the need for a caveat. As a result, the court ordered that the caveat be extended, but also directed that an injunction be granted to protect Salfa Pty Ltd's interests. This dual approach balanced the need to uphold contractual obligations while ensuring that the statutory protections under the Torrens system were not entirely undermined.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

CITATION:	Fekete v Salfa Pty Ltd [2005] NSWSC 1200
HEARING DATE(S):	23/11/05
JUDGMENT DATE :	23 November 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Plaintiff's caveat extended; Caveat to be withdrawn upon plaintiff being provided with bank guarantees of $1,028,500.00.

CATCHWORDS:	CONVEYANCING [191]- Torrens system- Caveat- Extension- Whether caveat should be extended if lodged in breach of contract- Whether injunction sufficient to protect plaintiff's interest instead of caveat.
PARTIES:	Katharina Fekete (P) Salfa Pty Limited (D)
FILE NUMBER(S):	SC 5982/05
COUNSEL:	B DeBuse (P)
SOLICITORS:	McCooe & McCooe (P)