Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd
[2006] WASC 156
BINNINGUP NOMINEES PTY LTD -v- BROGUE TABLEAU PTY LTD [2006] WASC 156
| Link to Appeal : | [2007] WASCA 179 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 156 | |
| Case No: | CIV:1001/2006 | 3 MAY 2006 | |
| Coram: | MASTER SANDERSON | 4/08/06 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Judgment entered for plaintiff | ||
| B | |||
| PDF Version |
| Parties: | BINNINGUP NOMINEES PTY LTD (ACN 008 794 938) BROGUE TABLEAU PTY LTD (ACN 009 271 970) |
Catchwords: | Practice and procedure Application for summary judgment Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 14, O 26 r 8(2) Transfer of Land Act 1893 (WA), s 140 |
Case References: | Binningup Nominees Pty Ltd as Trustee for The Lakewood Shores Unit Trust v Brogue Tableau Pty Ltd [2004] WASC 14 Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd [2004] WASC 207 Bolton v Excell, unreported, FCt SCt of WA; Library No 930175; 22 February 1993 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 John Street Marina Pty Ltd v Minister for Transport [2005] WASC 171 McKellar & Anor v Singh [1999] WASC 145 Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 Cook & Ors v Northoak Holdings Pty Ltd (Receiver & Manager Appointed) & Anor, unreported; FCt SCt of WA; Library No 970554; 28 October 1997 Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 Hooke v Holland [1984] WAR 16 Webster v Lampard (1993) 177 CLR 598 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BROGUE TABLEAU PTY LTD (ACN 009 271 970)
Defendant
Catchwords:
Practice and procedure Application for summary judgment Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 14, O 26 r 8(2)
Transfer of Land Act 1893 (WA), s 140
Result:
Judgment entered for plaintiff
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr J A Thomson
Defendant : Ms K A Vernon
Solicitors:
Plaintiff : Tottle Partners
Defendant : Arthur Metaxas & Co
Case(s) referred to in judgment(s):
Binningup Nominees Pty Ltd as Trustee for The Lakewood Shores Unit Trust v Brogue Tableau Pty Ltd [2004] WASC 14
Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd [2004] WASC 207
Bolton v Excell, unreported, FCt SCt of WA; Library No 930175; 22 February 1993
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
John Street Marina Pty Ltd v Minister for Transport [2005] WASC 171
McKellar & Anor v Singh [1999] WASC 145
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Case(s) also cited:
Cook & Ors v Northoak Holdings Pty Ltd (Receiver & Manager Appointed) & Anor, unreported; FCt SCt of WA; Library No 970554; 28 October 1997
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Hooke v Holland [1984] WAR 16
Webster v Lampard (1993) 177 CLR 598
(Page 3)
1 MASTER SANDERSON: This is the plaintiff's application for summary judgment. There have been two earlier decisions in relation to related matters. The first was a decision of Pullin J (as his Honour then was) Binningup Nominees Pty Ltd as Trustee for The Lakewood Shores Unit Trust v Brogue Tableau Pty Ltd [2004] WASC 14 and a decision of mine Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd [2004] WASC 207. Reading of those decisions provides background to this application. However, to put this present application in context it is necessary to say something of the background facts.
2 Before summarising the facts, I should identify the affidavits which were relied upon by the parties for the purposes of this application. On behalf of the plaintiff, they relied upon four affidavits of Barry Granville Waller ("Waller"), these affidavits being sworn on 24 January 2006, 1 February 2006, 27 April 2006 and 2 May 2006. The plaintiff also relied upon an affidavit of Paul Charles Blackman ("Blackman") sworn 27 April 2006.
3 During the course of his submissions, counsel for the plaintiff also referred to three affidavits of John Anthony Santamaria ("Santamaria"), the first and second sworn 30 October 2003 and 29 January 2004 respectively in CIV 2193/03 and the third sworn 14 September 2004 in CIV 2164/04. Santamaria is a director of the defendant and the affidavits of his to which reference was made were filed for use in the caveat applications. In this action the defendant filed an affidavit in opposition sworn by Santamaria sworn 21 February 2006.
4 Turning then to the facts, the plaintiff is the trustee of the Binningup Estate Unit Trust, and in that capacity is the registered proprietor of land in Certificate of Title Volume 2194 Folio 802 ("the Trust Land"): see Waller's affidavit 24 January 2006, par 6 and par 7. The Trust Land has been subdivided into a large number of blocks. Presently, stage 2A of the subdivision consists of 67 lots, stage 2B consists of 33 lots and stage 2C consists of 9 lots: see Waller's affidavit 24 January 2006, par 8; Waller's affidavit 27 April 2006, pars 5 – 10 and par 16.
5 At all material times, the defendant has been the holder of 182 "A" class units in the Binningup Estate Unit Trust. In total, 2,000,280 units have been issued in the Binningup Estate Unit Trust. All units in the Binningup Estate Unit Trust have the same entitlement. This means the defendant holds only a very small proportion of units in the Binningup Estate Unit Trust – approximately 0.01 per cent.
(Page 4)
6 On 6 September 2002, the defendant lodged an absolute caveat (I228079C) over all of the Trust Land: see Waller's affidavit 24 January 2006, par 10. On 12 February 2004, Pullin J, in the decision to which I have referred above, held that the defendant could not maintain the absolute caveat but was entitled to lodge a notice caveat. During the period while the absolute caveat remained over the Trust Land, the plaintiff was unable to develop the Trust Land and, in particular, was prevented from developing stage 2B: see Waller's affidavit 27 April 2006, par 11. As a result of the hiatus in developing the Trust Land, the plaintiff alleges that it has become liable to pay additional charges as a result of holding the land rather than selling it. Without detailing these charges, the amount the plaintiff claims is $526,301.45. By this application, the plaintiff is not seeking judgment for that amount. It is seeking judgment with damages to be assessed.
7 The plaintiff claims summary judgment for its loss pursuant to s 140 of the Transfer of Land Act 1893 (WA) ("the Act"). It says that the defendant lodged the absolute caveat without reasonable cause. Section 140 of the Act is in the following terms:
"Any person lodging any caveat with the Registrar either against bringing land under this Act or otherwise without reasonable cause shall be liable to make to any person who may have sustained damage thereby such compensation as a judge on a summons in chambers shall deem just and order."
8 Both parties accepted that the power to order summary judgment should be exercised with caution and only in a clear case: see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (at 129 – 130); Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 (at 89). It was not suggested by counsel for the defendant that it was not open, in a case such as this, for the plaintiff to apply for summary judgment. It is unusual that such an application should be made, but it is, I think, within the provisions of O 14.
9 There was no dispute between the parties as to the test to be applied in determining whether a caveator had reasonable cause to lodge a caveat. Malcolm CJ in Bolton v Excell, unreported, FCt SCt of WA; Library No 930175; 22 February 1993, put the position this way (at 3):
"The test to be applied in determining whether a caveator had reasonable cause to lodge a caveat for the purposes of s 140 of the Transfer of Land Act is not whether the caveator had a
(Page 5)
- caveatable interest at the time the caveat was lodged, but whether the caveator had an honest belief based upon reasonable grounds that he or she had such an interest: Deputy Commissioner of Taxation (Cth) v Corwest Management Pty Ltd [1978] WAR 129 per Brinsden J at 141-142; Bedford Properties Pty Ltd v Surgo Pty Ltd (1981) 1 NSWLR 106 per Wootten J at 108; and Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 (at 433 - 434) per Malcolm CJ. The test is not akin to a test of negligence."
10 In John Street Marina Pty Ltd v Minister for Transport [2005] WASC 171, Jenkins J restated the principles. Her Honour referred to the decision of Malcolm CJ in Bolton v Excell (supra) and said the principles could be stated in this way (at 32):
"First, the onus is on the party claiming damages to prove that the caveat was lodged without reasonable cause. Secondly, the test to be applied in determining whether a caveator has reasonable cause to lodge a caveat for the purposes of the act, section 140, is not whether the caveator had a caveatable interest at that time the caveat was lodged, but whether the caveator had an honest belief based on reasonable grounds that he or she had such an interest. Thirdly, that belief is to be judged as of the date that the caveat was lodged."
11 The first of these principles causes no difficulty. Counsel for the plaintiff accepted that it was for the plaintiff to establish that the caveat was lodged without reasonable cause. However, this being a summary judgment application, it was necessary for the plaintiff to go further. The plaintiff had to establish that this was a clear case where there could be no argument available to the defendant to establish that there was reasonable cause such as would justify the defendant lodging the caveat. Counsel acknowledged the significant hurdles faced by the plaintiff.
12 The second question is, then, whether the caveator (the defendant) at the time the caveat was lodged had an honest belief based on reasonable grounds that it had a caveatable interest. As Pullin J found, the defendant did have a caveatable interest. But that is not here the issue. The question is whether the caveator had an honest belief based on reasonable grounds that he had such an interest.
13 Counsel for the plaintiff conceded that on a summary judgment application, he was not in a position to establish that the defendant did not
(Page 6)
- hold an honest belief. No direct evidence was put on by the defendant dealing with this issue. But a reading of the affidavits of Santamaria filed in the caveat proceedings indicate clearly that he, and through him the defendant, believed that they had a caveatable interest in the Trust Land. The use of the word "honest" in this context suggests a subjective test. It may be that at trial with the benefit of cross-examination of Santamaria, a Judge may come to the conclusion that the belief was not honestly held. But on a summary judgment application where all that is available is affidavit material, I could not conclude, in effect, that Santamaria was dishonest. The question, then, is whether or not the belief honestly held was based on reasonable grounds.
14 The defendant lodged the absolute caveat because it became aware that the plaintiff proposed to sell some of the Trust Land to a company, Baycrest Pty Ltd, which had persons associated with Waller as a director and secretary. At the time of lodging the caveat, the defendant had no information about the terms of the proposed sale, although it had requested this information of the plaintiff. In effect, the defendant sought to maintain the caveat because it had not been provided with information about the terms of sale, and because it was allegedly "concerned" that the sale could be less than market value. This analysis of the defendant's position is derived from Santamaria's affidavit of 30 October 2003, pars 11 – 16 and pars 28 – 29; Santamaria's affidavit of 29 January 2004, par 9 and Santamaria's affidavit of 14 September 2004, par 7.
15 Counsel for the plaintiff submitted, and I accept, that the defendant's express basis for lodging the absolute caveat was nothing more than a suspicion that the plaintiff would sell part of the Trust Land under-value.
16 That suspicion was entirely unsupported by any evidence. In the course of my earlier decision in the related proceedings [2004] WASC 207 I said (at [27]):
"The question then to be determined was whether Brogue Tableau could show there was good cause why the caveat ought not be removed. Or, perhaps more correctly, whether it could satisfy the requirements for the grant of an injunction. It was simply unable to do so. Without going through the evidence in detail, it can be summarised in this way. Brogue Tableau is suspicious of the actions of Binningup Nominees. In the past there has been a suggestion that the South Land, or some part of it, might have been sold by Binningup Nominees to related parties at under-value. The same concerns arise in relation to
(Page 7)
- the transaction involving the Sale Land. However, there is nothing in the evidence which could found such a suspicion. Quite the reverse. It appears that the sale of the specified lots is an arm's-length transaction which is in the interests of all parties. Furthermore, Binningup Nominees is content to allow registration of a notice caveat against the land once the titles to the subject lots have issued. In my view, there is absolutely no basis upon which an injunction could be granted."
17 It necessarily follows from that conclusion that in relation to the caveat there was no serious question to be tried. Counsel for the defendant did not suggest otherwise.
18 Counsel for the plaintiff also pointed out that the defendant does not assert (and could not assert, having regard to cl 35 of the Binningup Estate Unit Trust) that it, through Santamaria, reasonably believed that as a unit holder it had the right to approve or veto each and every sale of part of the Trust Land by the plaintiff. Yet, that was the precise effect of lodging an absolute caveat preventing a sale of any part of the Trust Land.
19 It would seem that prior to lodging the absolute caveat, the defendant did seek legal advice. This legal advice is referred to in par 9 of Santamaria's affidavit of 21 February 2006. It was subject to a notice to produce under O 26 r 8(2). Quite properly, the advice was produced and it appears as part of annexure "PCB-2" to Blackman's affidavit. It comprises two short letters, one dated 3 September 2002, the other dated 4 September 2002. It is appropriate that I reproduce these letters in full.
"Dear Sirs
CAVEAT – BROGUE TABLEAU PTY LTD
Thank you for your fax of this morning, 3 September 2002.
Based on the information you have given us, Brogue Tableau Pty Ltd, as the owner of A-class units in the Lakewood Shores Unit Trust, would be entitled to a proportion of the proceeds of sale of Lakewood Shores Estate, and therefore has a caveatable interest in the Lakewood Shores Estate land.
However, we would need to see the Trust Deed to confirm our view. Could you please provide us with a copy of the Trust Deed.
(Page 8)
- Assuming that Brogue Tableau Pty Ltd does have a caveatable interest, our costs for preparing and lodging the caveat would be $250.00 plus GST and disbursements.
We look forward to receiving a copy of the Trust Deed.
Yours faithfully
JACKSON MCDONALD"
"Dear Sirs
CAVEAT – BROGUE TABLEAU PTY LTD
We refer to the letter from Mr John Santamaria of Sanbern Management Services Pty Ltd received by fax this morning, attaching a copy of the Unit Trust Deed.
There do not appear to be any provisions in the Trust Deed limiting Brogue Tableau's entitlement to a proportion of the proceeds of sale of Lakewood Shores Estate.
It is accepted that a unitholder in a unit trust has a proprietary interest in each asset of the trust, notwithstanding the possible long duration of the trust and the extremely wide powers of management given to the trustee. This is so even though the trust provides that no unitholder is entitled to any particular part of the trust fund or to have any part of the trust fund transferred to him otherwise than in accordance with the terms of the deed: Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90.
Our main disbursements for registering a caveat will be:
Title Search: $11.00
Registration Fee: $75.00
Attendance Fees: $43.00
Plus GST. In addition, our costs to date, incurred in reviewing the Trust Deed and considering whether Brogue Tableau Pty Ltd has a caveatable interest, are $250.00.
We look forward to your further instructions.
Yours faithfully
(Page 9)
- JACKSON MCDONALD"
20 It has to be said that these letters are remarkably brief. In fact, they may not amount to legal advice at all. Both letters are rather mechanical in nature. The defendant has not seen fit to give any indication of what instructions were issued to the solicitors which resulted in these letters. There is certainly nothing in either letter which suggests a detailed brief was delivered which resulted in comprehensive advice.
21 Nonetheless, it must be accepted that legal advice was sought and obtained by the defendant prior to lodging the caveat. The consequences of seeking legal advice when assessing whether a caveator acted reasonably in lodging the caveat must necessarily depend upon the circumstances. This is exemplified by what was said by Heenan J in McKellar & Anor v Singh [1999] WASC 145. His Honour was there dealing with the question of whether or not a caveat was lodged by the caveator based on an honest belief on reasonable grounds. His Honour said (at [9]):
"Bearing in mind the concerns expressed to him by his wife following their first meeting with the solicitor, his decision not to lodge the caveat at that time and the different advice which he received from the solicitor in Nedlands, I am satisfied that by mid-1997 the defendant either had grave doubt or should have had grave doubt as to the reliability of the advice which he had first received. He was given further reason for such doubt when he saw that the solicitor experienced difficulty in having the caveat accepted. Bearing in mind that there had been a lapse of six months or more since he was first advised to lodge a caveat and a lapse of about four months since he became aware that the plaintiffs had put their property on the market, I am inclined to think that his decision to lodge the caveat on 28 July 1997 was prompted rather by his own animosity towards the plaintiffs than by any belief which he might have retained in the soundness of the advice which the solicitor in Fremantle had given him. I doubt whether he acted on that advice but, if he did, I find that it was unreasonable of him to do so. In all the circumstances I doubt whether the defendant honestly believed that he had a caveatable interest in the land and I am positively satisfied that he did not have reasonable grounds for such a belief. The plaintiffs therefore are entitled to compensation for the damage which they have sustained by reason of the lodging of the caveat."
(Page 10)
22 If it be the case that Santamaria, and hence, through him the defendant, relied on the legal advice provided on 3 and 4 September 2002, it was clearly unreasonable for him to do so. In no way can it be said that the advice is comprehensive or that it was given after the solicitor concerned had been fully apprised of all relevant facts. If it was the case that the solicitor was comprehensively briefed, then it was for the defendant to put that evidence before the Court – in other words, to condescend upon particulars: see Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109.
23 The unreasonableness of the defendant's position is further compounded by the fact that it had a miniscule interest in the Binningup Estate Unit Trust. The question can be put this way: given the defendant had such a small interest in the Trust, was it reasonable for it to hold up the whole project so as to protect its interest? The answer, I think, must be no. There was no suggestion that some other form of redress was not open to the defendant if it thought its interests were being compromised. To lodge an absolute caveat in such circumstances was out of all proportion to what might have been regarded as reasonable to protect the defendant's position.
24 I am satisfied, then, that although the defendant may have had an honest belief it was entitled to lodge a caveat, I am not satisfied that belief was held on reasonable grounds. There ought therefore be judgment for the plaintiff with damages to be assessed.
25 I will hear the parties as to the precise form of orders and as to costs.
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