Above All Rigging & Site Modifications Pty Ltd v Lang
[2015] WASC 414
•3 NOVEMBER 2015
ABOVE ALL RIGGING & SITE MODIFICATIONS PTY LTD -v- LANG [2015] WASC 414
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 414 | |
| 03/11/2015 | |||
| Case No: | CIV:2701/2015 | 29 OCTOBER 2015 | |
| Coram: | MITCHELL J | 29/10/15 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | ABOVE ALL RIGGING & SITE MODIFICATIONS PTY LTD RUSSELL STUART LANG KERYN DIANNE LANG THE REGISTRAR OF TITLES |
Catchwords: | Real property Application to extend caveat Whether equitable charge arises from provision of guarantee permitting creditor to lodge a caveat Where defendants adduced uncontradicted oral evidence that loan the subject of the guarantee had been repaid |
Legislation: | Transfer of Land Act 1893 (WA), s 138B, s 138C |
Case References: | Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 Avco Financial Services Ltd v White [1977] VR 561 Bashford v Bashford [2008] WASC 138 Bateson v Jones [2013] WASC 8 Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 Bride v The Registrar of Titles [2015] WASC 11 Dominion Lifestyle Tower Apartment Pty Ltd v Global Capital Corporation Pty Ltd [2004] VSC 307; (2004) ANZ Conv R 561 Miluc Pty Ltd and Commissioner of State Revenue [2008] WASAT 68; (2008) 59 SR (WA) 50; (2008) 71 ATR 133 Nudd v Official Trustee in Bankruptcy [2002] NSWSC 399 Southern Wine Corp Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162 Troncone v Aliperti (1994) 6 BPR 13,291; (1994) ANZ Conv R 411 Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
RUSSELL STUART LANG
KERYN DIANNE LANG
First Defendants
THE REGISTRAR OF TITLES
Second Defendant
Catchwords:
Real property - Application to extend caveat - Whether equitable charge arises from provision of guarantee permitting creditor to lodge a caveat - Where defendants adduced uncontradicted oral evidence that loan the subject of the guarantee had been repaid
Legislation:
Transfer of Land Act 1893 (WA), s 138B, s 138C
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr B P Wheatley
First Defendants : In person
Second Defendant : No appearance
Solicitors:
Plaintiff : Mossensons
First Defendants : In person
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
Avco Financial Services Ltd v White [1977] VR 561
Bashford v Bashford [2008] WASC 138
Bateson v Jones [2013] WASC 8
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
Bride v The Registrar of Titles [2015] WASC 11
Dominion Lifestyle Tower Apartment Pty Ltd v Global Capital Corporation Pty Ltd [2004] VSC 307; (2004) ANZ Conv R 561
Miluc Pty Ltd and Commissioner of State Revenue [2008] WASAT 68; (2008) 59 SR (WA) 50; (2008) 71 ATR 133
Nudd v Official Trustee in Bankruptcy [2002] NSWSC 399
Southern Wine Corp Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162
Troncone v Aliperti (1994) 6 BPR 13,291; (1994) ANZ Conv R 411
Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171
- MITCHELL J:
(This judgment was delivered extemporaneously and has been edited from the court's record of the decision.)
1 This is an application for an extension of caveat, the order sought being that the operation of caveat M580272 registered against the first defendants' interest in specified land in Bibra Lake be extended until 21 days after judgment in related proceedings before the District Court.
2 The application is made under s 138C of the Transfer of Land Act 1893 (WA). That section empowers me to order the extension of the caveat if I am satisfied that the caveator's claim has, or may have, substance.
3 The application was amended today to seek, in the alternative, an order restraining the first defendants from dealing with the subject land in any way inconsistent with the plaintiff's rights under an acknowledgment of debt dated 7 November 2013, without the express written consent of the plaintiffs first had and obtained.
Principles - extension of caveat
4 The general principles relating to an extension of a caveat under s 138C of the Transfer of Land Act are well established. They were outlined by Edelman J in Bride v The Registrar of Titles,1 where his Honour noted:
Section 137 of the Transfer of Land Act 1893 (WA) enables a beneficiary or other person claiming an estate or interest in land to lodge a caveat. Section 138C(2) provides for the Supreme Court's powers when a caveator applies to the Supreme Court for an order extending the operation of a caveat, as follows:
…
(2) On the hearing of an application under subsection (1), the Supreme Court -
(a) if satisfied that the caveator's claim has or may have substance -
(i) may make an order extending the operation of the caveat for such period as is specified in the order; or
(ii) may make an order extending the operation of the caveat until the further order of the court; or
(iii) may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged; and
(b) if not satisfied that the caveator's claim has or may have substance, shall dismiss the application; and
(c) may make such ancillary orders in relation to the application as it thinks fit.
In assessing whether to grant the extension of the caveat the two broad issues are (1) whether the caveator's claim in respect of the estate or interest in land 'has or may have substance' and (2), whether the balance of convenience favours the retention of the caveat and the appropriate orders to be made.
The first issue is whether the caveator's claim in respect of the estate or interest in land 'has or may have substance'. This is sometimes expressed as whether the caveator can show that there is a serious question to be tried, or whether the caveator can prove a prima facie case. In assessing whether the caveator has proved that the claim has, or may have substance, the Court does not ordinarily evaluate the applicant's evidence or undertake a preliminary trial.
The requirement that the caveator's claim of substance be in respect of a claim of an 'estate or interest in land' has been held to mean that the claim must concern a proprietary interest in land.
The second issue is the balance of convenience in extending the caveat. The court considers the balance of convenience when it decides whether to exercise its discretion to extend the caveat. The balance of convenience is not independent of the strength or weakness of the caveator's claim. Rather, the apparent strength or weakness of the case for relief at trial is a relevant consideration on the balance of convenience.
An important factor in considering the balance of convenience is if the failure to extend a caveat will have the effect of destroying, or substantially impairing, the benefit of the proprietary interest which is claimed. (citations omitted)
5 The principles relevant to the grant of an order extending the operation of a caveat were also considered by Beech J in Bashford v Bashford.2 I adopt what his Honour had to say there without repeating it.
Evidence
6 The plaintiff relies on an affidavit of Shannon Luke Coward sworn on 23 October 2015. Mr Coward is a director and company secretary of the plaintiff. He attaches a company search of the plaintiff, the certificate of title which shows that the relevant property is held by the first defendants as registered proprietors, a copy of the caveat, and an acknowledgment of debt which is relied on by the plaintiff as giving rise to an equitable interest in land.
7 Mr Coward deposes that the plaintiff commenced proceedings in the District Court against Jupiter Nominees Pty Ltd and the first defendants in late 2014. He states that the plaintiff has been advised that an administrator was appointed to Jupiter Nominees, but has not been advised of the liquidation of Jupiter Nominees or that it has entered into an arrangement with its creditors. He says that the District Court action has not yet been entered for trial. He deposes to having received a notice sent under s 138B of the Transfer of Land Act, which indicates that the caveat will lapse at midnight on 3 November 2015, unless an order of this court is obtained extending the caveat and that order is lodged with the Registrar of Titles.
8 Mr Coward deposes to a belief that the plaintiff has a caveatable interest in the property, but does not give any evidence as to the procedural history or subject of the District Court action, which was commenced in late 2014.
9 One of the first defendants, Mrs Keryn Lang, gave evidence. The essence of her evidence was that no money remains owing by either the first defendants or Jupiter Nominees to the plaintiff, although in cross-examination she conceded that she did not have personal knowledge of all of the company's accounts.
Acknowledgment of debt
10 The equitable interest claimed by the plaintiffs is said to arise under a deed of acknowledgment of debt dated 7 November 2013, which is purportedly between the plaintiff, Jupiter Nominees and both of the first defendants (although it has only been signed by Mr Lang and not Mrs Lang). In the deed, Jupiter Nominees acknowledges its indebtedness to the plaintiff in the sum of $157,000 and agrees to repay that sum by instalments.
11 Clause 7 of the deed relevantly provides that:
(1) In consideration of the [plaintiff] entering into this Deed, the [first defendants] unconditionally guarantee [Jupiter Nominees'] obligations.
(2) The [first defendants] hereby agree to permit the [plaintiff] to register a Caveat over all [a specified piece of land].
12 The deed guarantees a personal debt owing by Jupiter Nominees to the plaintiff. The question is whether it creates an interest in land which can support a caveat.
Principles - equitable charge
13 The interest which is claimed is an equitable charge, which McLure JA described in Southern Wine Corp Pty Ltd (in liq) v Frankland River Olive Co Ltd3in the following terms:
Generally, an equitable charge is a security over property which has been created by an inter vivos act, consensual or otherwise, by the owner of the property. In a contractual setting, the question is whether the contractual parties have expressly or impliedly evinced an intention to appropriate property for the discharge of a debt or other obligation and to give the creditor a present right to have the property made available.
An equitable charge gives a right of realisation of the property by judicial process in case of non-payment. (citations omitted)
14 In the present case there are no express words creating an equitable charge. The question is whether an implication should or may be drawn from the terms of the acknowledgment of debt.
15 Some of the Australian authority dealing with this issue was considered by Allanson J in Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd,4 which was also an application for orders extending the operation of a caveat pursuant to s 138C of the Transfer of Land Act. Allanson J concluded:
The plaintiff needs to show a sufficient likelihood of success in its claim of an equitable charge to justify the continuation of the caveats. While it has agreed to the caveat lapsing for all land subject to contracts entered before the lodging of the caveat, there are some lots which are subject to contracts for sale entered later.
With respect, I agree with the comments of Bryson AJ in Taleb. If the intention to grant an interest in the land is not found expressed or by implication in the documents, there is no equitable interest. The intention to grant an interest is not expressed, and I am not satisfied that the plaintiff's case for the implication of an equitable charge, from these agreements is sufficiently arguable to justify an order maintaining caveats on the land [70] - [71].
- His Honour then dismissed the application for an extension of the caveat.
16 That conclusion depended on the circumstances of the case before Allanson J, which included features of the contractual arrangement which are not now present. It is necessary for me to consider whether, when all the circumstances of the present case are considered and the relevant term is construed in its context, the court should infer an objective intention to charge the property with the performance of the obligations of the first defendants under the guarantee.
Was an equitable charge arguably created?
17 The deed does not contain any express terms which create an equitable charge. The only express term which the plaintiff relies on to establish a charge is cl 7, in which the first defendants consent to the lodgement of a caveat. Even if applying for the issue of a s 138B notice constitutes a breach of that contractual term - and it is far from clear to me that it would be - the court cannot extend the caveat unless satisfied that the plaintiff has or may have a caveatable interest.
18 A significant contextual consideration is the nature of the obligation in this case, which is a guarantee of another person's debt. It is well established that guarantees are to be strictly construed in favour of the surety and that doubts as to the construction of guarantees should be resolved in favour of the surety.5
19 Given that principle, I am not satisfied that it is reasonably arguable that a mere agreement to permit the plaintiff to lodge a caveat in a guarantee of a personal debt creates a charge on the first defendants' property.
20 The plaintiff relies on a number of cases, the effect of which is summarised in the following terms by Professor Butt:6
In reality, the law has come down to this: if, as part of a loan arrangement, the borrower authorises the lender to lodge a caveat on the borrower's property, then, regardless of whether the authority is express, or implied, or is to be gathered from some separate document signed by the borrower, the lender has a sufficient interest to sustain a caveat.
21 A similar point was made by Barker J, sitting as president of the State Administrative Tribunal, in Miluc Pty Ltd and Commissioner of State Revenue,7 again in the context of a loan rather than a guarantee.
22 It seems to me to be significant that the passage of Professor Butt quoted above refers to a loan agreement rather than a guarantee.8 The other cases9 cited by counsel for the plaintiff also appear to concern loan agreements. In my view, the very different principles applicable to the construction of guarantees mean that the principle identified by Professor Butt is not applicable in this context.
23 Counsel for the plaintiff also relied on the following dictum of Pritchard J in Bateson v Jones:10
There is authority for the proposition that an agreement (typically in the context of a loan or guarantee arrangement), that in the event of a default by a borrower the lender will be entitled to attach the debt due to an asset of the borrower or guarantor, and may register a caveat against any property registered in the name of the borrower or guarantor, is sufficient, together with the lodgement of the caveat itself, to give rise to an interest in the land by way of an equitable charge over the land, so as to ground a caveatable interest. (citations omitted) (emphasis added)
24 The difficulty for the plaintiff is that the deed of acknowledgment of debt does not include any term entitling the plaintiff to attach the debt due to any asset of the first defendants. Such a provision would make clear the creation of an equitable charge. I also note that that matter does not appear to have been contentious in Bateson, there beinga concession recorded in her Honour's decision that the caveator had a caveatable interest.11
Has the plaintiff established an arguable case that the debt remains owing?
25 There is a further fundamental difficulty with the application. The acknowledgment of debt is proof that the sum of $157,000 was due on 7 November 2013 by Jupiter Nominees to the plaintiff. The plaintiff, however, has not adduced any evidence establishing that any amount of that debt remains owing.
26 The substance of the evidence of Mrs Lang is that no amount is owing.
27 As Edelman J noted in the passage from Bride to which I have referred, on an application of this kind the court does not enter into a preliminary trial or attempt to resolve conflicts in the evidence. However, in this case there is no relevant conflict, because Mr Coward has not said that any amount is owing. He has deposed as to District Court proceedings which remain on foot, but has not given evidence of the subject matter of those proceedings.
28 As Beech J noted in Bashford,12on an application for an extension of caveat the onus is on the caveator to demonstrate that there is a serious question to be tried as to whether a caveatable interest exists. In my view, the plaintiff has not discharged that onus because it has not adduced any evidence that the debt remains owing. That is an independent reason for refusing to extend the caveat.
Conclusion
29 Having considered those matters, I find myself in the same position as Allanson J was in Yaran Holdings, albeit that there are significant differences in the contractual setting. I am not satisfied that the plaintiff's case on the implication of an equitable charge is sufficiently arguable to justify an order maintaining the caveat. Nor am I satisfied that there is evidence of an unpaid debt sufficient to demonstrate that the caveatable interest, if it ever existed, remains.
30 The alternative application for injunctive relief is advanced on the basis that the first defendants ought be restrained from breaching a contract. However, counsel for the plaintiff was unable to identify a term of the deed of acknowledgment of debt which would be breached in the event that the caveat is removed by operation of s 138B(2) of the Transfer of Land Act.
31 The terms of the injunction sought would restrain dealings with the land which are inconsistent with the plaintiff's rights under the deed of acknowledgment of debt. Those proposed terms are themselves vague because they fail to identify those rights. There does not seem to me to be any term of the deed which restrains the plaintiffs from dealing with their property. The plaintiff's argument based on cl 7(2) seems to me to repeat the argument about whether a charge was created and to fail for the same reasons.
32 For those reasons, I will dismiss the plaintiff's applications.
1Bride v The Registrar of Titles [2015] WASC 11 [11] - [16].
2Bashford v Bashford [2008] WASC 138 [42] - [57].
3Southern Wine Corp Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162 [28] - [29].
4Yaran Holdings Pty Ltdv Goldsmith 7 Pty Ltd [2014] WASC 171 [61] - [63], [70] - [71].
5Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, 561; Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 [17] - [23]; Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 [53].
6 Butt P, 'Conveyancing and Property' (2002) 76(8) ALJ 477, 481.
7Miluc Pty Ltd and Commissioner of State Revenue [2008] WASAT 68; (2008) 59 SR (WA) 50; (2008) 71 ATR 133 [48].
8 Professor Butt refers to the decision in Yaran Holdings and considers it to follow established authority, in a case note at (2014) 88(12) ALJ 838.
9 Counsel for the plaintiff referred to Avco Financial Services Ltd v White [1977] VR 561, 564; Dominion Lifestyle Tower Apartment Pty Ltd v Global Capital Corporation Pty Ltd [2004] VSC 307; (2004) ANZ Conv R 561, 564; Troncone v Aliperti (1994) 6 BPR 13,291; (1994) ANZ Conv R 411, 412; and Nudd v Official Trustee in Bankruptcy [2002] NSWSC 399.
10Bateson v Jones [2013] WASC 8 [22].
11Bateson [23].
12Bashford [47].
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