Barker Mortgages P/L v Cheetham - [2017] SADC 114

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BARKER MORTGAGES P/L v CHEETHAM
[2017] SADC 114
Ruling of His Honour Judge Chivell
17 October 2017
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - DECLARATIONS - APPROPRIATE FORM OF RELIEF - DISCRETION OF COURT
Application for extension of time for removal of caveat.
Interlocutory application - parties agreed that a preliminary point should be determined separately.
Deed - whether deed operates as a bar to the plaintiff's application.
Held: Deed clearly and unambiguously bars plaintiff's application. Preliminary question answered in the affirmative.
Real Property Act 1886 (SA) s 191(g); District Court Civil Rules 2006 r 119, r 131, r 211; Supreme Court Rules 1987 r 75.02; District Court Rules 1992 r 75.02; Industrial Rehabilitation Services Pty Ltd v Workers Rehabilitation and Compensation Corporation [1993] SASC 4012; Sheahan v Verco [1999] SASC 263; The Tap Inn Pty Ltd v Matthews [2015] SASCFC 188; Pratap v Permanent Custodians Limited [2013] NSWSC 1918; Melanesian Mission Board Trust v AMP [1997] 1 NZLR 391, referred to.

BARKER MORTGAGES P/L v CHEETHAM
[2017] SADC 114

This is an application for extension of time for the removal of a caveat pursuant to s 191(g) of the Real Property Act 1886 (SA).
The parties have agreed that I should determine, as a preliminary point, whether the plaintiff, Barker Mortgages Pty Ltd, is barred from seeking such an extension.
The preliminary point was expressed in different ways in the outlines of argument filed by the parties:
·the plaintiff says the point is whether a deed ‘precludes’ the plaintiff from seeking the orders in the summons;
·the defendant says the point is whether, by virtue of a settlement agreement between the parties, including the plaintiff, the plaintiff ‘ceased to be entitled to lodge the caveat …’
Having regard to the way submissions were made before me on 12 October 2017, I adopt the plaintiff’s formulation for reasons which will become apparent.
Rule 211 of the District Court Civil Rules (‘DCR 211’) allows ‘the separate trial of an issue of fact or law (or an issue involving mixed questions of fact and law) involved in an action’. ‘Action’ is not defined, but this application is brought by summons and interlocutory application pursuant to DCR 119 (urgent cases) and DCR 131 (interlocutory applications), which clearly constitutes an action.
I note that in Industrial Rehabilitation Services Pty Ltd v Workers Rehabilitation and Compensation Corporation,[1] Legoe ACJ said that a preliminary point should not be determined where the action is proceeding on affidavits rather than pleadings. His Honour referred to the fact that it was not clear what relief was being sought to which the questions were supposedly relevant.[2]
[1] Unreported, Full Court No. S4012, [1993] SASC 4012, 16 July 1993 (incorrectly referenced as 16 March 1993 in Mr Belperio’s outline).
[2] See [23]-[28] of the judgment.
At the time Industrial Rehabilitation Services was decided, the relevant rule provided:
75.02… the Court may at any time or from time to time in any proceeding, order:
(a) …
(b) …
(c) … that any point or points of law arising on the pleadings be disposed of before proceeding to trial of the facts;
…
(My underlining)
DCR 75.02 was not materially different from SCR 75.02.
Clearly, the requirement that the point of law arises on the pleading led to the remarks of Legoe ACJ in that case.
DCR 211 no longer has such a requirement. It simply states:
211—Trial of separate issues
The Court may order the separate trial of an issue of fact or law (or an issue involving mixed questions of fact and law) involved in an action.
(My underlining)
It is clear that the Rules no longer require that an issue arises on the pleadings before it can be decided as a preliminary point. The remarks of Legoe ACJ to the contrary in Industrial Rehabilitation Services no longer apply.
There is no doubt that the issue raised by the preliminary point in this case would be ‘involved in the action’ no matter how the action progresses, whether by affidavit, pleadings or otherwise.
In the particular circumstances of this case, I consider that it is appropriate to determine the preliminary point. The circumstances are these:
·the procedure is adopted with the consent of the parties;
·the application is interlocutory in nature;
·the determination of the issue is required urgently;
·counsel for both parties assured me that the determination of the issue would assist them to resolve the remaining issues between them;
·the issue does not require the resolution of factual issues – rather, it involves the interpretation of a document;
·the issue to be resolved is not hypothetical, and does not require factual findings.[3]
[3] c.f. Sheahan v Verco [1999] SASC 263, Bleby J at [12]; The Tap Inn Pty Ltd v Matthews [2015] SASCFC 188.
The undisputed background to this application is set out in the document to be interpreted.
The document is described as a ‘deed’ and has been regarded as such by the parties. The deed appears at pp 75-82 of Exhibit MJH1 to the affidavit of Mr Hower, the managing director of Barker Mortgages Pty Ltd, although Mr Hower makes no specific mention of it in his affidavit.
The ‘background’ to the preparation of the deed is described in the deed as follows:
A.   The Guarantor is the registered proprietor of a property situate at 4 Everglade Court, Golden Grove, South Australia 5125, being the whole of the land comprised in Certificate of Title Volume 6045 Folio 23 (“the Property”).
B.    The Guarantor resides in the Property.
C.    At all material times, Augusta Developments Pty Ltd ACN 154 975 694 (“the Borrower”), was a company duly registered pursuant to the Corporations Act 2001 (Cth).
D.   By agreement in writing dated around 29 April 2015 (“the Angas Loan Agreement”), the Lender agreed to and did advance to Augusta Developments Pty Ltd (“the Borrower”) an amount of $6,594,000.00.
E.    Pursuant to clauses 12 and 13 of the Angas Loan Agreement, the Guarantor agreed to guarantee the obligations of the Borrower under the terms and conditions of the Loan Agreement to the extent of the value of the Property (“the Angas Guarantee”).
F.    By memorandum of mortgage registered no. 12318496 dated 29 April 2015 (“the Angas Mortgage”), the Guarantor granted the lender a mortgage interest in the Property as security for satisfaction of the Guarantor’s obligations under the Angas Loan Agreement.
G.   By agreement in writing dated around 30 November 2012 (“the Barker Loan Agreement”), Barker agreed to and did advance to the Borrower an amount of $770,000.00.
H.   Pursuant to clauses 12 and 13 of the Barker Loan Agreement, the Guarantor agreed to guarantee the obligations of the Borrower under the terms and conditions of the Barker Loan Agreement (“the Barker Guarantee”).
I.     By memorandum of mortgage registered no. 11857856 dated 30 November 2012 (“the Barker Mortgage”), the Guarantor granted Barker a mortgage interest in the Property as security for satisfaction of the Guarantor’s obligations under the Barker Loan Agreement.
J.     The Borrower defaulted under the Angas Loan Agreement by failing to repay principal and pay interest to the Lender.
K.   On 23 May 2016, the Lender issued proceedings in Supreme Court of South Australia Action No. 598 of 2016 (“the Proceedings”) against the Guarantor seeking possession of the Property.
L.    On 14 October 2016, the Guarantor filed a defence in the Proceedings wherein she asserted that the Mortgage and Guarantee the subject of the proceedings were unenforceable on account of unconscionability.
M.   On 17 October 2016, the Guarantor issued Third Party Proceedings (“the Third Party Proceedings”) against the Borrower seeking indemnity from the Borrower.
N.   On 21 January 2017, the Borrower filed a Defence to the Lender’s claim the subject of the Proceedings denying any liability on the part of the Borrower. The Third Party also sought orders that the Proceedings be dismissed and that Angas Mortgage, Barker Mortgage, Angas Guarantee and the Barker Guarantee be set aside.
O.   On 8 February 2017, the Lender appointed Administrators over the Borrower.
P.    By application dated 27 February 2017, the Guarantor applied to bring the Administration to an end [and] asserted that the Lender appointing the Administrators had engaged in an abuse of process.
Q.   The Lender denied the Guarantor’s assertion of abuse [and] the matter was set down for hearing on 9 March 2017.
R.    On 6 March 2017, the Lender and the Guarantor agreed to resolve the Proceedings on certain terms and conditions (“the Settlement”).
S.    On 15 March 2017, the Borrower was wound up in liquidation.
T.    This Deed records the terms of the Settlement.
The deed has been executed by the defendant, Ms Cheetham, but not by the plaintiff, Barker Mortgages Pty Ltd, or by Angas Securities Limited. There is no doubt that Ms Cheetham, Barker Mortgages Pty Ltd and Angas were to be parties to the deed; that is made explicit in paragraph 2.5, which provides:
The Parties means the Lender [Angas], the Guarantor [Cheetham] and Barker.
(The words in brackets are mine.)
I accept that I should treat the document as a deed for the purposes of this application. Both parties asked me to do so. Mr Sallis, counsel for Ms Cheetham, referred me to the decision of Young AJ in Pratap v Permanent Custodians Limited[4] in this regard.
[4] [2013] NSWSC 1918.
Annexed to the deed (Annexure B) was an email from Ms Takako Oue, solicitor for Ms Cheetham, to Mr Luke Rowley, solicitor for Angas and Barker Mortgages Pty Ltd, dated 6 March 2017. In that email, Ms Oue makes what appears to be a counter-offer to Mr Rowley to settle the proceedings between Angas and Ms Cheetham. Paragraph 10 of the email sets out one of the proposed terms of settlement:
Your client and Barker Mortgages Pty Ltd, together with any successors, related parties, agents or assigns thereof, agree to a full release and indemnity in favour of our client in relation to all and any claims by those persons howsoever arising;
Returning to the deed, paragraph 2.2 provides:
Deed means this Deed including each annexure, appendix, attachment and any schedule to this Deed.
It is clear from that paragraph that the email became part of the deed.
Paragraph 2.1 of the deed provides:
Claims means claims, demands, debts, liabilities, obligations, rights, complaints, contribution claims, third party actions, causes of action, cross-claims (and counterclaims), costs orders, actions, suits or proceedings (including costs and expenses), whether present or contingent, known or unknown, legal or equitable, statutory or otherwise, related, whether directly or indirectly how so ever arising.
It is therefore also clear that the demand that Ms Cheetham pay the ‘guaranteed amount’ of $942,000 made on 17 May 2017, being money owed by Augusta Developments Pty Ltd to Barker Mortgages Pty Ltd, is a ‘claim’ as defined in the deed.
Paragraph 4.1.7 of the deed provides:
Except as where expressly provided for in this Deed, nothing contained in this Deed will affect the rights of Barker under the Barker Loan Agreement, the Barker Mortgage or the Barker Guarantee or the Lender’s rights to enforce any of its rights of and incidental to the Barker Loan Agreement as against any party.
That provision also makes it clear that Barker Mortgages Pty Ltd was an active participant in the settlement. This is also made clear by paragraph 5.2:
5.2 The Lender and Barker warrant as follows:
5.2.1They will comply with any reasonable request of the Guarantor to enable the Guarantor to discharge its obligations under this Deed.
5.2.2They will act towards the Guarantor and the Borrower in good faith in accordance with the terms of the Settlement as set out in the email dated 6 March 2017 which is Annexure B to this Deed to enable the Guarantor to discharge its obligations under this Deed.
5.2.3Provided that it is in accordance with the terms of the Settlement as reflected in this Deed, they will within 48 hours of any request take steps reasonably necessary to facilitate the Guarantor paying the Settlement Sum in accordance with the terms and conditions of this Deed, which steps may include the delivery up of signed consents and/or acknowledgements to any subsequent financier, purchaser or government authority including the LTO with respect to the subdivision or sale of all or part of the Property.
5.2.4Provided that it is in accordance with the terms of the Settlement as reflected in this Deed, they will attend at settlement of the sale of all or any part of the Property upon 48 hours’ notice in writing being provided to the Lender’s Solicitors.
Paragraphs 6.1 and 6.2 also make that clear:
6.1 The Guarantor further acknowledges that:
6.1.1The Lender and Barker have entered into this Deed in reliance on the acknowledgements contained in Clause 4 herein and the warranties contained in Clause 5 herein.
6.1.2The Lender and Barker would not have entered into this Deed if the Guarantor had not provided the acknowledgements contained in Clause 4 herein and the warranties contained in Clause 5 herein.
Paragraph 9 of the deed deals with any default by Ms Cheetham in performance of her obligations under the Deed:
9.     Default
In the event of default by the Guarantor under the terms and conditions of this Deed:
9.1    ….
9.2    …
9.3    The Guarantor will not interfere with any attempt by the Lender or Barker to enforce their rights in the Proceedings, under the Angas Loan Agreement, the Barker Loan Agreement, the Angas Guarantee, the Barker Guarantee, the Angas Mortgage, the Barker Mortgage and this Deed.
This paragraph evinces a clear intention that Barker Mortgages Pty Ltd’s rights pursuant to its loan agreement with Augusta Developments, Ms Cheetham’s guarantee of Augusta’s performance of that agreement, and its mortgage over the properties referred to, were affected by the terms of the deed.
Paragraph 11 of the deed is as follows:
Subject to clause 8 herein, the Parties agree that this Deed shall operate and may be pleaded by them as a bar to any action, suit, claim, cost, damage or expense whatsoever arising from the matters set out in the Background to this Deed and any claims released by clause 7.
Barker Mortgages Pty Ltd was a party to the deed. It follows as a matter of simple logic that the bar in paragraph 11 applies to it as well.
Mr Belperio, counsel for Barker Mortgages Pty Ltd, pointed to paragraph 8.1 of the deed, in which Ms Cheetham indemnified Angas against any breach of the deed by her. A similar indemnity was not given to Barker. However, Ms Cheetham also released Angas and Barker from any ‘claims’ (as defined in paragraph 2.1 quoted above). Paragraph 8.2 provided a release by Angas to Ms Cheetham ‘upon compliance with the terms and conditions of this Deed’.
These provisions are confusing and somewhat contradictory.
The clearest indication of the intent of the parties, leaving aside all of the provisions I have already discussed, is paragraph 4.1.4 of the deed:
4.1.4 Neither the Lender nor Barker are required to do anything in respect of the Settlement or under this Deed other than comply in good faith with the terms of the Settlement as set out in the email dated 6 March 2017 attached hereto as Annexure B; Note - the Settlement Sum is not recovered under the Angas Guarantee or the Angas Mortgage.
The clearest indication that Barker is a party to the deed, and not in any limited way but to the full extent of its provisions, is paragraph 4.1.4 combined with paragraph 10 of the email of 6 March 2017 from Ms Oue to Mr Rowley, which provides:
Your client and Barker Mortgages Pty Ltd, together with any successors, related parties, agents or assigns thereof, agree to a full release and indemnity in favour of our client in relation to all and any claims by those persons howsoever arising;
I agree with the submission of Mr Sallis that paragraph 10 is not inconsistent with other provisions of the deed, paragraph 8 in particular, as suggested by Mr Belperio. But even if it was, paragraph 4.1.4 makes it clear that the intention of the parties was to execute the terms of settlement in the 6 March 2017 email, including a bar to further claims by Barker.
Mr Belperio submitted that:
(I)n my submission reading the deed as a whole means that the way in which this deed according to clause 11 operates as a bar is only in terms of the matters that are settled by the deed and the deed doesn't effect a settlement or release of Barker's claim. So the background certainly does set out that there is a claim by Barker, but because the deed itself doesn't settle that claim and doesn't give any release from Barker to the defendant, then clause 11 which says that the deed operates as a bar can't be taken to include that.
HIS HONOUR:      But the guarantor gave Barker a release?
MR BELPERIO:    Yes.
HIS HONOUR:      In 813.
MR BELPERIO:    Yes.
HIS HONOUR:      So there cannot be any argument surely that Barker was not a party to the settlement?
MR BELPERIO:    Barker was a party to the settlement for a limited purpose but not in relation to actually releasing its claim.[5]
[5]    T 10.22 – 11.1.
Barker was a party to the settlement, as is clearly indicated by the 6 March 2017 email which is part of the deed. The inferences which Mr Belperio sought to draw cannot override the clear statements of the intention of all the parties to the deed.
The relevant legal principles for the interpretation of the deed were very helpfully summarised by Mr Belperio in his outline of argument.[6] These were accepted by Mr Sallis.[7] Having regard to time constraints, it is not necessary to reiterate them here.
[6] At [15]-[17].
[7] T 17.
It is sufficient to refer only to the principle outlined at [27]:
… it is well-established that it is not the function of a court to search for ambiguity which is not there. If the words used by the parties in the agreement are clear and unambiguous, the ordinary meaning of those words must prevail.
(Melanesian Mission Board Trust v AMP [1997] 1 NZLR 391 at 394-5 (Privy Council))
I conclude that the words used in paragraph 10 of the 6 March 2017 email are clear and unambiguous, are not inconsistent with the rest of the deed, and represent the true effect of the deed.
These words constitute a bar to the claim by Barker which is the subject of the caveat sought to be enforced, and which is the subject of the present application.
My answer to the question in the preliminary point is ‘Yes’.