Weekly property law round-up, 6 Nov - 12 Nov 2023

This week:

1. An example of the factors that a Court will consider in determining an application for an injunction restraining dealings in land (Kazi v Alom & Ors, Supreme Court of NSW).

2. Bamboo is a tree, at least in New South Wales (West v Arico, Land and Environment Court of NSW).

3. What happens when a warrant for seizure and sale of a property conflicts with its sale by the mortgagee in possession? (Gaudry v Rello Finance Pty Ltd, Supreme Court of Victoria).

4. Some striking catchwords, and questionable evidence in an inheritance dispute (Potts v Potts, Supreme Court of NSW).

I note that the delay in the first two decisions being published (they date from 27 and 23 October respectively) is the result of the judgments being delivered ex tempore, with revised written reasons being issued later -- a practice which is much more common north of the Murray.

Kazi v Alom & Ors [2023] NSWSC 1321 (27 October 2023)

Supreme Court of New South Wales (Henry J)

EQUITY - Interlocutory injunction - Plaintiff seeks to restrain defendants from dealing with, disposing of or further encumbering property

This case involves a fairly common situation: a plaintiff seeking to restrain the sale or other dealings with a property, owned by the defendant, where the plaintiff had loaned money to the defendant secured against that land.

It does not involve any novel facts or law, but illustrates the factors that may go towards a Court's decision to refuse injunctive relief in relation to land. This may assist in understanding how to both make and respond to such applications. In particular, it is a reminder for plaintiffs to not ask for too much, and to avoid any kind of acquiescence in the dealings they wish to restrain.

The parties agreed on the purpose and test for an interlocutory injunction (summarised at paras [9]-[10]), so the application came down (1) to whether the claim for final relief raises a serious question to be tried; (2) whether the plaintiff would suffer irreparable harm if the injunction were not granted, for which damages would be an inadequate remedy; and (3) whether the balance of convenience favoured the grant of the injunction (per ABC v Lenah Game Meats, High Court, 2001).

In refusing the injunction, the Court noted the following factors (at [22]-[33]):

1. The plaintiff had been on notice for several years of the breaches of the loan agreement which formed the basis for the final relief he sought. He had also acquiesced in the sale of previous lots which were also secured against the loan (at [22]-[23]).

2. The plaintiff sought an injunction restraining dealings by the defendant in all of the lots comprising the property, not just those secured against the loan. The injunction went too far (at [24]).

3. The evidence did not suggest that the defendants were seeking to dispose of, dissipate or encumber their assets in a way that could be said to be intended to defeat a prospective judgment in favour of the plaintiff (at [27], citing Frigo v Culhaci, Supreme Court of NSW, 1998).

4. An injunction would potentially prejudice the defendants' ability to develop the property, particularly by restraining the sale of the lots that were not part of the loan security (at [28]).

5. Damages were an adequate remedy. There was insufficient evidence that there was any risk of the defendants going bankrupt, and the basis for the claim for final relief was damages for the alleged breach of a loan agreement, which the plaintiff had only belatedly sought to enforce (at [29]-[32]).

6. The defendants gave undertakings for the proceeds of sale of the secured lots to be paid into Court upon settlement (at [33]).

West v Arico [2023] NSWLEC 1668 (23 October 2023)

Land and Environment Court of New South Wales (Galwey AC)

TREES (DISPUTES BETWEEN NEIGHBOURS) - Bamboo - Status as tree - Legal fictions

Bamboo is a tree, at least according to the Trees (Disputes Between Neighbours) Act 2006 (NSW) (the 'Act'). This may come as a surprise to botanists. Bamboo is the common name for the plant subfamily bambusoideae, of the grass family poaceae -- it's therefore more closely related to wheat than to trees.

However, under the Act (at section 3), a "tree" is any "woody perennial plant, any plant resembling a tree in form and size, and any other plant prescribed by the regulations". This places bamboo squarely within the Act's ambit, as long as the particular bamboo in question is sufficiently tree-like. In this case, the test was satisfied, as it was "planted so as to form a hedge, and reaches more than 2.5 metres in height".

I must admit, if faced with a similar set of facts, my first thought would probably be whether it was possible to mount an argument that grasses fall outside the Court's jurisdiction -- so the decision is a reminder to always check whether any key terms have a special definition.

To be fair to the lawmakers, treating bamboo as a tree is in the spirit of the Act, and reflects the fact that different taxonomies will be useful in different situations: zucchini and eggplants are botanical fruits, but using them as culinary fruits is inadvisable.

Here in Victoria, Parliament has not entered the fray on this issue. Despite a recommendation by the Victorian Law Reform Commission in a 2019 report that legislation be passed to "assist neighbours to resolve their disputes quickly, affordably and effectively", such disputes remain governed by the law of tort. Per the VLRC at para 3.38 of the report:

The resolution of tree disputes in Victoria is currently based on the law of torts, which has largely been developed through judge-made case law (the ‘common law’). There is no legislation specific to the process for resolving private tree disputes between neighbours in Victoria.

So, lawyers in Victoria won't be faced with a similar definitional issue, instead only needing to consider whether the bamboo is a nuisance.

Gaudry v Rello Finance Pty Ltd [2023] VSC 630 (1 November 2023)

Supreme Court of Victoria (Gray J)

REAL PROPERTY - Warrant of seizure and sale - Application by registered mortgagee in possession to remove warrant from register - Whether warrant futile

What happens when a warrant for seizure and sale of a property conflicts with its sale by the mortgagee in possession? In this case, the plaintiff, a mortgagee in possession, sought an order removing a warrant of seizure and sale from the register of titles, and a temporary injunction restraining the first defendant from making a further application to register the warrant (with that injunction to last until the subject property was sold).

For context, a warrant of seizure and sale can be sought under Order 69 of the Supreme Court (General Civil Procedure) Rules 2015 to enforce a judgment debt, and directs the Sherrif to take and sell the subject property.

The first defendant, Rello, had registered the warrant after obtaining a judgment against the registered proprietor Mr Rogers, who owed Rello money for the marketing of one of the lots comprising the property.

The plaintiff was the mortgagee, Mr Gaudry, who had taken possession of the property after Mr Rogers defaulted on the underlying loan. Mr Gaudry sought to sell the property, but was prevented from doing so by the warrant registered by Rello.

The question was whether, as per the test from Capital Finance Australia Ltd v The O'Bryan Group Pty Ltd (Supreme Court of Victoria, 2003, referred to at para [2]), the "recording of a process such as a warrant serves no useful purpose and would work an injustice". If so, the Court could order the registrar of titles to remove the warrant, under its inherent jurisdiction to prevent abuse of process.

The presence of the warrant obstructed the ordinary mortgagee sale process from taking place -- in which the proceeds of sale would be paid to creditors in order of priority. Rello's interest was unsecured, and Mr Gaudry submitted that Rello would likely receive nothing from the proceeds of sale once secured creditors such as Mr Gaudry were paid (as the debts secured against the property exceeded their anticipated sale price).

While there were quite a few additional complexities of fact and law in the case (particularly relating to the 'rule against tacking' in s 94 of the Property Law Act), it's sufficient to note that the Court granted the relief sought.

While the Court could not resolve the priority dispute, and could not conclusively determine on the evidence before it that Rello would indeed receive nothing from the proceeds of sale, it considered that if the property was sold by the Sheriff while subject to significant encumbrances, this would reduce the sale price -- which was to everyone's detriment.

Further, and critically in the Court's view, Mr Gaudry offered an undertaking to pay any surplus funds in one of the units to Rello, which the Court held was sufficient to safeguard the latter's interest in the proceeds of sale.

Potts v Potts [2023] NSWSC 1344

Supreme Court of New South Wales (Elkaim AJ)

REAL PROPERTY - Declaration sought for transfer of legal ownership of property to first plaintiff - Property purchased with money held on trust for first plaintiff - Trust intended to protect first plaintiff from his own gambling habits

This case turns on its own facts, and I mention it only due to the striking catchwords, and the dismal view taken of the parties' evidence. It involved a nasty dispute between siblings over an inheritance. The Court summed up its overall view of the evidence in understated terms (at [25]):

All of the parties...were cross-examined on their affidavits. There were aspects of the evidence of each witness which gave me reason to doubt their evidence.