Chemech Pty Ltd v Cheng - [2023] WASC 319

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CHEMECH PTY LTD -v- CHENG [2023] WASC 319
CORAM:   WHITBY J
HEARD:   22 AUGUST 2023
DELIVERED          :   22 AUGUST 2023
PUBLISHED           :   23 AUGUST 2023
FILE NO/S:   CIV 1672 of 2023
BETWEEN:   CHEMECH PTY LTD
Applicant
AND
MARY YUEN SHAN CHENG
First Respondent
REGISTRAR OF TITLES
Second Respondent

Catchwords:

Caveat extension - Building contract - Charging clause - Proprietary interest - Caveator's claim has substance - Balance of convenience favours extension of caveat

Legislation:

Transfer of Land Act 1893 (WA)

Result:

Caveat extended

Category: B

Representation:

Counsel:

Applicant	:	Mr P G McGowan
First Respondent	:	Mr G A Lacerenza
Second Respondent	:	No appearance

Solicitors:

Applicant	:	Johnstone Crouse Lawyers
First Respondent	:	GA Lacerenza & Associates
Second Respondent	:	No appearance

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

Bateson v Jones [2013] WASC 8
Bride v Registrar of Titles [2015] WASC 11
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179
Cheng v Lam [2020] WASC 45
Cheng v Lam [2020] WASC 45(S)
Cheng v Lam [No 2] [2018] WASC 199
Cheng v Lam [No 4] [2020] WASC 175
Cheng v Lam [No 7] [2021] WASC 417
Pezzano Enterprises Pty Ltd v Mias [2023] WASC 168
Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olice Co Ltd [2005] WASCA 236

WHITBY J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

This proceeding is one of a number of proceedings that arise from a breakdown in a family arrangement to develop properties over a 12‑year period from 2001 to 2012.
The first respondent, Ms Mary Cheng (Mary), was married to Mr Chan Lam (Chan). Their marriage ended in 2012. Prior to the end of their marriage, they had been involved in property developments with Mr Francis Lam (Frank), Chan's brother, and Frank's wife, Ms Andrea Cheng (Andrea). I will refer to each of them by their first names as has been done throughout the related proceedings with no disrespect intended.
One of the properties that the parties purchased and developed was at 78 Edgecumbe Street, Como (Como Property). The parties built 4 units on the Como Property - 78A, 78B, 78C and 78D. Mary is the registered proprietor of the 78C Edgecumbe St Unit (Unit).
Chemech Pty Ltd (Chemech), the applicant, is a building company controlled by Frank and Andrea and was the building company who completed the development at the Como Property.
On 2 March 2016, Chemech lodged a caveat over the Unit.
On 9 June 2023, 21 days' notice expiring on 3 July 2023, was given to Chemech by the Registrar of Titles advising that unless proceedings were commenced the caveat would lapse. Chemech is applying, pursuant to s 138C of the Transfer of Land Act 1893 (TLA), to extend the operation of the caveat (application).
Mary opposes the application.
For the reasons that follow, I am satisfied that the caveat should be extended until further order of…

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.

Continue reading Chemech Pty Ltd v Cheng

Details

AGLC: Chemech Pty Ltd v Cheng [2023] WASC 319
Case: [2023] WASC 319
Decision Date

CaseChat Overview and Summary

In the case of Chemech Pty Ltd v Cheng, Chemech sought to extend a caveat lodged over a unit at the Como Property in order to secure an outstanding debt for building costs. The primary dispute was whether Chemech had a proprietary interest in the unit that could be protected by a caveat. The matter was heard in the Supreme Court of Western Australia. The central legal issue before the court was whether Chemech had a proprietary interest in the unit, and thus, whether the caveat should be extended to secure this interest. Mary Cheng, one of the owners of the unit, argued that the building contract was not binding because it was not signed by all the unit owners and she submitted that Chemech had not provided sufficient evidence to support its claim for $324,000 in unpaid building costs. Chemech, on the other hand, maintained that the building contract was valid and that there was an outstanding debt which gave rise to a proprietary interest in the unit. The court found that Chemech's claim had substance based on the findings of Chaney J in Cheng v Lam, the existence of the charging clause in the building contract, and the lack of distribution of the unit to Mary Cheng. The court held that the claim had sufficient merit to warrant the extension of the caveat. The court concluded that Chemech had demonstrated that its claim to a proprietary interest in the unit had, or may have, substance. Therefore, the caveat was extended to protect Chemech's interest pending the outcome of the substantive proceedings.

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

The claim made by Chemech clearly relates to a proprietary interest in the Unit. The parties to the Building Contract have expressly provided for the Unit to be appropriated for the discharge of an outstanding debt under the Building Contract. This gives rise to a proprietary interest in the Unit capable of protection by caveat.[14][14] Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olice Co Ltd [2005] WASCA 236 [40]. Mary submits that the Building Contract is not an agreement between the correct owners of the Como Property, those being herself, Frank and Andrea and that the Building Contract is not signed by her, Frank or Andrea. In those circumstances, Mary says that there is no binding building contract between her and Chemech. Further, Mary submits that there is no evidence to support Chemech's assertion that it is owed $324,000 for building costs associated with the Unit. Mary submits that Chemech has failed to provide any evidence that Mary was billed for the alleged construction costs in the sum of $324,000, or that Chemech issued her any notices after 3 December 2009 requesting her to pay the sum of $324,000 or issued any payment requests to her at all after that date. Mary sought to rely upon the Delbridge Report and various transcripts of evidence given by Frank in previous proceedings to establish that the debt to Chemech under the Building Contract had been paid.[15][15] Cheng Affidavit [15] and Annexures 'E1' and 'E2'. For all of these reasons, Mary submits that the claim by Chemech does not have any substance. Chemech submits that Mary, on her own admission, is an owner of the Unit and therefore, she is bound by the findings of Chaney J in Cheng v Lam, the result being that the proceeds of development of the Unit must be applied firstly to expenses of the development of the Unit, which include the costs incurred under the Building Contract, before any surplus funds are distributed to Mary, Frank and Andrea. I am not required to finally determine whether Chemech does have a proprietary interest in the Unit. Rather I am simply required to determine whether Chemech has shown that its claim to a proprietary interest has, or may have, substance. I am satisfied that Chemech's claim to a proprietary interest over the Unit has, or may have, substance for the following reasons:(1)in Cheng v Lam, Chaney J found that Mary was one of the owners of the Como Property and therefore, the Unit on the Como Property;(2)Mary is named as a party to the Building Contract;(3)the Building Contract contains a charging clause which gives rise to a proprietary interest in favour of Chemech to secure unpaid sums;(4)there has been no in specie distribution of the Unit to Mary; and(5)the parties are in dispute about whether Chemech has been paid in full under the Building Contract - Chemech relies upon the Registrar's Report,[16] and the Delbridge Report to establish that there is an amount outstanding under the Building Contract.[17] I accept that there is compelling evidence to establish the amount is outstanding under the Building Contract, however, it is not appropriate, upon an application to extend the operation of a caveat, to evaluate the evidence or undertake a preliminary trial.[18][16] The finding that there is an unpaid balance under the Building Contract in the amount of $1,038,000 Items 115 and 175; Agreed Facts 11.4, 11.9, 11.14, 11.19 and 9.21.[17] Cheng Affidavit Annexures 'E1' and 'E2'.[18] Bride v Registrar of Titles [2015] WASC 11 [13].