42. Claim for compensation under TLA s. 118.

Long Forest Estate Pty Ltd v Singh & Anor [2020] VSC 604 (23 September 2020), John Dixon J., is a very long case only part of which involves a caveat.  It is also an interesting decision on whether a vendor’s statement is required to disclose declarations or decisions by a Minister or Department of the Commonwealth.  Briefly the facts were –

  • The plaintiff (Long Forest) owned farmland adjacent to a Nature Conservation Reserve.  It had acquired the land for residential development but without any active planning approvals in place.
  • The land was subject to –
    • three declarations of the Commonwealth Minister for the Environment and Heritage under the Environment Protection and Biodiversity Act 1999 (Cth) as to threatened species, ecological communities and key threatening processes;
    • two decisions of the Minister under that Act which related to Long Forest’s proposal for residential development.  The former decision, in 2014, described the proposed construction of a particular residential development as a controlled action, stating that the project would require assessment and approval under the Act before it could proceed.  The latter decision, in 2015, informed the plaintiff that its proposal to construct the residential development would be approved subject to conditions.

The declarations, applications for approval for projects constituting controlled action and any final approval by the Minister were publicly available documents. 

  • However, by 2016 the plaintiff no longer intended to develop the land.  It was listed for sale without a planning permit. 
  • Negotiations occurred between representatives of Long Forest and the first defendant (Singh).  The Sale of Land Act s. 32D(a) required the vendor to disclose –

“[P]articulars of any notice, order, declaration, report or recommendation of a public authority or government department or approved proposal directly and currently affecting the land, …”

The vendor’s statement did not disclose the Minister’s declarations or decisions. 

  • Singh signed the contract of sale after being given a copy of the vendor’s statement.  He subsequently nominated the second defendant as purchaser. 
  • The purchaser did not pay the balance of the purchase price.  On 13 June 2017 the vendor served a rescission notice.  On 21 June 2017 a caveat was lodged on behalf of the nominee purchaser claiming a freehold estate with an absolute prohibition on dealing on the grounds that the caveator was a purchaser under an uncompleted contract of sale.  On 27 June the vendor’s solicitors wrote to the purchaser’s solicitors stating that as the rescission notice had not been complied with the contract was terminated and the deposit was forfeited.   In the meantime the defendants contended that they had validly rescinded the contract for non-compliance with s. 32D.
  • Long Forest applied to the Registrar of Titles under the Transfer of Land Act (TLA) s. 89A for service of a notice on the caveator.   In response the caveat was withdrawn and two replacement caveats were lodged on behalf of Mr Singh and the second defendant, each claiming a purchaser’s lien to secure repayment of the deposit of $400,000.
  • Long Forest’s solicitors wrote demanding that these caveats be removed, foreshadowing proceedings under s. 90(3), notifying that the caveat was preventing refinancing at a lower interest rate, and foreshadowing a claim for compensation under the TLA s. 118 for loss suffered by the refinancing delay.
  • Proceedings under s. 90(3) were issued but by agreement, reflected in a consent order, the caveats were withdrawn on the undertaking of Long Forest’s solicitors to hold $400,000 in trust not to be withdrawn without agreement or further order.

Long Forest made a number of claims against the defendants including under s. 118 for compensation for the delay in refinancing from 22 November 2017 to 11 April 2018.

John Dixon J. relevantly held –

  1. The plaintiff had validly rescinded the contract for non-payment of the residue of the price and was entitled to forfeit the deposit.  The defendants’ argument that the plaintiff had breached s. 32D by not disclosing the Minister’s declarations or decisions failed.  Neither the Minister nor the Department was a public authority or a government department as those terms were used in the Sale of Land Act – the Victorian Parliament never contemplated that information issued by Commonwealth agencies or departments would need to be attached to a vendor’s statement.  Further, none of the declarations or notices directly and currently affected the land at the relevant time, as Long Forest had already abandoned its application for ministerial approval of the controlled action constituted by the subdivision of the land.   Under the federal statutory regime, any approval of a proposed action and the conditions attached was affixed to the designated proponent and the project constituting the controlled action, rather than the land that constituted the relevant habitat or environment. [8]-[10], [13], [117], [141], [157], [158], [169], [174]-[176], [179], [181], [182]
  2. His Honour stated the law under s. 118 in conventional terms, in particular referring to KB Corporate Pty Ltd v Sayfe & Anor.  (KB is dealt with in Blog 9 but its summary of six relevant propositions is set out in Blog 24, Lanciana v Alderuccio per Moore J., paragraph 2). [339]-[341]
  3. Mr Singh had an honest belief, based on reasonable grounds, that he was entitled to the interest claimed in the caveat on the grounds identified.  Where a caveat is lodged by solicitors on behalf of a caveator, it would usually be inferred that those solicitors received instructions, gave advice and were then further instructed to lodge the caveat.  Ordinarily, such inferences will be drawn in the absence of specific evidence demonstrating departure from expected conveyancing practice.  Long Forest had not discharged the onus of proving that the solicitors lodging the caveats either never genuinely advised Singh that there was a proper basis to contend for breach of s 32D, entitling him to return of the deposit, or were not his lawyers at the relevant time.  His Honour was not persuaded that there was not a genuine dispute between the parties about the termination of the contract and the entitlement to the deposit, a dispute that has only been quelled by this Judgment. [11], [342], [343], [351], [352], 354]-[356]

Philip H. Barton

Owen Dixon Chambers West

27 October 2020

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