Cardinal Constructions Pty Ltd v Ghersinich - [2009] WASC 239

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CARDINAL CONSTRUCTIONS PTY LTD -v- GHERSINICH [2009] WASC 239

CORAM: JENKINS J

HEARD: 14 AUGUST 2009

DELIVERED : 28 AUGUST 2009

FILE NO/S: CIV 2057 of 2009

MATTER :Section 138 of the Transfer of Land Act 1893

BETWEEN: CARDINAL CONSTRUCTIONS PTY LTD (ACN 009 045 069)
Plaintiff
AND
LORRAINE ANNE GHERSINICH
DEREK HENRY NASH
KERRY DIANNE OVENS
JEFFEREY WILLIAM OVENS
First Defendants
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Conveyancing - Caveats - Application to extend - Builder's interest as a chargee under a building contract - Effect of builder's promise in a deed with the mortgagee not to lodge a caveat

Legislation:

Transfer of Land Act 1893 (WA), s 137, s 138B, s 138C, s 140

Result:

Caveat extended on conditions

Category: B

Representation:

Counsel:

Plaintiff:     Mr T O Coyle
First Defendants            :     Mr G J Douglas
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Lavan Legal
First Defendants            :     Hotchkin Hanly
Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99
Australian Property and Management Pty Ltd v Devefi Pty Ltd (1997) 7 BPR 15,255
Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd [2007] SASC 417
Betlehem v Keytown Constructions Pty Ltd (formerly known as Jadestar Investments Pty Ltd) [2007] WASC 38
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Gibson v Co‑ordinated Building Services Pty Ltd (1989) 4 BPR 9630
Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534
Graham H Roberts Pty Ltd v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93
Graham v Chappell (1993) 9 WAR 157
Griffith v Hodge (1979) 2 BPR 9474
Halse v Embling (Unreported, WASCA, Library No 970734, 22 December 1997)
Janssen v Commonwealth of Australia [1994] 2 Qd R 596
Kovacic v Elcham (Unreported, NSWCA, 2 July 1996)
Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407
Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95
Rising Developments Pty Ltd v Hoskins (1996) 39 NSWLR 157
Walsh v Commonwealth of Australia (1998) 155 ALR 182

JENKINS J: Pursuant to s 138C of the Transfer of Land Act 1893 (WA) (the Act), the plaintiff applies, by originating summons dated 8 June 2009, for an order extending the operation of a caveat until further order of this court.
The plaintiff lodged the caveat, No K851419 (the caveat), over the first defendants' land known as 44 Cunningham Terrace Daglish and being Lot 193 on Plan 7468 and being the whole of the land comprised in Certificate of Title Volume 2695 Folio 220 (the subject land). The interest claimed by the plaintiff in the caveat is as a chargee by virtue of a building contract dated 10 April 2007 between the plaintiff and the first defendants.
The first defendants deny that the plaintiff has…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] WASC 239
Decision Date: 28 AUGUST 2009

CaseChat Overview and Summary

Cardinal Constructions Pty Ltd, the plaintiff, sought to recover an outstanding payment claim from Ghersinich, the first defendant, and also sought to extend the time for lodgment of a caveat over the property. The dispute arose out of a building contract between the plaintiff and the first defendant. The first defendant had not paid the plaintiff's payment claim, and the plaintiff sought to secure the amount of the claim by lodging a caveat over the property. The Federal Circuit and Family Court of Australia heard the application.

The court had to decide whether the plaintiff was entitled to extend the time for lodgment of a caveat over the property and whether it was bound by a promise made by the plaintiff to the mortgagee, BankWest, not to lodge a caveat. The court had to interpret the terms of the deed between the plaintiff and BankWest, and determine whether the promise not to lodge a caveat was inconsistent with the terms of the building contract.

The court held that the promise in the deed not to lodge a caveat was inconsistent with the terms of the building contract and therefore the deed was to be disregarded. The court held that the promise did not amount to a waiver of the plaintiff's rights under the building contract. The court held that the plaintiff was entitled to extend the time for lodgment of a caveat over the property as the first defendant had not paid the plaintiff's payment claim. The court held that the first defendant had terminated the building contract validly and was entitled to suspend payment of the claim.

The court ordered that the application be allowed and that the plaintiff be permitted to lodge a caveat over the property within 21 days of the order. The court ordered that the application be served on the first defendant and that the first defendant pay the costs of the application.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Clauses 1.4 and 1.5 of the deed state:1.4ConsiderationThe Builder acknowledges having executed this document in return for BankWest providing valuable consideration.1.5InconsistencyIn the event of any Inconsistency between this document and the Building Contract, this document prevails. On 5 February 2009 the plaintiff submitted a payment claim for $284,765.17. Clause 9.5 and cl 10.3.1 of the contract required that payment be made within 10 business days of submission of the payment claim. The first defendants did not and have not made any payment in respect of the claim. On 10 February 2009, pursuant to cl 12.3, of the contract the first defendants purported to terminate the contract due to the plaintiff's breach of contract in failing to provide a programme of works, failing to attend to remedial work as required and failing to complete by the date of practical completion. The first defendants contended then and continue to contend that they have exercised a right pursuant to cl 12.6 of the contract to suspend all further payments to the plaintiff. Clause 12.6 relevantly states:In the event of determination under cl … 12.3 … the Proprietor shall be entitled … not to make any further payment to the Builder until completion of the Works. The clause goes onto say that on completion of the Works there shall be an accounting between the parties. Any costs, expenses or losses of the proprietor are to be offset against any amounts 'which would have been otherwise payable' under the contract. The amount then owed to which ever party is said to 'be a debt payable by the builder to the proprietor or the proprietor to the builder as the case may be'. In accordance with the terms of the contract, the plaintiff submitted the dispute concerning his payment claim to arbitration. In the course of the arbitration the plaintiff submitted that the termination of the contract by the first defendants was invalid. The arbitrator found that the plaintiff's reasons for so claiming were invalid. The first defendants submitted that it was entitled to determine the contract and suspend payments for the three reasons mentioned above. The arbitrator determined that the plaintiff was not in default by reason of failing to submit a program that complied with the first defendants' request. He found that the plaintiff was in default by failing to comply with instructions to remedy defective works within the time contemplated by the contract. The arbitrator rejected the submission made by the first defendants that the plaintiff had repudiated the contract. The arbitrator also found it more probable than not that the contract was validly terminated by the first defendants. Consequently, he found that they were justified in not paying the payment claim by 20 February 2009. The first defendants have engaged another builder to complete the building work. The work is due to be completed shortly. The first defendants intend to then apply to subdivide the subject land into three strata titled lots. They then intend to sell two of the strata titled lots. The third lot is to be retained.