Order for possession of property granted in NSW Supreme Court

The Court granted an order for possession of the property to the proprietors of the title land, despite the defendants remaining in possession. Security for costs was also ordered due to the defendants' lack of demonstrable assets.

OUTCOME: Allowed

Supreme Court New South Wales

Medium Neutral Citation: [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 7) [2018] NSWSC 1063 Hearing dates: 28 May, 12 & 14 June and 2 July 2018 Date of orders: 13 July 2018 Decision date: 13 July 2018 Jurisdiction: Equity Before: Slattery J Decision: Order for possession of subject premises made. Order made for security for the cross-defendants' costs of the cross-claim. Defendants ordered to pay the plaintiffs' costs of the contests in relation to the orders for possession and security for costs. Catchwords: REAL PROPERTY – possession of land – plaintiffs are the registered proprietors of [NAME_4] title land as the result of Court orders made against the defendants – but defendants remain in possession of the land – plaintiffs seek orders for possession by notice of motion – defendants contend notice of motion not served on all occupants of the land – whether service effected on occupants in accordance with Uniform Civil Procedure Rule ("UCPR"), r 6.8 – whether compliance with UCPR, r 6.8 is a pre-condition to making an order for possession – occupants of land alleged to be tenants of previous registered proprietor – whether order for possession can be made whilst tenants are in occupation.

SECURITY FOR COSTS – UCPR, r 42.21 - cross-claimant company brings proceedings claiming a declaration that it holds an equitable interest by way of charge over [NAME_4] title land – the registered proprietors, the cross-defendants, apply by motion for an order for security for their costs of the cross-claim – cross-claimant company is without demonstrable assets available to satisfy any costs order against it – no guarantee offered by any natural person to satisfy costs orders that may be made against the cross-claimant – cross-claimant relies upon monies in Court as a potential fund from which an order for the payment of costs can be secured by the cross-claimant company – whether in the circumstances an order for security for costs should be made. Legislation Cited: Family Law Act 1975, s 79 Jurisdiction of Courts (Cross-vesting) Act 1987, s 5(1) Real Property Act 1900, ss 42, 43, 74J Uniform Civil Procedure Rules 2005, rr 6.8, 36.8, 42.21 Cases Cited: [NAME_5] v [NAME_5] (No. 2) [2016] NSWSC 269 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 [COMPANY_6] Family Trust v [COMPANY_7]; [COMPANY_7] v [COMPANY_6] Family Trust [2017] NSWSC 157 [NAME_1] v [COMPANY_2]; Pham v Sebie [2017] NSWSC 1509 [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 2) [2018] NSWSC 22 [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 3) [2018] NSWSC 381 [NAME_1] v [NAME_8]; [NAME_1] v [NAME_3] (No. 4) [2018] NSWSC 566 [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 5) [2018] NSWSC 567 [NAME_3] v [NAME_1] (No. 6) [2018] NSWSC 592 Category: Consequential orders (other than Costs) Parties: In proceedings 2015/325044:

Counsel:

[redacted]

Solicitors:

[redacted] For [NAME_3]: self-represented For Registrar General of New South Wales: [NAME_12]

In proceedings 2015/56505:

Counsel:

[redacted] Third defendant: [redacted]

Plaintiffs: [redacted] For Registrar General of New South Wales: [NAME_12] [NAME_14]: [NAME_15], [NAME_15]: In proceedings 2015/325044:

Counsel:

[redacted]

Solicitors:

In proceedings 2015/56505:

Counsel:

[redacted] Third defendant: [redacted]

Plaintiffs: [redacted] For Registrar General of New South Wales: [NAME_12] [NAME_14]: [NAME_15], [NAME_15](s): (2015/325044); (2015/56505) Publication restriction: No

Judgment 1. This is my seventh judgment in these proceedings. My first judgment was given on 8 November 2017: [NAME_1] v [COMPANY_2]; Pham v Sebie [2017] NSWSC 1509. My second judgment was given on 30 January 2018: [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 2) [2018] NSWSC 22. My third judgment was given on 29 March 2018: [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 3) [2018] NSWSC 381. My fourth judgment was given on 24 April 2018: [NAME_1] v [NAME_8]; [NAME_1] v [NAME_3] (No. 4) [2018] NSWSC 566. My fifth judgment was given on 1 May 2018: [NAME_1] v [COMPANY_2]; [NAME_1] v [NAME_3] (No. 5) [2018] NSWSC 567. My sixth judgment was given on 3 May 2018: [NAME_3] v [NAME_1] (No. 6) [2018] NSWSC 592. This judgment should be read together with my six previous judgments. Events, matters and persons are referred to in all judgments in the same way that they are in each of my previous judgments.

2. The first and second judgments set out the history of these unusual proceedings from September 2017 until late January 2018. The third judgment deals with the course of the proceedings between late January 2018 and 29 March 2018. The fourth judgment brings the matter up to 24 April 2018. The fifth judgment covers the period from 24 April 2018 to 1 May 2018. The sixth judgment deals with an application brought by [NAME_3] on 2 May 2018 for an interlocutory injunction to restrain the settlement of the [NAME_16] scheduled for that day at 2pm.

3. This judgment deals with two matters. First is the plaintiffs' application for an order for possession of the [NAME_16]. The plaintiffs' application for possession was brought by motion dated 15 May 2018 ("the Motion for Possession"), which was first returnable before the Court on 28 May 2018. The hearing of the Motion for Possession was protracted over three days, 28 May, 12 and 14 June 2018, for the procedural reasons that are explained in more detail below.

4. The second matter for consideration is the plaintiffs' application, in their capacity as cross-defendants, for security for costs of a cross-claim brought by [NAME_14] in the proceedings on 1 July 2018. [ADDRESS] granted leave for [NAME_14] to file a cross-claim, which has since been amended to include [NAME_17] as a cross-defendant. But the plaintiffs/cross-defendants say that [NAME_14] is a corporate entity with no assets and is unlikely to meet any costs order against it if it is unsuccessful on the cross-claim. The plaintiffs/cross-defendants seek security for costs on the cross-claim and [NAME_14] resists the making of such an order.

5. Because of the complex array of procedural and other applications in these proceedings, the Court has taken the course, once again, of setting out as much of the procedural history as possible, so that if required, it can be efficiently followed by other judicial officers that may have to review aspects of these proceedings.

Early Background to These Three Sets of Proceedings 1. The origins and early phases of these three sets of proceedings remain relevant to an understanding of the present application for possession against [NAME_3]. The history of how these proceedings began is set out in some of the previous judgments but is usefully briefly summarised here. 2. [NAME_1], the plaintiffs in both of the principal proceedings before the Court, a husband and wife, purchased the [NAME_16] under the 2014 Contract. [NAME_3], then the sole registered proprietor of the [NAME_16], was the vendor to the plaintiffs under the 2014 Contract. But [NAME_3] failed to complete the 2014 Contract on the date fixed for completion, 3 December 2014.

3. So [NAME_1] sought specific performance of the 2014 Contract against [NAME_3] as first defendant in proceedings commenced on 23 February 2015 (2015/56505), ("the specific performance proceedings"). The second to fourth defendants in the specific performance proceedings were various encumbrances of the [NAME_16]. One of these, [NAME_14], was associated with [NAME_3], and played a role in this litigation that is explained below in Pembroke J's April 2017 judgment in the proceedings.

4. At about the same time as [NAME_1] commenced the specific performance proceedings, they also sought to protect their equitable interests in the [NAME_16] as purchasers under the 2014 Contract by lodging a caveat over the [NAME_16] ("the February 2015 caveat").

5. Between June and August 2015, [NAME_3] took steps to remove the February 2015 caveat without prior notice to [NAME_1]. Then, and still without notice to [NAME_1], [NAME_3] and his brother [NAME_3] arranged the transfer of the [NAME_16] for no consideration from [NAME_3] to [COMPANY_2] ("[NAME_2]"), through a mechanism further explained in Pembroke J's April 2017 judgment. [NAME_3] is, and was and at all material times, the sole director of [NAME_2]. 6. [NAME_1] found out in October 2015 about the transfer of the [NAME_16] to [NAME_2] only after it had occurred. Upon discovering that the February 2015 caveat had been removed, [NAME_1] lodged a new caveat over the Property ("the October 2015 caveat").

7. The October 2015 caveat again asserted and sought to protect the [NAME_1]'s equitable interest in the [NAME_16] as purchasers, as had the February 2015 caveat. 8. [NAME_2] soon sought to remove the October 2015 caveat. [NAME_2] served a lapsing notice under Real Property Act 1900, s 74J to trigger its lapsing. In response, [NAME_1] commenced a second set of proceedings on 5 November 2015 (2015/325044) this time against [NAME_2], as first defendant, seeking to extend the October 2015 caveat and restrain [NAME_2] from dealing with the Property ("the [NAME_2] proceedings"). [NAME_3] was joined as third defendant to the [NAME_2] proceedings. Darke J extended the October 2015 caveat on 11 November 2015, until further order.

9. But [NAME_3] was not the only person interested in the [NAME_16] before its sale to [NAME_1]. [NAME_3] was going through divorce proceedings from his wife, [NAME_17]. In June 201, [NAME_17] had commenced proceedings in the Federal Circuit Court of Australia, seeking relief under the Family Law Act, s 79 which included a claim on her part to an interest in the [NAME_16] ("the family law proceedings"). In the family law proceedings, [NAME_17] was seeking a division of marital assets of the parties to the marriage to effect a distribution of assets as to 70 per cent to her and 30 per cent to her husband. 10. [NAME_1] took the prudent course of joining [NAME_17] as a second defendant in the [NAME_2] proceedings, so that her interests in the Property would be bound by any relief granted in the [NAME_2] proceedings: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131]. [NAME_1] did not seek specific relief against [NAME_17].

11. It was logical for [NAME_1]'s specific performance proceedings against [NAME_3] to be merged with their claims against [NAME_2] and the other parties to the [NAME_2] proceedings. This merger was brought about on 15 March 2016 when, with the Court's leave, [NAME_1] filed a comprehensive Statement of Claim in the [NAME_2] proceedings to consolidate their claims in both proceedings.

12. The result of these procedural steps is that the [NAME_2] proceedings (2015/325044) still remain the active proceedings incorporating all the [NAME_1]'s claims. The specific performance proceedings are now largely concerned with the residual claim for the costs of these proceedings that [NAME_1] make against [NAME_3] before they became aware that he had sold the [NAME_16] to [NAME_2].

13. Darke J case managed the proceedings throughout 2016 in the Real Property List. In mid-2016, [NAME_17] sought by motion to transfer both proceedings to the Federal Circuit Court of Australia under the Jurisdiction of Courts (Cross-vesting) Act 1987, s 5(1). On 8 September 2016, Darke J declined to transfer the proceedings on the grounds that the proceedings were ready to receive a hearing date in the Supreme Court of New South Wales, the interests of a number of parties unrelated to the marriage were involved, the transfer would have involved some wastage in legal costs and there would be no prejudice to [NAME_17] if no transfer order were to be made.

14. The proceedings were listed for hearing before Pembroke J, commencing 10 April 2017. [NAME_3] made a failed application for adjournment, Pembroke J heard the matter between 11 and 19 April 2017 and gave judgment on 26 April 2017 ("the April judgment").

15. Pembroke J made serious credit findings against the defendants to the [NAME_2] proceedings and drew the following legal conclusions and formulated the following relief. His Honour found that [NAME_1] had an equitable interest in the [NAME_16] under the 2014 Contract. Their interest was not defeasible by the registration of transfer by [NAME_2] which transfer was fraudulent within the meaning of Real Property Act, ss 42 and 43 (the April 2017 judgment at [57]). His Honour found that the object of the transfer was to cheat the plaintiffs of their existing rights and that [NAME_14]'s claim seeking possession of the [NAME_16] from [NAME_3] was a "dishonest artifice" (the April 2017 judgment at [57]).

16. His Honour concluded that the plaintiffs, [NAME_1], were entitled to specific performance, equitable damages and compensation. But his Honour was critical of the utility of [NAME_17]'s involvement in the proceedings (the April 2017 judgment at [59] – [60]).

17. On 10 May 2017, Pembroke J held a supplementary hearing as to the form of final orders. On 15 May 2017, his Honour gave a supplementary judgment and issued final orders ("the May judgment"). The effect of his Honour's May 2017 orders was the following.

18. His Honour declared that the transfer from [NAME_3] to [NAME_2] was fraudulent and ordered that the [NAME_16] revest in [NAME_3]. His Honour gave effect to this by cancelling the existing folio and creating a new folio recording [NAME_3] as the registered proprietor (the May 2017 judgment at [3] – [4]).

19. His Honour decreed specific performance of the 2014 Contract and authorised the Registrar in Equity to execute all documents and take all steps required to ensure performance of the 2014 Contract (the May 2017 judgment at [5]).

20. Pembroke J's orders were finally executed only on 2 May 2018, after the complex course of these proceedings described in the Court's several judgments this year. These procedural complexities included [NAME_3] himself commencing separate proceedings to try and prevent the settlement, the 2 May proceedings, which proceedings were dealt with in my sixth judgment.

The Plaintiffs' Application for Judgment for Possession 1. The contract for sale of the [NAME_16] was settled on 2 May 2018. Consequent upon that, on 23 May 2018, the plaintiffs, [NAME_1], became the registered proprietors of the [NAME_16]. On 15 May 2018, the plaintiffs filed and served a motion seeking orders against [NAME_3] pursuant to Civil Procedure Act ss 20, 90 and 92 for judgment for possession of the [NAME_16]. The motion was returnable on 28 May 2018.

2. The Motion for Possession was returned before the Court on 28 May 2018. [ADDRESS] listed argument on the motion for 9.30am on Tuesday, 12 June 2018. As a result of a number of procedural delays, which should be attributed to the Sebies, the motion was not fully argued on 12 June, but the hearing resumed on 14 June 2018 and the matter was completed. [ADDRESS] gives a short account of the events leading up to the hearing to show that [NAME_3] was afforded procedural fairness.

3. On 28 May 2018, [NAME_3] was directed to serve his evidence upon [NAME_1] and the Registrar General (who was a party to a different aspect of the motion) by Monday, 4 June 2018. [NAME_18] of counsel, instructed by [NAME_15], appeared for [NAME_3] and other parties on 28 May. [NAME_3] was in the court room on 28 May and was well aware of the orders made that day.

4. Despite the Court's directions, [NAME_3] did not serve any evidence or submissions to oppose the order for possession. But at 1.35am on 12 June, [NAME_3] sent an email to my Associate, which attached by way of purported service his affidavit of 6 June 2018. This affidavit had not been previously served either in draft or unsworn form. As the history of these proceedings shows, this was a reasonably typical event: [NAME_1] and the Court were presented with late evidence from [NAME_3] which had the effect of disrupting the orderly conduct of these proceedings.

5. The matter was called at 9.30am on 12 June 2018. [NAME_3] appeared in person on that occasion. 6. [NAME_3] could give no satisfactory explanation why his 6 June affidavit was only served in the early hours of 12 June. The late service of [NAME_3]'s affidavit of 6 June put [NAME_1] at a substantial forensic disadvantage. An issue in contest on the possession application was whether [NAME_1] had indeed served required notices of the Motion for Possession on the occupiers of the [NAME_16]. The positive case that attempted to prove that he had not done so only emerged through the 6 June 2018 affidavit on the morning of the trial. But despite that, the Court allowed the affidavit to be read and encouraged the parties to continue with the contest.

7. One of the matters in contest was whether, as indicated, the notices to occupier had been served. This was a factual dispute. [ADDRESS] invited the parties to declare whether they wished to cross-examine one another on that question. Both did.

8. But [NAME_3] then said that he felt disadvantaged and could not cross-examine without a legal representative. He applied for an adjournment to get counsel. [NAME_3] is an intelligent man. He well understands the Court's obligation to afford procedural fairness. He can take advantage of that requirement for tactical reasons. 9. [ADDRESS] granted [NAME_3] an adjournment. But in light of the late service of his affidavit evidence and the ample time available between 28 May and 12 June, the Court was only prepared to grant him a little over a further 48 hours to find counsel. The matter was then listed to resume at 2pm on 14 June. 10. [NAME_3] attended the resumed hearing by telephone on 14 June 2018, despite the fact that [NAME_18] had stated to the Court on behalf of [NAME_3] that [NAME_3] did not oppose the judgment for possession. But [NAME_18] was no longer representing any members of the [NAME_3] family on 14 June. [NAME_3] represented himself on 14 June, advancing further late evidence, including a statutory declaration of an occupant of the house, a [NAME_19]. But the Court permitted the late evidence to be adduced notwithstanding the difficulties [NAME_1] faced in responding to it. [ADDRESS] accommodated the problem to a degree by giving directions for the service of written submissions after 14 June.

The Contest on the Application for Judgment for Possession 1. As registered proprietors of the [NAME_16], prima facie [NAME_1] are entitled to possession. But [NAME_3], the previous registered proprietor, continues in possession of the property, together with other members of his family and, he claims, a number of other occupiers, under financial arrangements with the [NAME_3] family. 2. [NAME_3] fields two issues to oppose the plaintiffs' application for judgment for possession. He contends: (a) that the plaintiffs have not complied with UCPR, r 6.8, which [NAME_3] says is a pre-condition to entry of judgment for possession in the plaintiffs' favour; and (b) [NAME_20] and two other persons who are not members of the [NAME_3] family are tenants in the [NAME_16] who have an interest in the property which, by the operation of Real Property Act 1900, s 42(1)(d), defeats the plaintiffs' entitlement to an order for possession as against [NAME_3].

3. The plaintiffs dispute both these contentions. In overview, the plaintiffs submit: they have complied with UCPR, r 6.8; compliance with the rule is not a precondition for the issue of a writ of possession; there are other reasons why the Court should not refuse judgment for possession; and Real Property Act, s 42(1)(d) as it applies to the persons in occupation is not impediment to the entry of judgment for possession now.

4. The plaintiffs' arguments are the more persuasive for the reasons which follow.

The Argument from UCPR, r 6.8 1. The statutory framework for [NAME_3]'s argument that [NAME_1] have not complied with UCPR, r 6.8 and are now not entitled to judgment for possession requires reference to UCPR rr 6.8 and 36.3, provisions dealing with the requirements for various stages of obtaining judgment for possession. The first of these, UCPR r 6.8 provides as follows: "6.8 Originating process for recovery of land to be served on occupier (1) If, when proceedings for possession of land are commenced, a person (the occupier) not joined as a defendant is in occupation of the whole or any part of the land, the plaintiff: [redacted] (b) must serve the originating process on the occupier together with a notice to the effect that: (i) the occupier may apply to the court for an order that the occupier be added as a defendant, and (ii) if the occupier does not so apply within 10 days after service, the occupier may be evicted under a judgment entered in the occupier's absence. (2) For the purposes of subrule (1), documents may be served on the occupier personally or by leaving the documents on the land concerned addressed to the occupier by name or addressed simply "to the occupier". (3) If originating process is amended by the addition of a claim for possession of land, the time at which proceedings for possession of that land are commenced is taken, for the purposes of subrule (1), to be the time at which the amendment is made."

1. UCPR, r 36.8 provides as follows: "36.8 Possession of land Unless the court orders otherwise, judgment for possession of land may not be given or entered against a defendant in his or her absence unless the plaintiff files an affidavit: (a) stating that, when the originating process was filed or (if the claim for possession arises from an amendment to the originating process) when the amendment was made: (i) specified persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, or (ii) no persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, and (b) stating that, as to each person specified in accordance with paragraph (a) (i) (other than a person whose occupation the plaintiff does not seek to disturb): (i) the originating process has been duly served on the person, or (ii) the person has, since the time referred to in paragraph (a), ceased to be in occupation of any part of the land, and (c) in relation to a claim for possession by reason of default in the payment of money, stating particulars of the default."

1. The contested facts related to whether [NAME_1] had served notices at the [NAME_16] in conformity with UCPR r 6.8. [NAME_1]'s evidence was that, on 15 May 2018, he served the Motion for Possession on [NAME_20] ([NAME_3]'s mother) and any other occupiers of the [NAME_16]. [NAME_1] says, and the Court accepts, that on the evening of 15 May 2018, he placed an envelope, which contained the letter to [NAME_20] and enclosing the notice of motion, in the letter box at the [NAME_16].

2. The material [NAME_1] left at the property also included a letter dated 15 May 2018 from him to any other occupiers of the [NAME_16]. On the evening of 15 May 2018, I accept he placed the envelope, which contained the letters and enclosing the notice of motion, in the letter box at the [NAME_16], one in an envelope addressed to "[NAME_21]" and the other in an envelope addressed to "[NAME_20]". The two letters satisfy the content requirements of UCPR r 6.8.

3. But [NAME_1] had provided earlier notice, that an application for judgment for possession would be made, even before he and [NAME_1] became registered proprietors. In a letter dated 6 April 2018 he notified occupiers of the [NAME_16] that he and [NAME_1] were in the process of obtaining possession of the Property. On the evening of 6 April 2018 he placed an envelope (which contained the letter) in the letter box at the Property. The letter added: "If any person occupies the Property and wishes to oppose the Court making an order in the plaintiffs' favour for possession of the Property, that person should promptly apply to the Court for an order that they be added as a defendant in the proceeding (see rule 6.8 of the Uniform Civil Procedure Rules), and serve a copy of the application on the plaintiffs. If that person does not so apply within 10 days after service of this letter (on 6 April 2018), that person may be evicted from the Property under a judgment made by the Court and entered in their absence: see rule 6.8 of the Uniform Civil Procedure Rules." 1. [ADDRESS] accepts that neither [NAME_1] nor his solicitor, [NAME_11], was contacted by any occupant of the [NAME_16] in response to this letter. 2. [NAME_3] cross-examined [NAME_1]. But his challenges to [NAME_1]'s evidence all failed. [ADDRESS] accepts [NAME_1]'s account of these events. 3. [NAME_3] gave a quite different account of events, so as to found the inference for which he contended, that no one on behalf of the plaintiff had left notices at the [NAME_16]. He said that people he claimed were tenants of the [NAME_16] were not aware of any applications for possession, nor had they been served with any, requests, or letters from [NAME_1] about a possession application. He stated that the occupants of the property were not aware that the matter was listed in the Supreme Court for hearing on 12 June 2018. 4. [NAME_3] denies [NAME_1] or anyone else delivered any letter or notice of motion into the letter box of the [NAME_16] on 15 May 2018 or 6 April 2018. [NAME_3] says he checked the letter box every day over this period and confirmed no letters nor any documents of the kind [NAME_1] described had been received. I have spoken to the other occupants and tenants at the house. [NAME_3] says that they had confirmed to him that they had received no hand deliveries (or any other receipt) of any documents such as those [NAME_1] described on 15 May 2018 or 6 April 2018, or on any other day in May 2018. 5. [NAME_3] was cross-examined on his affidavit. [ADDRESS] does not accept his evidence about these events. [NAME_3] also relied on an affidavit of his father [NAME_3] and a statutory declaration of [NAME_19].

6. In contrast to [NAME_1]'s stable account of events concerning the delivery of notices to the [NAME_16], [NAME_3]'s account was inconsistent and improbable at times. He faced the challenge of rebutting direct evidence that the documents in question had been delivered by [NAME_1] to the [NAME_16] at particular times. He had to explain how it was that he could have been observing at all times sufficient to exclude the possibility that [NAME_1] could have delivered the notices at the times that he did in the way that he did. [NAME_3] advanced a number of methods to attempt this. But in my view, they were all unsuccessful. 7. [NAME_3] said he checked the letterbox every day. His evidence gave the impression that he also spoke to the other occupants and tenants in the house every day about what had been delivered to them. But to resist the proposition put in cross-examination that one of the tenants might have emptied the letterbox between the time [NAME_1] delivered the letters and when [NAME_3] next checked it, [NAME_3] responded by saying that the letterbox was always locked and that the only key to the letterbox was on his key ring. In my view, this account was an invention designed to overcome a problem in [NAME_3]'s case. It did not appear in his affidavit. It is highly improbable as a matter of objective fact that all the occupants of the house would have to come to him to get access to their letterbox. 8. [NAME_3] said that the letterbox was under video surveillance and that an examination of the video showed that at no stage [NAME_1] deposited the noticed in the letterbox as he had deposed. [NAME_3] insisted that the letterboxes were on full view to video cameras. But notwithstanding that [NAME_3]'s claims footage of a view of the letterboxes on the relevant dates, was not exhibited to the affidavit. 9. [NAME_3] gave inconsistent evidence about an alleged tenant [NAME_22]. She is said to be a tenant at the [NAME_16] because her name appears on one of the three tenancy agreements which [NAME_3] advanced. [NAME_3] claims the tenants are not aware of any application for the judgment for possession.

10. But under cross-examination, a rather different picture emerged. [NAME_3] revealed that he had not spoken with [NAME_22] since April 2018 when she had gone on travels around Australia, leaving only her belongings at the [NAME_16]. This account opens up the question whether she is a current tenant at all. 11. [NAME_3] put contradictory submissions on behalf of his mother and the tenants. On the one hand, he claimed they did not know about these proceedings. But on the other hand, he advanced a document on 14 June 2018 entitled "Submissions on Behalf of [NAME_20] a Tenant". From the style and content of this document it might be inferred that they were in fact aware of the hearing. Indeed, [NAME_3] and [NAME_3] advanced submissions to the Court that assumed they were taking instructions from and speaking on behalf of [NAME_20].

12. No evidence was adduced from the tenants. Apart from the problem that [NAME_3] was seeking to advance a case on behalf of the tenants, who had not sought to do so themselves, it would have been a relatively straight forward exercise for tenants in occupation of the property to be asked by [NAME_3] to file affidavits to say that they had not been served with the notices in question. Instead, the statutory declaration of the alleged tenant, [NAME_19], that [NAME_3] advanced, did not address the question of whether she was aware of the Supreme Court proceedings at all. Similarly, [NAME_3] served an affidavit on 5 June 2018 which said nothing about the lack of notice to [NAME_20]. 13. [NAME_3]'s evidence on this question was unsatisfactory and the Court preferred [NAME_1]'s account and finds that all the notices were served as [NAME_1] says.

The Pre-Conditions for Judgment for Possession 1. [NAME_3]'s argument that [NAME_1] have not complied with UCPR, r 6.8 has overstated the provision. The key relevant provision in my view is UCPR, r 36.8, which provides that the Court may not enter judgment for possession "against a defendant in his or her absence" unless the plaintiff files an affidavit specifying certain things. UCPR, r 36.8 in substance requires the plaintiff seeking judgment to depose that the originating process has been served on any person who was in occupation of any part of the land when the claim for possession arose.

2. This is not a case where judgment for possession of land is given or entered against [NAME_3] "in his absence". He was present throughout all the argument relating to the contest about the judgment for possession. He filed affidavits on the contest for the judgment for possession. He put submissions against the entry of judgment for possession, including about the effect of UCPR, rr 6.8 and 36.8. The purpose of UCPR, r 36.8 is to deal with applications for default judgment for possession in a way that gives some protection to occupiers of the land who may be indirectly prejudiced by the failure of the defendant being evicted from warning sub-tenants, licensees or other occupiers of the default proceedings.

3. But such considerations do not apply here. The case was fully defended. [NAME_1] have satisfied the Court that they have served the occupiers. Were it to be found that UCPR, r 36.8 did apply, the Court would "order otherwise" and enter judgment for possession because of the efforts [NAME_1] have made to notify the occupiers.

4. Two footnotes to this conclusion are necessary at this point. First, "proceedings for possession of land" were relevantly "commenced" in this case when the plaintiffs filed their 15 May 2018 Motion for Possession. [ADDRESS] has found that that originating process has been served on the occupiers, together with the notices required by UCPR, r 6.8. [ADDRESS] is accordingly also satisfied that there is no obstacle to the entry of judgment for possession of the land because there has been compliance with UCPR, r 36.8(b)(i) in this case.

5. There is a second matter. These reasons were delivered a few hours after the orders were made. Due to the exigencies of a busy Duty List, reasons could not be delivered at the same time as the orders were made. [NAME_3] did not attend the making of the orders. But that does not mean within UCPR, r 36.8 that judgment was entered in his absence. He was fully aware of the proceedings, and was notified of the judgment delivery date and time. Moreover, in the related application for security for costs, [NAME_3] sought to file written submissions before 2pm today, indicating his awareness of the date and time for judgment. Incidentally, the Court declined to have regard to those submissions as the only legal representative of [NAME_14], [NAME_15], was not the author. [ADDRESS] will not hear submissions from the client as well as from the client's lawyer. [NAME_15] is still the solicitor on the record.

6. But the Court should also enter judgment for possession for other reasons. [NAME_18] of counsel on 12 June 2018 indicated that [NAME_3] did not oppose judgment for possession. [NAME_3]'s affidavit indicates that [NAME_20] has sufficient notice of the claim on the Motion for Possession to enable her to appear and oppose it if she wished. Apart from some identified occupiers under contract, other persons in the [NAME_16] appear to be family members only.

The Argument from Real Property Act, s 42(1)(d)

1. When the Motion for Possession hearing resumed on 14 June 2018, [NAME_3] put a written submission to the Court entitled, "Submissions on Behalf of [NAME_20] and the Tenants". [NAME_10] on behalf of [NAME_1] correctly took the point that [NAME_3] had no authority to appear on behalf of any tenant or occupier of the property. To allow him to do so would be to accommodate a potential spoiling action by him on behalf of tenants or occupiers, who in response to notices served upon them had not themselves taken the steps to move the Court for orders. [NAME_3] cannot act for any person in occupation. He has no proper authority to come before the Court and speak on their behalf.

2. But despite that, the Court will briefly deal with the submissions that were put. The submissions are not persuasive for the reasons which follow. 3. [NAME_3] argued in the written submission that [NAME_20] and the other tenants in the property could resist an order for possession because they "had better title than [NAME_1]" to occupy the [NAME_16]. [NAME_3] referred to a two year residential tenancy agreement between himself and [NAME_20] commencing on 15 January 2018. Moreover, the evidence indicates that there were two rental agreements made between [COMPANY_2], a former registered proprietor of the property and two non-family member occupiers. 4. [NAME_3]'s contention that these various tenancy agreements and Real Property Act, s 42(1)(d) are an obstacle to the entry of judgment is misconceived. The statutory provision is set out below.

5. Real Property Act, s 42 provides as follows: "42 Estate of registered proprietor paramount (1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except: (a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land, (a1) in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act, (b) in the case of the omission or misdescription of any profit à prendre created in or existing upon any land, (c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value, and (d) a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected: Provided that: (i) The term for which the tenancy was created does not exceed three years, and (ii) in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years. (iii) (Repealed) (2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio. (3) This section prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section."

1. If the alleged tenancy agreements are valid and the tenants satisfy the conditions in Real Property Act, s 42(1)(d) the tenants may be able to enforce some rights against [NAME_1]. The exception to indefeasibility in Real Property Act, s 42(1)(d) is to save short-term tenants the expense of registration by giving them security of tenure against later registered proprietors. But that does not stop the plaintiffs having judgment for possession against [NAME_3]. All the provision does is to give tenants some temporary rights against [NAME_1] should they choose to exercise them. So far, despite notice having been given to them, they have not sought to do so.

2. Moreover, the other alleged tenancy agreements involving the two non-family members were made with [COMPANY_2], not [NAME_3]. It is doubtful that as against [NAME_3] these persons are more than mere licensees and may not be able to use Real Property Act, s 42(1)(d) against [NAME_1] in any event.

3. Finally, notice of the unregistered tenancy is a pre-requisite to affording protection to a tenant under Real Property Act, s 42(1)(d), a registered proprietor who takes without notice of the tenancy holds free of it. The first notice that [NAME_1] had of the alleged tenancy agreements was when they were served with [NAME_3]'s affidavit on 12 June 2018. They cannot satisfy the notice requirement.

Costs 1. The plaintiffs have been wholly successful on this contested application for judgment for possession. It has been hard fought and many arguments have been raised against the entry of judgment. Costs should follow the event. [ADDRESS] will order that [NAME_3] pay [NAME_1]' costs of, and incidental to, the Motion for Possession.

Next Steps – [ADDRESS] of Appeal and A Writ for Possession 1. [NAME_1] have foreshadowed that they will soon seek a writ for possession. But [NAME_3] and [COMPANY_2] have lodged an appeal to the Court of Appeal against Pembroke J's orders in May 2017. It is quite likely that if the Court were now to issue a writ for possession a stay would be applied for until the Court of Appeal proceedings were concluded. So the Court will decline to proceed with the application for a writ for possession at this stage. That matter will be stood over to a date to be fixed in October of this year.

2. But the entry for judgment for possession represents a material date for appeals for the running of time to appeal from a number of my decisions, if the time has not already commenced to run. I have decided that I will ask that this judgment be referred to the Registrar of the Court of Appeal who is managing the appeal against Pembroke J's judgments and orders of April and May 2017. [NAME_3] and [NAME_3] have, at various times, indicated that if the Court makes orders against them on the various applications before me, that they will appeal. So it is likely, therefore, that this judgment, and the many that preceded it, will soon find their way to the Court of Appeal.

3. The [NAME_3] have a tendency to generate multiple applications at first instance. This has been difficult to manage. I have endeavoured to remain the judge dealing with those applications because of the difficulties in reacquainting other judicial officers with the complexities of these proceedings. The avoidance of multiple applications and hearings in this matter is highly desirable for the efficient administration of justice.

4. Whilst it is obviously a matter for the Court of Appeal rather than for me as the trial judge, it would greatly assist the future trial management of these proceedings if it were possible for any appeals from this judgment to be dealt with at the same time as any appeals from Pembroke J's judgments. Whilst it is appreciated that no appeal has yet been brought from this judgment, this comment is warranted because the inevitability of an appeal has been foreshadowed.

5. I will direct my Associate to forward a copy of these reasons, with particular reference to this paragraph, to be drawn to the attention of Registrar of the Court of Appeal.

The Cross-Defendants' Application for Security for Costs 1. After the Court's sixth judgment, [NAME_14] was permitted to file a cross-claim seeking to assert an equitable charge over the [NAME_16] pursuant to various documents that it claims were executed between itself and [NAME_3] to secure [NAME_14]'s alleged funding of the purchase of the [NAME_16]. An amended cross-claim has now been filed to join [NAME_17], because she is a claimant competing with [NAME_14] for the fund in Court which has resulted from the sale of the [NAME_16]. [NAME_14] now seeks to propound this amended cross-claim.

2. The plaintiffs/cross-defendants (who will often be referred to in this section of these reasons just as [NAME_1]) foreshadowed before the filing of [NAME_14]'s cross-claim and amended cross-claim that they would make an application for security for their costs against [NAME_14]. [ADDRESS] permitted [NAME_1] to amend their existing Notice of Motion of 15 May 2018, and on 10 July 2018 they filed their Amended Notice of Motion pursuant to the UCPR, r 42.21 seeking orders that [NAME_14] give security in respect of [NAME_1]' costs of the amended cross-claim in an amount to be determined by the Court ("the Security for Costs Motion"). An opportunity for written submissions was given to which the parties spoke on Wednesday, 11 July 2018. This application has been brought on quickly. On 1 July 2018 [NAME_14] first filed its cross-claim joining [NAME_1] as cross-defendants. But [NAME_14] is not a defendant. [ADDRESS] gave leave for the cross-claim to be filed notwithstanding that [NAME_14] is not a defendant in the [NAME_2] proceedings. [NAME_14] is in every sense of the word a corporate plaintiff pursuing a claim against [NAME_1] on this cross-claim. 3. [NAME_1] security for costs evidence is in short compass. [NAME_1] swore an affidavit on 10 July 2018 together with a supplementary affidavit of 11 July 2018. [NAME_14] did not serve any evidence on the application.

4. On 2 July 2018, the Court had directed [NAME_14] to file and serve evidence in response to the security for costs application by 5pm on 10 July 2018. Throughout preparation for and hearing of the Security for Costs Motion, [NAME_15] represented [NAME_14]. There have been difficulties with [NAME_14]'s representation previously.

5. But [NAME_14] filed no evidence and gave no substantive response to the orders to produce. On 2 July 2018, the Court ordered [NAME_14] to produce by 5pm on Monday 9 July 2018 "all financial information requested by the plaintiffs of [NAME_15] by email dated 7 June 2018". [NAME_1] request of 7 June 2018 was for financial statements showing [NAME_14]'s financial position in 2015, 2016 and 2017, as the most recent evidence available before the hearing as to [NAME_14]'s financial position was as old as 2014. 6. [NAME_15], [NAME_14] did ultimately read some evidence in response. Most of that evidence read is irrelevant. But [NAME_15] and [NAME_10] on behalf of [NAME_1] referred to select parts of it in their submissions. [NAME_14]'s affidavit evidence on the Security for Costs Motion was the affidavits of [NAME_3] of 10 July 2018; [NAME_3] 16 February 2018; [NAME_3] 21 February 2018 and of [NAME_3] on 27 February 2018.

7. This case does not call for extensive discussion of the principles in relation to the application for security for costs under UCPR, r 42.21 and the other sources of jurisdiction for such applications. There are many sources of modern judicial authority summarising the principles. I have most recently done so in [COMPANY_6] Family Trust v [COMPANY_7]; [COMPANY_7] v [COMPANY_6] Family Trust [2017] NSWSC 157. Those principles are applied here. [NAME_1]' submissions are persuasive. There is reason to believe that [NAME_14] will be unable to pay [NAME_1]' costs should [NAME_14] be unsuccessful on the cross-claim. [ADDRESS] reaches that conclusion for the following reasons. 8. [NAME_14]'s paid-up share capital is only $1,000. Despite an email requesting information on 7 June 2018, and the Court's orders on 2 July 2018, [NAME_14] has not produced financial statements or tax returns for the 2016 and 2017 financial years. No explanation for the non-production is provided. [NAME_14] has a substantial existing liability to [NAME_1] for costs.

9. Despite the Court's prior warnings to [NAME_14] of the importance of filing up to date financial evidence, the additional affidavit evidence filed and read at the hearing did not throw any light upon [NAME_14]'s financial position after 2014. And even the evidence which was adduced raises more questions that it answers. [NAME_14]'s financial statements for FY2014 show that it had cash assets of $722,737. A bank statement for [NAME_14] shows that it had cash at bank on 10 July 2015 of $31,919.48, and on 14 July 2015, $452,619.48. Then, by 17 July 2015, after various transfers out of its account, it only had cash to the credit of that account of $97,759.79. That material is three years old and demonstrates substantial liquid assets. But being liquid, those assets are easily transferrable. And no account in the last three years has given any indication about [NAME_14]'s holdings of such assets. 10. [ADDRESS] may take into account a wide range of relevant considerations on such an application: UCPR, r 42.21(1)(a). Some of these factors assume more importance on the present application than others.

11. First, ordinarily courts ignore or place little weight upon the consideration of the prospects of success of the plaintiff's claim. At this stage of such an application, the final claim is undetermined and any assessment of its merits must be speculative. But this case is unusual. [NAME_14] seeks to prove through the amended cross-claim that it made a secured loan by agreement between itself and [NAME_3] in September 2005. [NAME_3] who was the sole director of [NAME_14] at the time of this alleged transaction and a party to the alleged secured loan agreement conducted his defence against [NAME_1] in the trial before Pembroke J in April 2017 on the basis that [NAME_14] had made this agreement with him. But after a four day trial in which [NAME_3] called many witnesses, including an IT expert, Pembroke J found that the alleged secured loan agreement that [NAME_3] put forward was a fabrication. [ADDRESS] considers that [NAME_14]'s prospects of success on the amended cross-claim are low. And I have already considered that some of the documents upon which [NAME_14] relies to propound this cross-claim are inherently suspicious. On the other hand, even without this consideration being put into the balance, in my view, an order for security would be made because of the many other factors that support it being made.

12. Second, no offer has been made to meet [NAME_14]'s potential liability for costs on the cross-claim, either by [NAME_3] or [NAME_3] offering personal guarantee to pay those costs. [NAME_3] now holds himself out as the sole active director of [NAME_14]. He would benefit from [NAME_14]'s claim were it to be successful. Other evidence before the Court shows that [NAME_3] owns residential real estate in New South Wales other than the [NAME_16]. So he presumably has some capacity to provide a guarantee of substance but he has not done so.

13. Third, [NAME_1] are not in any way responsible for [NAME_14]'s current financial position. [NAME_14] elected not to be involved in the proceedings before Pembroke J to attempt to secure its interest in the [NAME_16]. Its current circumstances are entirely a product of its own forensic approach. [NAME_15] did not propound a case on behalf of [NAME_14], rightly in my view, that [NAME_1] had brought [NAME_14] to this pass.

14. Fourth, it cannot be concluded that an order for security for costs would stifle the proceedings. For such a consideration to be given weight, [NAME_14] would ordinarily have to show that those persons who might be expected to be a source of funds for [NAME_14] were unable to do so, such that the order for security would itself preclude the possibility of the case being advanced. [NAME_14] has not called evidence to justify such a conclusion.

15. Finally, [NAME_14] also argued that it could offer the monies now in Court after the sale of the [NAME_16] as security for costs. But this argument is not persuasive. Whether or not [NAME_14] is entitled to these funds is at best speculative. And both [NAME_1] and [NAME_17] have strong competing claims to substantial parts of the funds in Court. 16. [NAME_1] sought to argue that were the amended cross-claim to proceed they would be prejudiced because [NAME_14] declined the opportunity afforded to it to participate in the proceedings before Pembroke J. I do not think this can be considered on the security for costs application. It may provide a defence to [NAME_1] as cross-defendants on the basis of Anshun estoppel. But in my view, it is not a relevant consideration in deciding whether security for costs should be ordered.

17.

For these reasons, the Court will order security for the cross-defendants' costs. The amount of security to be ordered must now be determined. This was not the subject of much contest. 18. [NAME_1], the first plaintiff, is a solicitor. Through his experience as a legal practitioner he has been able to estimate, as he does by his affidavit of 10 July 2018, that [NAME_1]' costs in defending the cross-claim brought by [NAME_14] would be at least $210,000. I accept his evidence. 19. [NAME_1] submit that quantification of any security that should be ordered in their favour should not just assume that a costs order on the ordinary basis might be made against [NAME_14] were it to be unsuccessful. [NAME_1] cite a number of situations in which both Pembroke J in May 2017 and I in November 2017 have made indemnity costs orders against [NAME_3]. [NAME_1] also submit that if a Defence to the cross-claim succeeds on the basis of an Anshun estoppel because [NAME_14] did not take the opportunity afforded to it to litigate this matter before Pembroke J, then there is a reasonable prospect of the Court concluding that [NAME_14]'s amended cross-claim is an abuse of process and in the ordinary course an indemnity costs order will therefore be made against it. 20. [ADDRESS] can indeed infer in this case that there is some prospect of an indemnity costs order being made. But this is not strongly influential on the Court in its calculation of the appropriate amount of security. [ADDRESS] is not prepared to assess the security on the basis that [NAME_1] are likely to get an indemnity costs order. But the Court should ensure that [NAME_1]' ordinary costs are adequately covered by the order. 21. [ADDRESS] is also in the position to assess security for costs in this case on the basis of the Court's own experience of the way the proceedings have been conducted in the last nine months. A feature of these proceedings with which [NAME_3] and [NAME_3] are associated is that lawyers are changed, and adjournments are sought, documents are served at the last minute. As a result excessive amounts of procedural time is spent attempting to control the [NAME_3]'s conduct of proceedings. [ADDRESS] therefore accepts [NAME_1]'s evidence that the hearing of [NAME_14]'s cross-claim will run for at least the same number of days as the trial before Pembroke J in April 2017. Indeed, I would not be surprised if the trial ran a little longer.

22. In my view, costs of [NAME_14] defending the cross-claim are likely to be at least $210,000. Costs on the ordinary basis could be in the order of up to 85% of that on about $175,000. In my view, particularly because of the unpredictable nature of this litigation and the prospects of interlocutory hearings generated by the conduct of the [NAME_3], it would be appropriate for a substantial security for costs award to be made at the beginning of the proceedings and the Court will order about 60% of those costs, about $100,000 to cover the period up to the commencement of the trial.

23. But the Court will grant liberty to [NAME_1] should their pre-trial costs substantially exceed their current estimates to return to the Court to seek more pre-trial security at or before the same time as they seek security for costs in relation to the trial itself. 24. [NAME_1] have been successful on their application for security for costs. Costs of this application should follow the event in the ordinary way: [NAME_5] v [NAME_5] (No. 2) [2016] NSWSC 269 at [22] per Campbell J. [ADDRESS] will order [NAME_14] to pay [NAME_1]' costs of and incidental to their application for security for costs.

Conclusion and Orders 1.

Accordingly, the Court makes the following orders and directions:

1. Judgment for the plaintiffs for possession of the [NAME_16] [folio identifier not published].

2. Order the defendants to pay the plaintiffs' costs of the contest in relation to the judgment for possession of the [NAME_16].

3. Order that the proceedings on the amended cross-claim brought by [COMPANY_14] ("[NAME_14]") be stayed against the plaintiffs/cross-defendants unless before 4.00pm on 27 July 2018 the cross-claimant, [NAME_14], provides acceptable security for the potential costs liability of [NAME_14] to the plaintiffs/cross-defendants in the amount of $100,000.00, on account of the cross-defendants' costs to be incurred up to the commencement of the hearing of the amended cross-claim.

4. The cross-defendants have liberty to apply for future security to cover the hearing of the amended cross-claim when it is set down for hearing.

5. The cross-defendants have further liberty to apply for greater security for costs, if their legal costs exceed by more than 10% those estimated in the course of this application.

6. Order that the costs of the cross-defendants' motion for security for costs will be the cross-defendants' costs in the cause.

7. Refer a copy of these reasons to the Registrar of the Court of Appeal.

********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 July 2018