Tonks v Cummins [2020] NSWSC 1723 (2 December 2020)

Last Updated: 8 December 2020

Supreme Court New South Wales

Case Name:	Tonks v Cummins
Medium Neutral Citation:	[2020] NSWSC 1723
Hearing Date(s):	30 November; 2 December 2020
Date of Orders:	2 December 2020
Decision Date:	2 December 2020
Jurisdiction:	Equity - Duty List
Before:	Parker J
Decision:	See [27]
Catchwords:	LAND LAW – caveats – removal of caveat – removal by order of court – service of application – Real Property Act 1900 (NSW), ss 74MA, 74N
Legislation Cited:	Bankruptcy Act 1966 (Cth), s 116 Civil Procedure Act 2005 (NSW) Real Property Act 1900 (NSW), pt 7A, ss74 MA, 74N Uniform Civil Procedure Rules 2005 (NSW), r 39.6
Cases Cited:	Diamond Hill International Pty Ltd v Xu (1997), 7 BPR 15,213
Category:	Principal judgment
Parties:	Bradley John Tonks (Plaintiff) Richard James Cummins (Defendant)
Representation:	Solicitor advocate: D Manca (Plaintiff) Solicitors: LAS Lawyers (Plaintiff)
File Number(s):	2020/335316
Publication Restriction:	Nil

JUDGMENT – EX TEMPORE

Revised from transcript; issued 8 December 2020

1. This is an application under the Real Property Act 1900 (NSW), s 74MA, for the removal of a caveat. The caveat has been lodged over a property at Oakhurst in western Sydney.
2. The defendant, Richard James Cummins, was formerly the registered proprietor of the property. He purchased it in 2007. Mr Cummins was made bankrupt by order of the Federal Circuit Court on 5 June 2018. The plaintiff, Bradley John Tonks, was by that order appointed as the trustee of Mr Cummins’ bankrupt estate. On the face of it, therefore, Mr Cummins' interest in the property passed to Mr Tonks as his bankruptcy trustee at that point.
3. When Mr Cummins was made bankrupt he was in occupation of the property. Mr Tonks sought possession of it. He commenced proceedings for possession in December 2018 and obtained judgment in May 2019. The order for possession was then challenged by Mr Cummins which delayed execution of the writ of possession. Eventually the writ was executed and Mr Tonks obtained possession of the property in September 2019.
4. About two weeks later, Mr Cummins filed an application in the Federal Circuit Court seeking "review" of the sequestration order which had been made in June 2018. That application for "review" was treated as an application for annulment of the sequestration order. The Federal Circuit Court refused the application on 12 December.
5. On 30 January 2020, apparently out of time, Mr Cummins filed a notice of appeal to the Federal Court of Australia against the orders made by the Federal Circuit Court on 12 December 2019. Mr Tonks became aware of the filing of the notice of appeal in late February. At that point, he had already begun to prepare the property for sale. He decided to continue along that course despite the filing of a notice of appeal.
6. On the evidence before me, Mr Tonks' decision was clearly justified, as the property had been left in poor condition and required significant work to be put into a state suitable for sale. There was also a lack of ready funds in the administration.
7. On 13 July 2020 Mr Tonks entered into a contract for the sale of the property. The contract price was $550,000.
8. Under the terms of the contract it was due to complete on 24 August but by that date the appeal had not yet been determined and Mr Tonks had not taken steps to register himself as the proprietor of the property. The contract provided that if circumstances prevented Mr Tonks from conveying title to the purchaser, Mr Tonks could extend the date of completion of the contract, but extension was not possible beyond a sunset date of 22 December.
9. On 23 September Mr Cummins lodged the caveat on the property which is the subject of these proceedings. Under “estate or interest claimed” he wrote:

Claiming an "equitable life estate", e.g. “life tenancy”.
Claiming breaches of s116 Bankruptcy Act 1966 and Civil Procedure Act 2005 s106 by Local Sheriff.

10. The interest was claimed by virtue of facts stated as follows:

S116 B Act as 2D has happened it causes 2B to revest the property back to its original owner - Breaches by sheriff of CP Act No. 3, 5 in relation to 2(d) and a breach of No. 1(a), (b), (c) and a breach of REG 39.6 UCPR 2005 NSW by Sheriff.

11. The caveat recorded Mr Cummins as the registered proprietor and specified his address as being in Jugiong Street, Boorowa, which is a township on the south western slopes of New South Wales. Apparently this is where Mr Cummins’ parents live. Mr Cummins' address as caveator was given as the same location, as was the address for services of notices on the caveator.
12. Mr Tonks took steps to have himself registered as the proprietor of the property but this took some time and the transmission was not formally recorded until 26 November, last week. Meanwhile, the appeal by Mr Cummins had been heard on 20 October and judgment reserved. On 27 November, last Friday, the appeal was dismissed.
13. Mr Tonks now seeks an order removing the caveat so that he can complete the sale of the property before the sunset date. Mr Tonks also seeks an order under s 74MA(2)(b) restraining Mr Cummins from lodging any further caveat over the property. The application came before me on an urgent basis because of the proximity of the sunset date.
14. An initial question arose about the proper manner of service of the application. Section 74MA relevantly provides:

Application to Court for withdrawal of caveat
(1) Any person who is or claims to be entitled to an estate or interest in the land described in a caveat lodged under section 74B or 74F may apply to the Supreme Court for an order that the caveat be withdrawn by the caveator or another person who by virtue of section 74M is authorised to withdraw the caveat.
(2) After being satisfied that a copy of the application has been served on the person who would be required to withdraw the caveat if the order sought were made or after having made an order dispensing with service, the Supreme Court may:

(a) order the caveator or another person, who by virtue of section 74M is authorised to withdraw the caveat to which the proceedings relate, to withdraw the caveat within a specified time, and
(b) make such other or further orders as it thinks fit.

15. Section 74MA appears in Part 7A of the Act, which deals with caveats. Section 74N deals with the service of notices on caveators for the purposes of Part 7A. Sub-section (1) relevantly provides:

(1) Where under this Part provision is made for the service on the caveator of a notice relating to a caveat lodged under a provision of this Part, or to any proceedings in respect of such a caveat, the notice is duly served if it is served in one of the following ways:

(a) the notice is served on the caveator personally,
(b) the notice is left at or sent by registered post to:

(i) the address for service of notices specified in the caveat ...,

...
(e) the notice is served in such other manner, whether by advertisement or otherwise, as the Registrar-General directs in writing,
(f) the notice is served in such other manner as the Supreme Court, on application being made to it, directs.

16. Sub-section 74MA(2) in terms permits the Court to make an order dispensing with service of the application to have the caveat removed. But unless the Court makes such an order, the Court is required to be satisfied that the application has been served.
17. In Diamond Hill International Pty Ltd v Xu (1997), 7 BPR 15,213, Young J (as his Honour then was) had to deal with an application for the removal of a caveat in similar circumstances to the present. His Honour was asked initially to remove the caveat ex parte and to dispense with service. His Honour, however, directed that the application be served at the address shown as the address for service in the caveat. That evening the process server attended the address and left the documents there but was told by the inhabitant that the caveator did not live at that address and only used it as a postal address, coming there from time to time to collect his mail.
18. When the matter came back before his Honour on the following day, he made an order under s74MA. His Honour observed that although s 74N refers to the service on the caveator of “a notice relating to a caveat”, this extends to court process seeking the removal of the caveat. His Honour therefore considered that there had been valid service by delivery of the originating process to the caveator's address shown in the caveat and that no question of dispensing with service arose.
19. It was likely that the caveator would not actually have received the court documents at the time his Honour heard the application. But his Honour did not consider this an obstacle to making the order, observing that it was the caveator's responsibility to select an address which would ensure that the document would come to his attention. If the caveator chose to use an address where he or she would not necessarily be present, then any failure to receive the documents was the caveator's own fault.
20. In these proceedings, originally an order was sought dispensing with service or providing for substituted service. When I became aware of Young J's decision, I directed that a similar procedure be followed here, and the summons was then served at the address in Jugiong Street, Boorowa. That happened yesterday. Mr Cummins was not present, but his mother was, and she accepted the court documents on his behalf. I am satisfied that service has been effected in accordance with the Act and, as in the Diamond Hill case, I do not need to consider whether I should make an order dispensing with service or providing for substituted service.
21. Turning to the merits of the caveat, it seems that Mr Cummins wished to raise two points. The first concerns s 116 of the Bankruptcy Act 1966 (Cth). From the reference to “2D”, it seems that Mr Cummins contends that the moneys used to purchase the property were “protected moneys” for the purpose of s 116, being deriving from damages or compensation for a “personal injury or wrong” done to Mr Cummins, or being in some other way exempt from vesting in the trustee under that section (see s 116(2C), definition of “exempt money”, paragraph (b)).
22. On the evidence before me, that contention appears to be unjustified. A search of the property shows that at the time it was acquired, it was almost entirely funded with a mortgage loan from a bank. It would seem likely that the remainder of the moneys was provided under the first buyers' scheme of the Commonwealth Government.
23. Mr Tonks' solicitors have corresponded with Mr Cummins and asked him to provide details of his claim to be entitled to the property and there has been no response. There is no evidence before me to suggest that the caveat has any validity so far as it relies on s 116.
24. The alternative claim, based on the provision of the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW) has even less apparent substance. Rule 39.6 deals with the sale of property by the sheriff, which is not this case.
25. In the circumstances, I will make an order under s 74MA(2)(a) ordering the withdrawal of the caveat. That order will be made requiring the caveat to be withdrawn by 5:00pm today. This will mean that if it is not withdrawn by Mr Cummins, it can be lapsed by service of an office copy of the order tomorrow, in time for completion of the sale which is now scheduled for Friday.
26. Given the history of the matter which involves a pattern of unsuccessful attempts by Mr Cummins to prevent Mr Tonks from dealing with the property as trustee, I will also make an order under subparagraph 2(b) restraining the lodgement of any further caveat as asked.
27. The orders of the Court are:

(1) Order that the defendant withdraw the caveat by 5:00pm on 2 December 2020.

(2) I order that the defendant be restrained from lodging or causing to be lodged any application to record a caveat in respect of land comprised in folio [identifier] and known as [address], Oakhurst NSW 2761.

(3) I order that the defendant pay the plaintiff's costs of the proceedings.

(4) I order that these orders be entered forthwith.

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