Conroys Smallgoods Pty Ltd v Tomlinson

[2018] WASC 21

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CONROYS SMALLGOODS PTY LTD -v- TOMLINSON [2018] WASC 21

CORAM:   ACTING MASTER STRK

HEARD:   23 OCTOBER 2017

DELIVERED          :   25 JANUARY 2018

FILE NO/S:   CIV 2516 of 2017

BETWEEN:   CONROYS SMALLGOODS PTY LTD

Plaintiff

AND

ROBERT STEVEN TOMLINSON
First Defendant

REGISTRAR OF TITLES
Second Defendant

Catchwords:

Caveats - Application to extend operation of two caveats - Whether agreements grant equitable interest and charge land - Whether there is a serious question to be tried - Balance of convenience - Turns on own facts

Legislation:

Transfer of Land Act 1893 (WA), s 137(1), s 138B

Result:

The operation of the caveats be extended until further order of the court in these proceedings

Category:    B

Representation:

Counsel:

Plaintiff:     Mr C P K Russell

First Defendant             :     Mr R E Lindsay

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     JKR Lawyers

First Defendant             :     Capital Legal

Second Defendant         :     No appearance

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

A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112

Bashford v Bashford [2008] WASC 138

Betlehem v Keytown Constructions Pty Ltd (formerly known as Jadestar Investments Pty Ltd) [2007] WASC 38

Bride v The Registrar of Titles [2015] WASC 11

Cardinal Constructions Pty Ltd v Ghersinich [2009] WASC 239

Complex Scaffolding Solutions Pty Ltd v Doueihi [2014] NSWSC 230

Composite Buyers Ltd v Soong (1995) 38 NSWLR 286

Cruz v Osborne [1999] WASC 8

Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42

EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23

Gee Dee Nominees Pty Ltd v Ecosse Property Holdings Pty Ltd [2016] VSCA 23

Heritage Properties (No 3) Pty Ltd v Coles Supermarkets Australia Pty Ltd (1993) Q ConvR 54‑448

KWS Capital Pty Ltd v Love [2013] WASC 294

Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407

Midland Brick Company Pty Ltd v Welsh [2006] WASC 122; (2006) 32 WAR 287

Porter v McDonald [1984] WAR 271

Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268; (2008) 38 WAR 350

Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171

Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166

Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530

Zorostar Pty Ltd v Arian Investments Pty Ltd [2016] WASC 348

1. ACTING MASTER STRK:  By a chamber summons filed 11 September 2017, the plaintiff sought to extend the operation of two caveats lodged by the plaintiff against two parcels of land belonging to the first defendant, until further order of the court.

Background

1. The chamber summons was filed in proceedings commenced by writ of summons, also filed on 11 September 2017.  By the proceedings, the plaintiff seeks the following relief:

   1.     A declaration that the interest claimed by the plaintiff in Caveat N685225 registered over land more particularly described as Lot 780 on Deposited Plan 37507, being the whole of the land described in Certificate of Title Volume 2226 Folio 462 is valid.

   2.     A declaration that the interest claimed by the plaintiff in Caveat N685226 registered over land more particularly described as Lot 9 on Deposited Plan 402209, being the whole of the land described in Certificate of Title Volume 2860 Folio 574 is valid.

   3.     The sum of $112,565.85 (Debt) being moneys due and owing to the plaintiff by the first defendant pursuant to a guarantee and indemnity which the first defendant provided to the plaintiff on 9 June 2016 (Guarantee & Indemnity).  Under the Guarantee and Indemnity the first defendant:

   (a)guaranteed to the plaintiff the performance by Royal Park Quality Foods Pty Ltd (Royal Park) of all of Royal Park's obligations under a written agreement between Royal Park and the plaintiff dated 9 June 2016 (Credit Agreement); and

   (b)indemnified the plaintiff against any loss that the plaintiff may incur by reason of Royal Park's failure to punctually pay all monies owing to the plaintiff under the Credit Agreement.

   4.     The sum of $2,044.10 being interest on the Debt at the rate of 6 per cent per annum from 18 May 2017 to 11 September 2017 pursuant to the Credit Agreement and the Guarantee & Indemnity.

   5. Further, interest on the Debt at the rate of 6 per cent per annum, being a daily rate of $18.50, from 12 September 2017 until judgment or, alternatively interest on the Debt pursuant to section 32 of the Supreme Court Act 1935 (WA).

   6. Costs on an indemnity basis pursuant to the Credit Agreement and the Guarantee & Indemnity, or in the alternative costs pursuant to the Supreme Court Act 1935 (WA).

2. The application by chambers summons was required as the defendant would not agree to the extension of the two caveats pending a substantive determination of the proceedings commenced by writ of summons.

3. The application was supported by two affidavits:  the affidavit of Tonino Greco, the financial controller of the plaintiff, sworn 11 September 2017 (Greco affidavit); and the affidavit of Luke Peter Humphries, a lawyer employed by the plaintiff's solicitors, sworn 12 September 2017 (Humphries affidavit).  The Humphries affidavit deals with the giving of notice of the application to the second defendant, the Registrar of Titles.  On 20 October 2017, the plaintiff also filed a draft undertaking as to damages, to be provided by the plaintiff to the court.

4. By way of background, the plaintiff says as follows:[1]

   (a)The first defendant granted the plaintiff an equitable charge over two parcels of land belonging to the first defendant by cl 6 of the Guarantee & Indemnity dated 9 June 2016.

   (b)The first defendant entered into the Guarantee & Indemnity at the same time as the plaintiff and Royal Park Quality Foods Pty Ltd (Royal Park) entered into the Credit Agreement dated 9 June 2016.  Under the Credit Agreement, the plaintiff agreed to provide smallgoods to Royal Park on credit.  At that time, the first defendant was a director of Royal Park.

   (c)Pursuant to the Credit Agreement, between 11 May 2017 and 13 June 2017, the plaintiff provided smallgoods to Royal Park and rendered invoices to Royal Park which totalled $112,565.85 (the Debt).  Royal Park has failed to pay the Debt to the plaintiff.

   (d)On 1 August 2017, the plaintiff lodged caveats against two parcels of land owned by the first defendant.[2]  In the caveat, the estate or interest claimed is described as being pursuant to cl 6 of the Guarantee & Indemnity.  The first defendant has been the registered proprietor of the parcels of land since 27 November 2008 and 8 May 2015, respectively.[3]

   (e)The plaintiff has demanded the Debt from both Royal Park and the first defendant but it remains outstanding.[4]

   (f)On or about 31 August 2017, a liquidator was appointed to Royal Park.

   (g)On or about 29 August 2017, the plaintiff received two notices from the second defendant issued pursuant to s 138B of the Transfer of Land Act 1893 (WA), in relation to the two caveats.[5]

   [1] The summary is taken from the plaintiff's outline of submissions filed on 11 October 2017 [2] ‑ [6]; and from the Greco affidavit, where indicated.

   [2] The caveats are annexed to the Greco affidavit as TG-2 and TG-3 respectively.

   [3] Greco affidavit [7], TG-4.

   [4] Greco affidavit [12] ‑ [13], TG-7.

   [5] Greco affidavit [4], TG-1.

5. The first defendant opposes the extension of the two caveats and relies on the affidavit of the first defendant sworn on 21 September 2017 (Tomlinson affidavit); and the affidavit of Miriro Bote, an accountant, sworn 21 September 2017 (Bote affidavit).

6. The plaintiff objects to pars 22 ‑ 25 and 34 of the Tomlinson affidavit and pars 1, 12 and 15 of the Bote affidavit. After hearing counsel, I did not rule on the objection.  I indicated that if anything ultimately turned on the evidence, I would determine the objection and make clear my decision in these reasons.

Legal principles applicable to the extension of caveats

1. The general principles relating to the extension of a caveat under s 138C of the Transfer of Land Act are well established.  They were summarised by Edelman J in Bride v The Registrar of Titles, as follows:[6]

   [6] Bride v The Registrar of Titles [2015] WASC 11 [11] ‑ [16] (footnotes omitted).

   Section 137 of the Transfer of Land Act 1893 (WA) enables a beneficiary or other person claiming an estate or interest in land to lodge a caveat. Section 138C(2) provides for the Supreme Court's powers when a caveator applies to the Supreme Court for an order extending the operation of a caveat, as follows:

   (2)On the hearing of an application under subsection (1), the Supreme Court -

   (a)if satisfied that the caveator's claim has or may have substance -

   (i)may make an order extending the operation of the caveat for such period as is specified in the order; or

   (ii)may make an order extending the operation of the caveat until the further order of the court; or

   (iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;

   and

   (b)if not satisfied that the caveator's claim has or may have substance, shall dismiss the application; and

   (c)may make such ancillary orders in relation to the application as it thinks fit.

   In assessing whether to grant the extension of the caveat the two broad issues are (1) whether the caveator's claim in respect of the estate or interest in land 'has or may have substance' and (2), whether the balance of convenience favours the retention of the caveat and the appropriate orders to be made.

   The first issue is whether the caveator's claim in respect of the estate or interest in land 'has or may have substance'.  This is sometimes 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.  In assessing whether the caveator has proved that the claim has, or may have substance, the Court does not ordinarily evaluate the applicant's evidence or undertake a preliminary trial.

   The requirement that the caveator's claim of substance be in respect of a claim of an 'estate or interest in land' has been held to mean that the claim must concern a proprietary interest in land.

   The second issue is the balance of convenience in extending the caveat.  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.

   An important factor in considering the balance of convenience is if the failure to extend a caveat will have the effect of destroying, or substantially impairing, the benefit of the proprietary interest which is claimed.

Whether the plaintiff's claim has or may have substance

1. In this application, the onus is on the plaintiff to demonstrate that the caveatable interest it claims has or may have substance.[7]

   [7] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50 (Owen J).

2. The plaintiff claims to have an equitable interest in two parcels of land belonging to the first defendant, as a chargee.  It claims that an equitable charge was created contractually, relying on cl 6 of the Guarantee & Indemnity, which provides as follows:[8]

   The Guarantor(s) hereby charge in favour of the Creditor any estate and interest in any land and in any other asset(s), whether tangible or intangible, in which they now have any legal or beneficial interest or in which they will later acquire any such interest, with payment of all monies owed to the Creditor.

   [8] Greco affidavit, TG-5.

3. The plaintiff says that the first defendant entered into the Guarantee & Indemnity at the same time as Royal Park entered into the Credit Agreement with the plaintiff.  The Credit Agreement and the Guarantee & Indemnity were contained within one document on which the first defendant placed his signature on the second page and which signature was witnessed by the first defendant's accountant.[9]

   [9] Greco affidavit [9] ‑ [10], TG-5.

4. The plaintiff says that the language of cl 6 makes clear that the guarantor is intending to grant a charge over land.  The plaintiff also says that as at the date of the Guarantee & Indemnity, the first defendant was the registered proprietor of the two parcels of land now caveated, and the first defendant's ownership of the land was able to be ascertained from existing facts and circumstances.  The plaintiff says that this is sufficient to establish a valid and enforceable charge.[10]

   [10] Plaintiff's outline of submissions filed 11 October 2017 [15] ‑ [17].

5. The first defendant raises a number of arguments in opposition to the application.  I understand them to be as follows.

The estate or interest was not adequately specified in the caveats

1. The first defendant argued that the caveats are defective as the estate or interest claimed by the plaintiff is not adequately specified in the caveats.  Counsel for the first defendant noted in particular that the caveat did not disclose the quantum of the plaintiff's claim to a third party inspecting the register.

2. The estate or interest claimed by the plaintiff in the caveats is 'as chargee', and the estate or interest is claimed to be by virtue of the following:[11]

   Pursuant to clause 6 of the Personal Guarantee and Indemnity between the Caveator and the Registered Proprietor dated 9 June 2016.

   The extent was to the whole of the land comprised in the certificates of title.

   [11] Greco affidavit, TG‑2, being a true copy of caveat N685225; and TG‑3, being a true copy of caveat N685226.

3. It was not in contention at the hearing that a caveat must definitely or explicitly specify the estate or interest claimed and that it must reveal to the registered proprietor the nature and extent of the claim.[12]

   [12] Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407, 422 ‑ 23, as cited in Zorostar Pty Ltd v Arian Investments Pty Ltd [2016] WASC 348 [26] (Beech J). Plaintiff's outline of submissions filed 11 October 2017 [9].

4. In response to the first defendant's complaint, the plaintiff argued that the caveats did in fact definitely or explicitly specify the estate or interest claimed and revealed to the registered proprietor the nature and extent of the claim.

5. In Leros Pty Ltd v Terara Pty Ltd,[13] the majority found that a statement of the amount of the debt secured is not required as an element in the requisite description of the caveator's interest.  In Midland Brick Company Pty Ltd v Welsh,[14] Hasluck J noted that, for the reasons given by McKechnie J in Cruz v Osborne,[15] the description of the estate being claimed can be supported in certain cases by reference to the deed or instrument mentioned in the caveat from which the estate or interest is said to arise.

   [13] Leros Pty Ltd v Terara Pty Ltd (423) on appeal from the Supreme Court of Western Australia.

   [14] Midland Brick Company Pty Ltd v Welsh [2006] WASC 122; (2006) 32 WAR 287 [360], [389].

   [15] Cruz v Osborne [1999] WASC 8.

6. Having considered the caveats, and in light of the decisions referred to above, I am satisfied that the caveats meet the requirements as to form.

The conditions for guarantee obligation not fulfilled

1. The first defendant says that the Guarantee & Indemnity:[16]

   [I]s one in which the first defendant's liability depends upon it first being established by the plaintiff that there has been a default by the unspecified buyer.  A contract of guarantee arises only where it has been shown that the buyer has defaulted and some explanation given as to the nature of that default.

   [16] First defendant's outline of argument filed 21 September 2017 [9].

2. The first defendant complains that in this case, default is not established, and because of this, the contract of guarantee does not arise or is not enforceable.

3. In response, the plaintiff contends that it has established a default on the part of Royal Park and that it is entitled to proceed directly against the first defendant.  Having regard to the Greco affidavit, in particular [9] ‑ [12], and to the terms of the Guarantee & Indemnity, I am satisfied of the same.

The land was not charged in favour of the plaintiff

1. The first defendant argued that there was no formal charging by the plaintiff of an interest in the two properties, and therefore no foundation for the caveats.[17]  The first defendant pressed a number of alternative grounds in support of this argument.

   [17] First defendant's outline of argument filed 21 September 2017 [10].

2. First, that a charging instrument, executed by the first defendant in favour of the plaintiff and registered against the land, was required, but in this case no charging instrument was agreed, executed, or registered.  Counsel for the first defendant also argued that the obligation of the guarantor to create a charging instrument would only arise upon there being indebtedness and a breach by the primary obligor.

3. In this case, an instrument separate to the Guarantee & Indemnity was not required.  In coming to this conclusion, I have had regard to the following.

4. As Edelman J stated in Bride '[t]he requirement that the caveator's claim of substance be in respect of a claim of an "estate or interest in land" has been held to mean that the claim must concern a proprietary interest in land.'[18] A charge over land is an estate or interest in land within the meaning of s 137 of the Transfer of Land Act which is able to be protected by a caveat.[19] 

   [18] Bride v The Registrar of Titles [14] (footnotes omitted).

   [19] Composite Buyers Ltd v Soong (1995) 38 NSWLR 286, 288 (Hodgson J); and cited in KWS Capital Pty Ltd v Love [2013] WASC 294 [37] (Edelman J).

5. No particular form of words is required to create a charge.  Rather, as noted by Allanson J in Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd:[20]

   [t]he question is whether the contracting parties have expressly or impliedly evinced an intention to appropriate property for the discharge of a debt or other obligation and to give the plaintiff a present right to have the property made available to meet a debt or other obligation:  National Provincial & Union Bank of England Ltd v Charnley [1924] KB 431, 449 - 450; Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584, 595 - 596; Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162. The property charged can be property to be acquired in the future, providing it is definite and ascertainable: Montagu v Earl of Sandwich (1886) 32 Ch D 525.

   [20] Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171 [46].

6. It has been held that where the relevant term uses words such as 'charge' and 'mortgage', the conclusion that the term was intended to create a security in favour of the lender may be relatively easy to reach.[21]  In this case, it is certainly arguable that cl 6 of the Guarantee & Indemnity evinces an intention to charge land held by the first defendant 'with payment of all monies owed to the creditor'.  Further, the inclusion of the words 'hereby charge' in cl 6 is inconsistent with the first defendant's contention that the obligation of the guarantor to create a separate charging instrument would only arise upon their being indebtedness and a breach of the primary obligor, not before.

   [21] Complex Scaffolding Solutions Pty Ltd v Doueihi [2014] NSWSC 230 [30] (Robb J).

7. Secondly, the first defendant argued that that the absence of a name where the definition of 'Buyer' appears in the Guarantee & Indemnity causes difficulty for the plaintiff in seeking to enforce Guarantee & Indemnity as against the first defendant, and renders the Guarantee & Indemnity ineffective as creating a charge over land.

1. As to that absence, the plaintiff says in response that on the proper construction of the Guarantee & Indemnity, the 'Buyer' is Royal Park.  The plaintiff says that this is because documents executed together can be considered together.[22]  The plaintiff contends that '[w]here a commercial transaction is implemented by several contracts or documents, all of the contracts or documents may be read together for the purpose of ascertaining their proper construction and legal effect, at least where the contracts or documents are executed contemporaneously or within a short period'.[23]  In this regard, the plaintiff says that the first defendant entered into the Guarantee & Indemnity at the same time as Royal Park entered into the Credit Agreement with the plaintiff.  It is the plaintiff's position that the Credit Agreement and the Guarantee & Indemnity were contained within one document on which the first defendant placed his signature on the second page and which signature was witnessed by the first defendant's accountant.[24]

   [22] Plaintiff's outline of submissions filed 11 October 2017 [28] ‑ [34].

   [23] Plaintiff's outline of submissions filed 11 October 2017 [30] citing Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530, 559 [82]; Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268; (2008) 38 WAR 350, 374 [87] (Buss JA, Martin CJ agreeing); EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23, 52 ‑ 53 (Buss JA, Owen & Newnes JJA agreeing). Also see Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166 [45] ‑ [49].

   [24] Greco affidavit [9] ‑ [10], TG-5.

2. The first defendant's answer to the above was expressed as follows:[25]

   [25] First defendant's responsive outline of submissions filed 19 October 2017 [20] ‑ [26] (footnotes omitted).

   [I]n this case the Plaintiff has credit arrangements not only with Royal Park Quality Foods Pty Ltd ('Royal Park') but also with other companies of which Mr Tomlinson is a director, including Tomlinson Family Trust T/A Regency Foods Australia ('Regency Foods') in which the First Defendant has day to day conduct and management.  Both Regency Foods and Royal Park and another company of the First Defendant, West Coast Meat Solutions Pty Ltd, have been supplied goods by the Plaintiff under credit arrangements (paragraphs 11 and 12 of the Affidavit of Robert Tomlinson).

   In Custom Credit at page 546, it is said that there is authority for the constructional approach that if a written contract fails to state information, such as a date, which an Act requires to be stated in it, a court will not supply the omitted information by a process of construction or implication. Their honours went on to say, 'where, by a court declining to supply in that way omitted information, a term going to the heart of an agreement is left uncertain, the agreement has been held, because uncertain, not to amount to a valid contract.'

   The omission by the Plaintiff to identify a buyer or ABN in the Contract of Guarantee results in a situation whereby there is no identification as to who the entity is or what the debt is, that the First Defendant is agreeing to guarantee or indemnify.  The Plaintiff's request is that the Court cures this substantial deficiency that goes to the heart of the contract, which as the case of Custom Credit provides, is not the constructional approach.

   The various credit agreements and account applications were all completed by Ms Bote in the absence of the First Defendant.  The First Defendant did not see the credit agreement for Royal Park being relied upon by the Plaintiff nor does he have day to day conduct or management of Royal Park.

   Affidavit of Robert Tomlinson paragraph 13 and 27

   Affidavit of Miriro Bote paragraph 5

   As Ms Bote describes, she completed and signed the credit agreement on 9 June 2016 and she filled in the First Defendant's details under the heading guarantor and dated the contract 9 June 2016, but she was unaware which entity the Contract of Guarantee related to as there is no reference to the buyer.

   Affidavit of Miriro Bote paragraphs 11 and 12.

   Given that the First Defendant did not see nor read the credit agreement; that there were three companies of which the First Defendant was a director and who traded with the Plaintiff; and the absence of any indication in the Contract of Guarantee of the buyer or ABN [which contents are to be strictly construed], Mr Tomlinson would have no means of knowing or inferring from the credit agreement for Royal Park, which was signed by Ms Bote on the same date as the Contract of Guarantee signed by Mr Tomlinson, that the unspecified buyer was meant to be Royal Park.

   The Plaintiff relies upon the case of Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166 at paras 50-52 to establish that the credit agreement and the Contract of Guarantee formed part of the same documents, this is not the case here. The credit agreement and Contract of Guarantee were two separate documents. The First Defendant's affidavit evidence is relevant to negate and refute the Plaintiff's reliance on extraneous documentation, specifically the credit agreement provided by the Plaintiff in the form of the credit agreement.

3. As to this second argument, I note that the question I am to answer is whether the plaintiff's claim (as caveator) has or may have substance - is there a serious question to be tried about whether the Guarantee & Indemnity creates an equitable charge over the first defendant's land?  In assessing whether the caveator has proved that the claim has, or may have substance, the court does not ordinarily evaluate the applicant's evidence or undertake a preliminary trial.  Further, in determining the plaintiff's application, it is not appropriate to resolve conflicts of evidence on affidavit.[26]

   [26] Porter v McDonald [1984] WAR 271, 276, as cited in Zorostar Pty Ltd v Arian Investments Pty Ltd [31] (Beech J).

4. Thirdly, the first defendant argued that the parties agreed that a caveat would not be permissible against property belonging to the first defendant, and such intention was evidenced by cl 6 of the Guarantee & Indemnity, as amended. The first defendant says that the Guarantee & Indemnity precludes lodgment of caveats based upon the deletion in cl 6 of the words 'and consent to the lodging by the creditor of a caveat or caveats which note the creditor's interest in the real property', by those words having been struck through.[27]

   [27] First defendant's responsive outline of submissions filed 19 October 2017 [13].

5. I agree with the plaintiff that the first step in dealing with the assertion is to consider to what use the deleted text can be put. Immediate resort to deleted text, which remains visible in the document, when construing a contract is not permitted.  Recourse is only permitted for the purpose of construing ambiguous language in the agreement.[28]  In this case, there is no ambiguity of language.

   [28] Gee Dee Nominees Pty Ltd v Ecosse Property Holdings Pty Ltd [2016] VSCA 23 [93] ‑ [95]; A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112 [37] ‑ [40].

6. The fact that the Guarantee & Indemnity did not give the plaintiff the express right to lodge caveats over certain property will not prevent the caveats from being effectively lodged. There is no requirement in s 137 of the Transfer of Land Act for the caveator to have secured permission to lodge a caveat.

7. Further, by the Guarantee & Indemnity the plaintiff was not bound to a promise not lodge caveats, although I note that had such a promise been made, that promise would not have determined the matter.[29]

   [29] Cardinal Constructions Pty Ltd v Ghersinich [2009] WASC 239 [59] (Jenkins J); citing Betlehem v Keytown Constructions Pty Ltd (formerly known as Jadestar Investments Pty Ltd) [2007] WASC 38 [19] ‑ [20] (EM Heenan J).

8. Again, as to the arguments raised, I note that the question I am to answer is whether the plaintiff's claim (as caveator) has or may have substance - is there a serious question to be tried about whether the Guarantee & Indemnity creates an equitable charge over the first defendant's land?  As noted above, in assessing whether the caveator has proved that the claim has, or may have substance, the court does not ordinarily undertake a preliminary trial. 

9. In all of the circumstances, I am satisfied that the plaintiff has discharged its onus to demonstrate that the caveatable interest it claims may have substance.  The plaintiff has shown a sufficient likelihood of success in its claim of an equitable charge to justify the continuation of the caveat.[30]

   [30] Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [70].

The balance of convenience

1. I now turn to the question of the balance of convenience. In my opinion the balance of convenience favours the extension of the operation of the caveats.  There are a number of considerations which lead me to that conclusion.

2. While the first defendant says the balance of convenience does not favour the extension of the caveats because of the prejudice to him caused by the presence of the caveats, the evidence as to the caveats being the cause of prejudice is not compelling.  The first defendant's evidence to establish prejudice is as follows.

3. In his affidavit, the first defendant deposes that:[31]

   On 17 August 2017 Mr Lawrence brought the Caveats to my attention.  Settlement of the refinancing of my homes, by which I sought to benefit from a lower interest rate, was due to settle on 17 August 2017.  Searches conducted by Capital Legal beforehand revealed the existence of the Caveats.

   [31] Tomlinson affidavit [28].

4. The first defendant also says that he provided instructions to his solicitor to demand, by way of email, that the plaintiff immediately remove the caveats and identified the loss and damage he had suffered because of the caveats.[32]  Attached to the Tomlinson affidavit at RT‑8 was a copy of the email dated 18 August 2017, which included the following passage:

   The settlement of our client's refinance was booked to settle yesterday.  Searches conducted that morning revealed the existence of the caveats.  Settlement has now been delayed until the caveats are removed.  Any delay in the refinancing of our client's facilities will cause our client to incur substantial costs and damages.

   [32] Tomlinson affidavit [29].

5. There is no evidence of the amount sought to be refinanced, the saving to the first defendant of the lower interest rate, or that his financier has pointed to the plaintiff's subject to claim caveats as a bar to refinancing.

6. On the other hand, I note that substantive proceedings have been commenced by the plaintiff.  There is no suggestion that the proceedings are not capable of proceeding expeditiously. The parties may seek to have the proceedings entered in the CMC List.

7. When considering the balance of convenience, the apparent strength or weakness of the plaintiff's case can be taken into account.[33] I find that the plaintiff's case is arguable and I have not formed a view that the plaintiff's claim is a weak one, so as to tilt the balance of convenience against the extension of the operation of the caveats.

   [33] Bashford v Bashford [2008] WASC 138 [104] (Beech J), citing with approval Heritage Properties (No 3) Pty Ltd v Coles Supermarkets Australia Pty Ltd (1993) Q ConvR 54‑448, 59424 ‑ 59425 (Fitzgerald P & Pincus JA).

8. I have taken into account the undertaking proffered by the plaintiff and I note that the substance of the undertaking proffered was not challenged. 

9. Finally, I have taken into account that while the balance of convenience is a factor to be considered in an application such as this, the interlocutory removal of a caveat where an arguable case as to the existence of the caveat has been demonstrated will be unusual.[34]

   [34] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (50) (Owen J).

Determination

1. For the reasons given, I would propose an order to the following effect:

   (1)The operation of Caveat N685225 and N685226 be extended until further order of the court in these proceedings.

2. I will hear from the parties as to the precise form of orders to be made and as to costs.