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

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

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…

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: [2018] WASC 21
Decision Date: 25 JANUARY 2018

CaseChat Overview and Summary

Conroys Smallgoods Pty Ltd sought to extend the operation of two caveats entered over two parcels of land belonging to Tomlinson. The dispute involved the validity of the equitable charge claimed by Conroys, which was based on a Guarantee & Indemnity agreement. Conroys argued that the agreement created an equitable charge over Tomlinson's land, while Tomlinson contended that the caveats were defective because they did not adequately specify the quantum of the claim. The case was heard in the Supreme Court of Western Australia.

The central legal issues in this case revolved around whether the agreements between the parties granted an equitable interest and charge over the land, and whether there was a serious question to be tried regarding the validity of the charge. The court had to determine if the onus was on Conroys to demonstrate that the claimed interest had substance and whether the caveats were properly specified. Additionally, the court needed to consider the balance of convenience in deciding whether to extend the caveats.

The court found that the onus was indeed on Conroys to demonstrate that the claimed interest had substance. The court noted that the Guarantee & Indemnity agreement explicitly stated that the guarantor was charging any estate or interest in any land with payment of all monies owed to the creditor. The court held that the language of the agreement clearly indicated that the guarantor intended to grant a charge over the land. However, the court also emphasised that the caveats needed to adequately specify the estate or interest claimed, and the quantum of the claim had to be ascertainable from the caveats. The court held that the caveats in this case were defective because they did not disclose the quantum of Conroys' claim to a third party inspecting the register.

The court granted the application to extend the caveats, finding that there was a serious question to be tried regarding the validity of the equitable charge. The court also found that the balance of convenience favoured extending the caveats, as Conroys had demonstrated a potential equitable interest in the land, and the interests of justice required further investigation. The final orders of the court allowed the extension of the caveats, subject to certain conditions, including that Conroys provide further particulars to specify the quantum of its claim.

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

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