Claybek Investments Pty Ltd as trustee of the Clayton and Rebekah Black Superannuation v Armstrong Way Investments (WA) Pty Ltd
[2025] WASC 29
•6 FEBRUARY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CLAYBEK INVESTMENTS PTY LTD as trustee of the CLAYTON AND REBEKAH BLACK SUPERANNUATION -v- ARMSTRONG WAY INVESTMENTS (WA) PTY LTD [2025] WASC 29
CORAM: GETHING J
HEARD: 24 JANUARY 2025
DELIVERED : 24 JANUARY 2025
PUBLISHED : 6 FEBRUARY 2025
FILE NO/S: CIV 1067 of 2025
BETWEEN: CLAYBEK INVESTMENTS PTY LTD as trustee of the CLAYTON AND REBEKAH BLACK SUPERANNUATION
Plaintiff
AND
ARMSTRONG WAY INVESTMENTS (WA) PTY LTD
Defendant
Catchwords:
Real property - Application to extend operation of a caveat - Whether caveator's claim that it has an equitable charge under a loan agreement may have substance - Whether balance of convenience favours extension of caveat
Legislation:
Transfer of Land Act 1893 (WA) s 138C
Result:
Caveat extended
Representation:
Counsel:
| Plaintiff | : | Mr J C Yeldon |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Appius Lawyers |
| Defendant | : | Not yet served |
Case(s) referred to in decision(s):
Bashford v Bashford [2008] WASC 138
Bateson v Jones [2013] WASC 8
Bride v The Registrar of Titles [2015] WASC 11
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Prem v Surma [2024] WASC 308
Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236
GETHING J:
(This judgment was delivered extemporaneously on 24 January 2025 and has been edited to correct grammar and infelicities of language and to include full references to relevant evidence and authorities).
By writ filed on 23 January 2025 (Writ), the plaintiff, Claybek Investments Pty Ltd as trustee for the Clayton and Rebekah Black Superannuation Trust (Claybek) seeks to enforce a loan agreement it entered into with Armstrong Way Investments (WA) Pty Ltd (Armstrong). By chamber summons filed at the same time, Claybek seeks an order to extend the operation of Caveat CP938771 (Caveat). This order is sought pursuant to the Transfer of Land Act 1983 (WA) s 138C (TLA). The Caveat was registered by Claybek against Armstrong's land at 30A and 30B Armstrong Way, Newman, Western Australia (Property).
The application is supported by an affidavit of Clayton Black sworn 23 January 2025 (Black Affidavit), a certificate of urgency filed on 23 January 2025 and an undertaking as to damages filed on 23 January 2025. Mr Black is a director of Claybek.
Armstrong is the registered proprietor of the Property.
The Caveat was lodged by Claybek on 2 April 2024.
On 3 January 2025 the Registrar of Titles issued a notice to Claybek notifying that the Caveat would lapse at midnight on 24 January 2025 unless before that time it obtained, extracted and lodged an order from the court extending the operation of the Caveat. This notice was issued at the request of Armstrong and is pursuant to TLA s 138B(1).
Extension of caveat - legal principles
Section 137 of the TLA provides that any person claiming an estate or interest in land may lodge a caveat. A caveat has the effect of preventing registration of any dealing against the land until the person who lodged the caveat has an opportunity to justify the caveat by pursuing available remedies:[1]
[1] Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179 [68] (Buss JA, with whom Wheeler JA agreed); Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50 (Owen J, with whom Malcolm CJ and Walsh J agreed) (Custom Credit).
Section 138C(1) of the TLA provides that the caveator who is served with a notice under s 138B(1) may apply to the Supreme Court, in accordance with the rules of the court, for an order extending the operation of the caveat. By s 138B(2), on the hearing of an application of this kind, if the court is satisfied that the caveator's claim has or may have substance, it may make one of three orders:
(a)an order extending the operation of the caveat for such period as is specified in the order; or
(b)an order extending the operation of the caveat until the further order of the court; or
(c)such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged.
If the court it not satisfied that the caveator's claim has or may have substance, then s 138C(2)(b) of the TLA requires it to dismiss the application.
By s 138C(3) of the TLA, an interim order under this section may be made ex parte unless the court orders otherwise.
In determining whether the caveat should be extended pursuant to s 138C of the TLA, the plaintiff has the onus of satisfying the court that:[2]
(a)the plaintiff's claim has or may have substance; and
(b)the balance of convenience favours the maintenance of the caveat.
[2] Navarc Pty Ltd v Moondancer Holdings Pty Ltd[2009] WASCA 95 [20] - [21] (Pulllin JA, with whom Miller and Newnes JJA agreed) (Navarc); Custom Credit (48) (Owen J, with whom Malcolm CJ and Walsh J agreed); Bashford v Bashford [2008] WASC 138 [47] (Beech J) (Bashford); Bride v The Registrar of Titles [2015] WASC 11 [12] (Edelman J) (Bride).
As to the first issue, this is usually expressed as whether the caveator can show that there is a serious question to be tried, or whether the caveator can prove a prima facie case.[3] The existence of a serious question to be tried involves showing a sufficient likelihood of success to justify the preservation of the status quo in all of the circumstances. How strong the likelihood of success needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought.[4]
[3] Bride [13]; Bashford [48].
[4] Bateson v Jones [2013] WASC 8 [19] (Pritchard J) (Bateson).
In an application for an extension of caveat it is not appropriate to attempt to resolve conflicts of evidence on affidavit, evaluate the applicant's evidence or undertake a preliminary trial.[5]
[5] Bride [13]; Bashford [48].
The requirement that the caveator's claim of substance be in respect of a claim of an 'estate or interest in land' means that that the claim must concern a proprietary interest in land.[6] This requires the interest to be a proprietary interest that is recognised at law or in equity.[7]
[7] Prem [60].
The caveat will not be removed unless the claim to an estate or interest in the land appears to be without foundation.[8]
[8] Bashford [49].
As to the second issue, the court considers the balance of convenience when it decides whether to exercise its discretion to extend the caveat. The balance of convenience is not independent of the strength or weakness of the caveator's claim. Rather, the apparent strength or weakness of the case for relief at trial is a relevant consideration on the balance of convenience.[9]
[9] Bride [15].
It is also important to consider, in assessing the balance of convenience, whether the failure to extend the caveat will have the effect of defeating the proprietary interest which is claimed.[10]
[10] Bride[16].
In summary, in order to extend the Caveat, Claybek must persuade the court that:[11]
(a)its claim has, or may have, substance; and
(b)the balance of convenience favours the extension of the Caveat.
[11] Bride [12].
Does the plaintiff's claim have, or may it have, substance?
The estate or interest which Claybek claims in the Caveat is an '[i]nterest as a person who is entitled to receive portions of the proceeds of land upon sale'.
Mr Black deposes that the interest of Claybek arises under the loan agreement between Claybek and Armstrong entered into in or about June 2022 (Loan Agreement). He annexes an executed copy of the Loan Agreement to the Black Affidavit.
Pursuant to the Loan Agreement, Claybek agreed to lend $173,000 to Armstrong. The Loan Agreement empowers Claybek to lodge a caveat over the Property. The relevant clause is cl 5, which is as follows:
5SECURITY
5.1Subject to Claim Caveat
For the purposes of the Lender security their interest under the Loan Documents the Borrower hereby irrevocably consents to the Lender lodging a 'Subject to Claim' Caveat ONLY against the Property.
5.2No 'Absolutely' Caveat
The Lender acknowledges that they have no right to lodge a caveat 'Absolutely' and irrevocably appoints the Borrower to remove any caveat 'Absolutely' lodged by the Lender with all costs and expenses incurred by the Borrower in connection with the removal of the offending caveat will be paid for by the Lender.
5.3Costs
The costs and expenses incurred by the Lender in connection with the preparation registration, lodgement and subsequent removal of the Caveat will be paid for by the Borrower capped at the value of $330 inc GST plus Landgate/Electronic Lodgement Fees for the lodgement and subsequent removal event.
The Loan Agreement in cl 6.2 provides that upon an event of default occurring, Claybek may by notice to Armstrong make the amount owing (as defined) immediately due and payable, exercise their rights under the Caveat or any other provisions of the Loan Agreement or exercise any rights it has under any law.
Mr Black deposes that:
(a)the sum of $173,000 was advanced to Armstrong on 30 June 2022;
(b)Armstrong made some repayments of the loan;
(c)Armstrong defaulted on the Loan Agreement by missing the payment for the quarter ending on 30 December 2023;
(d)on 9 April 2024, Claybek issued a notice of default to Armstrong;
(e)there have been some negotiations between representatives of Claybek and Armstrong for the payment of the loan, removal of the Caveat and/or substitution of the security for the loan; and
(f)Armstrong has defaulted on the Loan Agreement by missing the payments due on 1 October 2024 and 1 January 2025.
Claybek claims a proprietary interest in the Property, namely an equitable charge. Whether a contract gives rise to an equitable charge depends on the intention of the parties. Intention can be express or implied. The intention is to be garnered from the terms and conditions of the contract and its commercial purposes. The court should not adopt a narrow or pedantic approach to construction, particularly in the case of commercial arrangements. No particular form of words is required to create a charge. The language is immaterial if the meaning is plain. An agreement that a person has a right to place a caveat on another's title may demonstrate an intention to create an equitable charge.[12] In my view, there is at least a serious question to be tried that Claybek has an equitable charge over the Property.
[12] Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236 [39] - [40].
Does the balance of convenience favour extension of the caveat?
As to the balance of convenience, Mr Black deposes that it is his belief that Armstrong, upon sale of the Property, will not honour its commitments under the Loan Agreement, and that, without any form of security, Claybek will suffer significant losses including the loss of funds paid to Armstrong under the Loan Agreement.
I am satisfied that the failure to extend the Caveat will have the effect of destroying, or substantially impairing, the benefit of the proprietary interest which is claimed.
The removal of the Caveat would undermine the commercial bargain that the parties have struck in the Loan Agreement. If the Caveat is not extended, Claybek will have no security in relation to the amount it alleges is outstanding under the Loan Agreement. The effect of the removal of the Caveat will be that Armstrong will be able to sell the property, free from any practical obligation to account to Claybek for the proceeds of the sale.[13]
[13] Custom Credit (50) (Owen J).
Claybek's claim is a straightforward claim for the recovery of money advanced under the written Loan Agreement. The right to secure payment by lodging a caveat is a term of the Loan Agreement. No defence is apparent. The claim, on its face, in relation to the repayment of outstanding moneys appears to be strong.
Claybek has provided an undertaking as to damages, which protects Armstrong in the event that Claybek's claim turns out not to have substance.
In all these circumstances, Claybek has persuaded me that the balance of convenience favours the extension of the Caveat.
I will hear from counsel as to the appropriate form of the orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
OB
Associate to the Hon Justice Gething
6 FEBRUARY 2025
[6] Bride [14]; Prem v Surma [2024] WASC 308[60] (Strk J) (Prem).
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