Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd
[2004] WASC 14
BINNINGUP NOMINEES PTY LTD AS TRUSTEE FOR THE LAKEWOOD SHORES UNIT TRUST -v- BROGUE TABLEAU PTY LTD [2004] WASC 14
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 14 | |
| Case No: | CIV:2191/2003 | 17 NOVEMBER 2003 & 4 FEBRUARY 2004 | |
| Coram: | PULLIN J | 12/02/04 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Caveat removed, Defendant given leave to lodge "notice" caveat | ||
| B | |||
| PDF Version |
| Parties: | BINNINGUP NOMINEES PTY LTD AS TRUSTEE FOR THE LAKEWOOD SHORES UNIT TRUST (ACN 008 794 938) BROGUE TABLEAU PTY LTD (ACN 009 271 970) |
Catchwords: | Real property Torrens system Caveat Unit trust Whether beneficiary of unit trust has proprietary interest and therefore a caveatable interest Caveat Absolute caveat Whether justified Whether "notice" caveat justified Power of court to amend caveat |
Legislation: | Transfer of Land Act 1893 (WA), s 137, s 138 |
Case References: | Ambasax Pty Ltd v Evindon Pty Ltd, unreported; SCt of Vic (App Crt); 10 November 1995 Bonini v Western Australian Real Estate Custodian Ltd [2001] WASC 258 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 Connell v Bond Corporation Pty Ltd (1992) 8 WAR 352 Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90 DCT v Corwest Management Pty Ltd [1978] WAR 129 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 Evindon Pty Ltd v Ambasax Pty Ltd [1996] ANZ Conv R 398 Karingal 2 Holdings Pty Ltd v Commissioner of State Revenue [2002] VSC 431 Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 Midland Co Pty Ltd v Welsh [2002] WASC 248 Porter v McDonald [1984] WAR 271 Read v Commonwealth (1988) 167 CLR 57 State Bank of India v Sood [1997] Ch 276 Suncorp Insurance & Finance v Commissioner of Stamp Duties [1998] 2 Qd R 285 Vandyke v Vandyke (1976) 12 ALR 621 Bomford v Barrett [2002] WASC 304 Cruz v Osborne [1999] WASC 8 Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 Halse v Embling, unreported; FCt SCt of WA; Library No 970734; 22 December 1997 Jandric v Jandric [1999] WASC 22 Kitay as Liquidator of Allstate Mining Machinery Hire & Sales Pty Ltd v Strathfield Holdings Pty Ltd (1998) 27 ACSR 716 McCarthy v Wheeler & Wongan Hotels Pty Ltd [1998] VSC 67 Re Henderson's Caveat [1998] 1 Qd R 632 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
The LAKEWOOD SHORES UNIT TRUST
- Plaintiff
AND
BROGUE TABLEAU PTY LTD (ACN 009 271 970)
Defendant
Catchwords:
Real property - Torrens system - Caveat - Unit trust - Whether beneficiary of unit trust has proprietary interest and therefore a caveatable interest
Caveat - Absolute caveat - Whether justified - Whether "notice" caveat justified - Power of court to amend caveat
(Page 2)
Legislation:
Transfer of Land Act 1893 (WA), s 137, s 138
Result:
Caveat removed
Defendant given leave to lodge "notice" caveat
Category: B
Representation:
Counsel:
Plaintiff : Mr M D Howard
Defendant : Ms P E Cahill
Solicitors:
Plaintiff : Tottle Partners
Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Ambasax Pty Ltd v Evindon Pty Ltd, unreported; SCt of Vic (App Crt); 10 November 1995
Bonini v Western Australian Real Estate Custodian Ltd [2001] WASC 258
Charles v Federal Commissioner of Taxation (1954) 90 CLR 598
Connell v Bond Corporation Pty Ltd (1992) 8 WAR 352
Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90
DCT v Corwest Management Pty Ltd [1978] WAR 129
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431
Evindon Pty Ltd v Ambasax Pty Ltd [1996] ANZ Conv R 398
Karingal 2 Holdings Pty Ltd v Commissioner of State Revenue [2002] VSC 431
Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407
Midland Co Pty Ltd v Welsh [2002] WASC 248
Porter v McDonald [1984] WAR 271
(Page 3)
Read v Commonwealth (1988) 167 CLR 57
State Bank of India v Sood [1997] Ch 276
Suncorp Insurance & Finance v Commissioner of Stamp Duties [1998] 2 Qd R 285
Vandyke v Vandyke (1976) 12 ALR 621
Case(s) also cited:
Bomford v Barrett [2002] WASC 304
Cruz v Osborne [1999] WASC 8
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Halse v Embling, unreported; FCt SCt of WA; Library No 970734; 22 December 1997
Jandric v Jandric [1999] WASC 22
Kitay as Liquidator of Allstate Mining Machinery Hire & Sales Pty Ltd v Strathfield Holdings Pty Ltd (1998) 27 ACSR 716
McCarthy v Wheeler & Wongan Hotels Pty Ltd [1998] VSC 67
Re Henderson's Caveat [1998] 1 Qd R 632
(Page 4)
1 PULLIN J: This is an application by the plaintiff, pursuant to s 138 of the Transfer of Land Act 1893, requiring the defendant to show cause why caveat 1228079C relating to land known as the "South Land" should not be removed. The plaintiff is the registered proprietor of the South Land. On the Certificate of Title, the registered proprietor is shown as Lakewood Shores Pty Ltd, which is the plaintiff's former name.
2 I might begin by describing the factual situation in the broad terms in which the plaintiff described it, before analysing the circumstances in greater detail.
3 The plaintiff is named as the trustee of a unit trust called the Lakewood Shores Unit Trust ("Lakewood Trust"). The South Land was added to the trust fund of the Lakewood Trust. There are 100 units issued in the Lakewood Trust. The plaintiff is the holder of the 100 units.
4 The plaintiff is also the trustee of property in a trust known as the Binningup Estate Unit Trust ("Binningup Trust"). The property in the trust fund is the settled sum of $25 plus the 100 units in the Lakewood Trust on trust for the unit holders in the Binningup Trust. The defendant holds 182 A class units in the Binningup Trust. Adamstoun Holdings Pty Ltd ("Adamstoun") holds 2,000,098 B class units in the Binningup Trust. There are no special rights conferred on A class units. From this short account, it can be seen that the plaintiff is said to have three different capacities in relation to these two trusts.
(a) In the first place, it is said to be the trustee of the Lakewood Trust, and in that capacity it is said to hold the trust fund of the trust (including the legal estate in the South Land) in trust for the beneficiary of the trust.
(b) Secondly, it is said to be the sole beneficiary of the Lakewood Trust. In that capacity, it is said to hold an equitable estate in the trust fund, including the South Land.
(c) Thirdly, it is the trustee of the Binningup Trust, and in that capacity it holds the trust fund, including the equitable interest in the South Land
5 The first observation which I make is that there is no trust involved in the Lakewood Trust. A trustee may be one of a number of beneficiaries but cannot be the sole beneficiary. If a trustee is the sole beneficiary, there is no trust because there is no separate equitable
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- interest vested in the beneficiary. The legal and equitable interests merge into full ownership: DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 464 and 474. The result is that the plaintiff holds the trust fund of the Lakewood Trust, including the South Land, on trust for the beneficiaries of the Binningup Trust.
Events leading to lodgment of caveat and commencement of these proceedings
6 The plaintiff and defendant negotiated over a proposal by the defendant to redeem its units in the Binningup Trust, and the parties could not reach agreement. In the course of the negotiations which commenced in the year 2000 and which extended through until 2002, the defendant learned that the plaintiff was proposing to sell the South Land to a company called Baycrest Pty Ltd. A director of Baycrest Pty Ltd is the son of Mr Waller, who is a director of the plaintiff. The secretary of Baycrest is a Mr Linton Scott, who is associated with Adamstoun. Mr Waller and Mr Scott are directors also of A M Securities Pty Ltd, which is the mortgagee of the South Land.
7 After learning of the proposed sale by the plaintiff to Baycrest Pty Ltd, the defendant lodged the caveat on 6 September 2002. The caveat shows the defendant as caveator and shows the "estate or interest being claimed" in these terms: "As beneficiary of a trust, against land held by the trustee for the trust", by virtue of a:
"Unit Trust Deed dated 31 December 1975 made between CLIVE GREGORY WALLER as Founder and BINNINGUP NOMINEES PTY LTD as Trustee, at one time also known as LAKEWOOD SHORES PTY LTD".
- (This is a reference to the Binningup Trust Deed).
8 The caveat forbids the registration of any instrument affecting the estate or interest "absolutely".
9 On 3 October 2002, these proceedings were commenced by the plaintiff.
The Binningup Trust Deed
10 The Binningup Trust Deed contained a recital reading:
"Whereas the Founder being desirous of establishing a trust with the intent that the benefits and obligations of the trusts
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- herein contained shall enure to the extent provided herein to every Unit Holder who shall hold such units in the manner hereinafter set out and for the purpose of giving effect to such desire has upon the execution hereof transferred or is about to transfer to the Trustees the initial sum referred to in the First Schedule and the Trustees have consented to become the Trustees hereof upon the trusts and with and subject to the powers and provisions hereinafter expressed."
11 Clause 3 contained a declaration of trust by the trustee that it "will henceforth stand possessed of the Trust Fund … upon the trusts and with and subject to the powers and provisions hereinafter expressed concerning the same".
12 The "initial sum" was $280.
13 The "Trust Fund" was defined as meaning the initial sum plus property transferred to, and accepted by, the trustees as additions to the trust fund.
14 Clause 7 provided for an advisory committee, to which each unit holder was entitled to appoint a representative. The advisory committee had the power to advise or direct the trustees, and the trustees were obliged to seek prior advice from the advisory committee in relation to all matters arising in connection with any business carried on by the trustees or in relation to any investment. There was provision for arbitration in the event of deadlock on the advisory committee.
15 Clause 8 provided:
"(a) The beneficial interest in the Trust Fund and the income thereof as originally constituted and as existing or produced from time to time shall be held by the Unit Holders according to and in the proportion to the rights and entitlements for the time being and as such may be changed from time to time attaching to the particular class of units issued and classified by the Trustees.
(b) Each unit of a particular class shall entitle the registered holder thereof equally with the registered holders of units of the same class and according to the proportionate rights attaching to the units of that Class to a beneficial interest in the Trust Fund and the income thereof as an entirety and shall not entitle the Unit Holder to any particular security or investment
(Page 7)
- comprised in the Trust Fund or any part thereof and save as herein expressly provided no Unit Holder shall be entitled to the transfer to him of any property comprised in the Trust Fund.
- (c) the Trust Fund as originally constituted by the said initial sum shall be divided into the number of units and into the classes (if any) set forth in the First Schedule which units shall be held by the original Unit Holders the names and addresses of which are specified in the First Schedule each of which shall hold the number of units and in the classes (if any) specified against their respective names in the First Schedule.
…"
16 Subject to cl 7, the plaintiff, as trustee, had power to sell investments in the trust fund.
Does the Defendant have a Caveatable Interest in the South Land?
17 Section 137 of the Transfer of Land Act provides that:
"Any beneficiary or other person claiming any estate or interest in land under the operation of this Act … may lodge a caveat with the Registrar in an approved form forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest either absolutely or until after notice of the intended registration or dealing be given to the caveator or unless such instrument be expressed to be subject to the claim of the caveator as may be required in such caveat. …"
18 Section 137 states that the person lodging the caveat shall, if required by the Registrar, support the same by statutory declaration stating the nature of the estate or interest claimed and the title thereto". No such statutory declaration was required in this case, and so the caveat stands alone.
19 The plaintiff does not seek to argue against the proposition that the holder of a unit in a unit trust has an equitable proprietary interest in all the property which is for the time being subject to the trust deeds: Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 at 609; Read v Commonwealth (1988) 167 CLR 57 at 61-62; Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90 at 92.
(Page 8)
20 Nor does the plaintiff argue against the proposition that a unit holder has a proprietary interest in each of the assets which comprise the entirety of the trust fund and that provisions in unit trust deeds to the effect that a unit holder is not entitled to any particular asset in the trust fund or to an interest in any particular asset, are to be construed in context as meaning no more than that the unit holder is not entitled to have the exclusive use or ownership of any particular asset: Connell v Bond Corporation Pty Ltd (1992) 8 WAR 352 at 374; Bonini v Western Australian Real Estate Custodian Ltd [2001] WASC 258 at [13] and the other authorities cited in Karingal 2 Holdings Pty Ltd v Commissioner of State Revenue [2002] VSC 4311 at [27].
21 There is no doubt that these conclusions must depend upon the terms of the unit trust in each case and on what effect the law will give to the instrument considered as a whole in the light of applicable principles: Costa & Duppe Properties Pty Ltd (supra) at page 93 per Brooking J and Suncorp Insurance & Finance v Commissioner of Stamp Duties [1998] 2 Qd R 285 at 300-301. There is nothing in the terms of the trust deeds here which alters the proposition set out in the two preceding paragraphs.
22 As I have indicated above, there is no trust involved in relation to what is described as the Lakewood Trust. The plaintiff is therefore the registered proprietor of the South Land, which is held on trust for the beneficiaries (ie the unit holders) of the Binningup Trust. The defendant, as a unit holder, therefore has an equitable proprietary interest in the South Land.
23 The plaintiff, however, submitted that because a person has a proprietary interest in land does not mean that such person has a "caveatable" interest. With respect, I disagree with that submission. As Malcolm CJ said in Connell v Bond Corporation Pty Ltd (supra) at 362: "It may be accepted as trite law that any proprietary interest recognised at law or in equity will constitute a caveatable interest".
24 The plaintiff argued that there should be a distinction between proprietary interest and caveatable interest because of the decision of O'Bryan J in Evindon Pty Ltd v Ambasax Pty Ltd [1996] ANZ Conv R 398. In that case, Evindon was trustee of the Esplanade Trust, which was the proprietor of three parcels of land at St Kilda. The trust was a unit trust comprising 60 units. Five of these were held by Ambasax as trustee of a family trust. There was a dispute between Ambasax, as unit holder, and Evindon, as trustee, relating to Evindon's conduct as trustee. Ambasax lodged a caveat on the three titles, claiming an equitable
(Page 9)
- interest in fee simple as unit holder as to five equal undivided one-sixtieth parts or shares pursuant to the declaration of trust. O'Bryan J considered the Costa v Duppe Properties case and said that the headnote of the report was somewhat misleading in stating that the unit holder held a sufficient interest in the land to support the caveats without a rider that Brooking J was not asked to determine the question whether a unit holder and a unit trust in which the trust fund comprises land holds a sufficient interest in land to support a caveat. O'Bryan J said at 399-400:
"Unit trusts are recognised commercial entities in which units are listed and traded on the Stock Exchange. There is no precedent, so far as counsel is aware, of a unit-holder seeking to protect their interest in the trust fund owned by the trustee (insofar as it comprises land) by means of a caveat. The nature and purpose of a caveat under the Torrens system of land registration is to protect the caveator's interest from being defeated by the registration of a dealing without the caveator first having had an opportunity to invoke the assistance of the Court to give effect to his interest. … The legal relationship between the trustee, Evindon and a unit-holder does not confer upon the unit-holder a right to frustrate or curtail the exercise of the very wide powers of management conferred on the trustee by the trust deed, in my opinion."
"A unit-holder's proprietary interest in each asset of the trust does not confer a caveatable estate or interest for the purposes of the Transfer of Land Act when the asset comprises land."
26 With respect, I must differ from the conclusions O'Bryan J reached in the last sentence which I have quoted. His Honour accepted that the unit holder's interest in the trust in that case conferred a proprietary interest. Once it did, then, in my view, based on the Chief Justice's statement in Connell v Bond Corporation Pty Ltd (supra), a caveatable interest then existed. O'Bryan J seems to have been influenced in his decision by the feeling that if any unit holder could lodge a caveat, that this would be inconvenient to the management of unit trusts, particularly in the case of listed unit trusts. In my respectful opinion, that is not a reason which should intrude into the legal analysis of the situation. Furthermore, such inconvenience can be easily avoided, if the settlor of such a trust wishes, by including a provision in the trust deed
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- to the effect that unit holders are not permitted to lodge a caveat. A trustee may also be able to do this if it has the power of amendment which permits such a provision to be added to the trust deed.
27 I note that in Ambasax Pty Ltd v Evindon Pty Ltd, unreported; SCt of Vic (App Crt); 10 November 1995, the judgment of O'Bryan J came before the Court of Appeal on an application by the caveator for a stay of the order made by O'Bryan J that the caveat should be removed. The case turned on whether or not the grounds for a stay could be made out. The application for a stay failed for reasons which are not relevant here. The only comment made about the decision of O'Bryan J was a statement by Phillips JA, who said:
"Obviously, if I may say so, there is much force in the comments made by O'Bryan J about the decision in Costa and the very precise terms in which it appears that that judgment was couched."
28 In my opinion, Ambasax v Evindon does not provide any approval of the reasoning of O'Bryan J.
29 The plaintiff next submitted that if a proprietary interest in land would support a caveat, then, because it was the only holder of the 100 units in the Lakewood Trust, only the plaintiff, and not the defendant, had a proprietary interest in the South Land. The plaintiff submitted that the defendant only had a proprietary interest in the units in the Binningup Trust, and that this did not give the defendant any interest in the South Land which would support the caveat. In view of my conclusion that there was no trust in the so-called Lakewood Trust, it is strictly unnecessary to consider this submission. However, as the matter was argued, I will briefly express my views on it. What I say will be based on an assumption (contrary to my finding above) that there are two trusts. This argument depends very much upon treating the units in a unit trust as though they were separate property and as though they were choses in action, like shares. There is no doubt, as the authors in Jacobs' Law of Trusts in Australia, 6th Ed, at [315] say, that: "From an investor's point of view, for commercial purposes, owning units in a unit trust is the same as owning shares in a company". As the authors note, however, legally this is not so. In Charles v Federal Commissioner of Taxation (supra) at 609, it was stated:
"A unit held under this trust deed is fundamentally different from a share in a company. A share confers upon the holder no legal or equitable interest in the assets of the company; it
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- is a separate piece of property … But a unit under the trust deed before us confers a proprietary interest in all the property which for the time being is subject to the trust of the deed."
30 Putting aside contractual rights that the unit holder may have, the beneficial interest which the unit holder has in the trust fund is as I have set it out above. The unit holders of each trust are beneficiaries of each such trust, and each have a proprietary interest in the trust fund of that trust. The plaintiff contends that 100 units in the so-called Lakewood Trust were held in the Binningup Fund. That may be an investor's shorthand but, in fact, the property in the Binningup Trust trust fund was the beneficial interest the plaintiff held in the Lakewood Trust trust fund. The Lakewood Trust trust fund consisted partly of the South Land. In conventional analysis, the trustee of the Lakewood Trust held the legal estate in the South Land. The beneficiary of that trust held the equitable estate. The beneficiary held that equitable estate (as trustee of the Binningup Trust) on trust for the beneficiaries of the Binningup Trust. Thus, the unit holders of the latter trust, including the defendant, held an equitable estate in the South Land. The purpose of units is to designate the extent of a unit holder's beneficial interest at any given time. That will be the proportion which his or her units bear to the total number of units issued: Read v The Commonwealth (supra) at 61-62.
31 In my opinion, the defendant had a caveatable interest in the South Land.
Form of Caveat
32 In Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 Mason CJ, Dawson and McHugh JJ said at 422-423:
"The purpose of requiring the caveator to 'specify' the estate or interest claimed is to enable the registered proprietor to know, or find out, the claim which he or she will have to meet. … another purpose is to enable the Registrar-General to determine whether a dealing lodged for registration is inconsistent with the estate or interest claimed by the caveator. … [The word] 'specify' [in s 137] should be understood in the sense of 'mention definitely or explicitly'."
33 See also Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419.
(Page 12)
34 The caveat correctly identifies the defendant's interest as beneficiary of a trust of land held by the trustee for the Binningup Trust. The only remaining question is whether the circumstances allowed the defendant to lodge an "absolute" caveat, ie a caveat forbidding registration of any instrument affecting the estate or interest "absolutely". Section 137 may appear to confer the right on a caveator to choose one of the three types of caveats, namely:
(a) an absolute caveat;
(b) a caveat forbidding registration of any transfer or instrument until after notice of the intended registration or dealing be given to the caveator; or
(c) unless the instrument be expressed to be subject to the claim of the caveator.
35 However, the caveator may not lodge a caveat which goes beyond the legitimate claim necessary to protect the caveator's rights: DCT v Corwest Management Pty Ltd [1978] WAR 129 at 131 and Vandyke v Vandyke (1976) 12 ALR 621 at 624.
36 In this case, the trustee of the Binningup Trust has powers of sale which may be legitimately exercised, subject to the advice and direction of an advisory committee. If the property was sold by the trustee in the proper exercise of its power, the defendant would have no further interest in the property and no right to maintain a caveat. In short, the defendant's equitable interest may be overreached by a sale by the trustee within his dispositive powers: State Bank of India v Sood [1997] Ch 276 at 281. Only an ultra vires disposition by the trustee will not overreach: State Bank of India v Sood at 281.
37 On the point about the form of the caveat, the defendant referred to Midland Co Pty Ltd v Welsh [2002] WASC 248. In that case, an absolute caveat was extended in circumstances where the plaintiff, which was a brick maker, had sold adjoining land but on the condition that the defendant/purchaser would not subdivide the land without written consent of the plaintiff. The agreement permitted the plaintiff to lodge a caveat. The caveat was an absolute caveat, prohibiting any dealing. It was argued that this was too wide, but the court held it was maintainable. It was apparently argued that only a subject-to-claim caveat should have been lodged. Hasluck J held that a caveat in that form would not provide the plaintiff with protection. In effect, Hasluck J reasoned that a subject-to-claim caveat would not be appropriate because there would be no point allowing a subdivision and
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- conveyance of title in circumstances where the plaintiff claimed a right to prevent that happening at all. In my opinion, that case is distinguishable and affords no reason for allowing an absolute caveat in this case. An absolute caveat would prevent any dealing whatsoever, even a dealing resulting from the proper exercise of the trustee's powers of sale, acting with the approval of the advisory committee. That is an inappropriate restraint.
38 In my opinion, the defendant had no right to lodge an absolute caveat based merely upon the existence of its interest as beneficiary in a unit trust.
Should the caveat be amended?
39 The appropriate caveat in such circumstances would have been a "notice" caveat. A notice caveat has the effect that the caveator is given notice of a proposed transfer or dealing. Fourteen days after notice is given, the proposed dealing or transfer may be lodged, whereupon the caveat will then lapse, unless in the meantime the operation of the caveat has been extended by the court pursuant to s 138C of the Transfer of Land Act.
40 The provisions of s 138 authorise the court to amend a caveat: Porter v McDonald [1984] WAR 271 at 275.
41 I would be prepared to authorise amendment of the caveat, which may be achieved by withdrawing the present caveat and lodging a notice caveat pursuant to the leave of the court under s 138D of the Transfer of Land Act.
42 The orders I would propose making therefore are:
1. The defendant be directed to withdraw Caveat No 1228079C within seven days.
2. The defendant have leave to lodge a "notice" caveat in a form approved by the court.
Injunction
43 The court may, in an appropriate case, grant an injunction, even if a caveat is not in proper form: Midland Brick Co v Welsh (supra). The complaint which prompted the defendant to lodge the caveat arose as a result of the proposed transaction between the plaintiff and Baycrest, which the defendant alleged involved a breach of trust. This case was originally heard on 17 November 2003, but after that date the plaintiff
(Page 14)
- filed an affidavit to the effect that the Baycrest transaction had not proceeded and that the plaintiff did not intend proceeding with any other transaction involving Baycrest. An undertaking by the plaintiff has also been filed, whereby the plaintiff undertakes not to enter into any further transaction with Baycrest.
44 As a result, there is no basis for an injunction in respect of such a transaction.
45 However, the defendant contends that it is concerned about, and distrusts, the plaintiff, and that the plaintiff should be forbidden from entering into any transaction at all, pending unspecified action by the defendant against the trustee. In my opinion, those contentions provide no basis for the grant of an injunction. The plaintiff has powers which it may properly exercise in accordance with the trust deed, and it would be wrong for this Court to restrain the plaintiff from exercising those powers on the assertion by the defendant that it mistrusts the plaintiff.
46 No injunction will therefore be granted.
Costs
47 This matter was adjourned after the first hearing, and then limited matters dealt with on the second day of hearing. As a result, I asked for submissions regarding costs. The plaintiff submitted that if the plaintiff succeeded in having the caveat removed, then it should have its costs. The defendant, on the other hand, contends that if the plaintiff failed in its argument that there was no caveatable interest, the defendant should be awarded costs. The defendant also argues that undertakings given by the plaintiff after the first day of hearing and the further affidavit filed, meant that the plaintiff, by that means, avoided the possibility of the grant of an injunction, which was live on 17 November 2003. The plaintiff, however, points out that there was never any application by the defendant for an injunction supported by an undertaking as to damages. The plaintiff submits that the further evidence, and the undertaking, have simply headed off the prospect that there might be a claim for an injunction.
48 The usual order of costs is that they should follow the event. There always remains, of course, a discretion in the court on the question of costs. It is not usually profitable, however, to try and decide who should have costs by deciding who won or lost different arguments. This is a case where there was success by both parties on some of the points argued, but the plaintiff has succeeded in obtaining an order removing the absolute caveat. The defendant has been
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- permitted to lodge a subject-to-notice caveat, but that order was one which was only made as a result of the order removing the existing caveat.
49 I would apply the normal rule, and order that the defendant pay the plaintiff's costs of the application to be taxed.
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