Crane Distribution Limited v Recorder of Titles
[2009] TASSC 68
•27 August 2009
[2009] TASSC 68
COURT: SUPREME COURT OF TASMANIA
CITATION: Crane Distribution Limited v Recorder of Titles [2009] TASSC 68
PARTIES: CRANE DISTRIBUTION LIMITED
(ABN 29 000 003 832)
v
RECORDER OF TITLES
BRADLEY, Michael William
JAMES, Kassie Alice
ACN 135 650 243 PTY LTD
FILE NO/S: 528/2009
DELIVERED ON: 27 August 2009
DELIVERED AT: Hobart
HEARING DATE: 21 August 2009
JUDGMENT OF: Crawford CJ
CATCHWORDS:
Real Property – Torrens title – Caveats against dealings – Lapse – Substantiation of caveator's claim – Requirement for undertaking to commence action to maintain claim and pursue with due diligence – Requirement for undertaking as to damages.
Aust Dig Real Property [1307]
REPRESENTATION:
Counsel:
Applicant: M E O'Farrell SC
Respondents other than Recorder of Titles: D R Wallace
Solicitors:
Applicant: Toomey Maning & Co
Respondents other than Recorder of Titles: Wallace Wilkinson & Webster
Judgment Number: [2009] TASSC 68
Number of paragraphs: 17
Serial No 68/2009
File No 528/2009
CRANE DISTRIBUTION LIMITED (ABN 29 000 003 832)
v RECORDER OF TITLES MICHAEL WILLIAM BRADLEY
KASSIE ALICE JAMES and ACN 135 650 243 PTY LTD
REASONS FOR JUDGMENT CRAWFORD CJ
27 August 2009
Michael William Bradley and Kassie Alice James, who I will call the respondents, are the registered proprietors under the Land Titles Act 1980 of land comprised in the Folio of the Register Vol 141729 Folio 2. The land was purchased by them and the transfer registered on 27 September 2004.
On 10 July 2007, the applicant, Crane Distribution Limited, lodged a caveat forbidding the registration of any dealing affecting the land by virtue of an equitable mortgage or charge over the estate of Mr Bradley. It claimed that by virtue of a guarantee by Mr Bradley, by a deed made on 31 July 2001, he charged his interest in land with the repayment of certain monies and that by virtue of the deed, the equitable mortgage or charge was created. No issue was taken before me concerning the right of the applicant to lodge the caveat, provided that Mr Bradley was beneficially entitled to an interest in the land. The applicant's caveatable interest depends on him having a beneficial interest in the land.
The respondents claim that the land was transferred to them in their capacity as trustees of the Bradley Superannuation Fund established by a deed of trust made on or about 1 June 2003. The transfer of the land in fact described them as trustees of the Bradley Superannuation Fund.
There is evidence that the respondents appointed ACN 135 650 243 Pty Ltd to replace them as trustees of the Bradley Superannuation Fund. The new trustee made an application to the Recorder of Titles to be registered proprietor of the land in place of the respondents.
Thereupon, the Recorder of Titles issued to the applicant on 27 May 2009 a notice under the Land Titles Act, s136, which advised that upon the expiration of the period of 28 days from service of the notice, the Recorder intended to register the application unless within that period, an order to the contrary was made by the Supreme Court. It is provided by s136(4) that unless an order to the contrary is made and served on the Recorder within that period of 28 days, an affected caveat lapses and ceases to affect the land.
The caveator applied to the Court for an order that the Recorder be restrained from registering the application. The matter came before Evans J on 26 June 2009 and an order was made that until further order, the Recorder was restrained from registering the application.
By application dated 7 August 2009, the respondents and ACN 135 650 243 Pty Ltd applied to have that order vacated, and the matter came before me for hearing on 21 August. I reserved my decision.
It is agreed that the applicant would have been entitled to lodge a caveat against Mr Bradley's interest in the land if it was a beneficial interest. However, the respondents and ACN 135 650 243 Pty Ltd maintain that he was only a registered proprietor in his capacity as a trustee of the superannuation fund and that because of that, the equitable mortgage or charge claimed by the applicant cannot operate against his interest in the land. The applicant accepts that if in fact Mr Bradley has no beneficial interest in the land, but is registered solely because he is a bare trustee, it has no caveatable interest and the caveat should not be allowed to stand.
A problem for the respondents is that they have not produced the deed of trust they say created the trust in question. They claim that it is lost and after considerable searching cannot be found. By their affidavits they have provided evidence that there was a deed of trust in existence, that it was executed in June 2003, and that it appointed them as trustees for the Bradley Superannuation Fund. They also provided evidence that the land, the subject of the caveat, was purchased by them in their capacity as trustees of that fund.
The applicant challenges the claim that the Bradley Superannuation Fund was ever created and that the deed of trust ever existed. Its counsel pointed to the Conveyancing and Law of Property Act 1884, s60(2)(b), which provides that a declaration of trust respecting any land or interest therein, must be manifested and proved by some writing signed by some person who is able to declare such trust, or by his will. It was argued that as the respondents have not produced such writing, there is insufficient evidence of the trust and its terms. Reliance was placed on Macks v Macks (1986) 6 NSWLR 34 and Mack v Lenton (1993) 32 NSWLR 259 as authority for the proposition that where the original writing is not produced and secondary evidence is relied on, there must be clear and convincing proof, not only of the existence, but also of the relevant contents, of the writing. The applicant challenges the evidence concerning the existence of the deed of trust and its contents and says that it will put the respondents to proof in any action that is commenced concerning the issue.
Evidence was given, largely in affidavit form, by each of the respondents that leads me to conclude that it is likely that a deed of trust was executed and that the trust in question was created and is still in existence. Nevertheless, the evidence has not been fully tested and the hearing of an application to sustain the caveat is not the place for that to occur. As was pointed out by counsel for the applicant, the evidence at the trial of an action may well be different and it is likely to be preceded by interlocutory steps such as discovery of documents.
Courts generally take the approach that the parties should be given full opportunity to determine their rights by action, particularly if the facts are genuinely in dispute. It is, therefore, a general rule that the Court will not determine disputed facts upon an application of this kind.
It is also generally accepted by courts that the test to be applied when deciding whether or not to make an order to remove a caveat, or one that allows a caveat to remain, should be exercised in accordance with the "balance of convenience" test that is applied in relation to interlocutory injunctions. See Caveats by Colbran and Jackson, 346 – 354, 433 – 435. In this case, the balance of convenience supports the applicant, for if the caveat is not sustained and the application for the registration of the new trustee is allowed to be registered by the Recorder, the applicant will be unable to enforce the equitable mortgage or charge it claims to have against the title of Mr Bradley, for he will no longer be a registered proprietor of the land.
For these reasons I am not persuaded that I should vacate the order made by Evans J without giving the applicant the opportunity of sustaining its claim to an equitable mortgage or charge with respect to Mr Bradley's interest in the land, by an action.
I will allow the caveat to remain provided that the applicant undertakes that it will prosecute with all due diligence an action, which it also undertakes it will commence against the respondents within 14 days, in which it will seek to have its claim to an equitable mortgage or charge against Mr Bradley's interest in the land upheld. If such an action is not commenced within that time, I will order that the caveat be removed.
I will also require the applicant to give an undertaking to pay to the respondents and ACN 135 650 243 Pty Ltd any damages they may sustain because of the caveat and which the Court or a judge thinks ought to be paid by the applicant. I see that as just, having regard to the fact that they have gone to a great deal of effort and expense to disclose the evidence upon which they rely for their case. The applicant has had the opportunity to view a great deal of material and make a considered decision whether it is likely to be successful in establishing its claim against Mr Bradley's interest in the land. Further, I understand that there exists an agreement for sale of the land. The caveat may delay that sale or even prevent its completion. I consider it only fair and just that if the applicant loses the action that is to be commenced, it should accept the risk and responsibility for such damages.
Subject to the applicant giving those two undertakings, the application to vacate the order of 26 June 2009 will be dismissed.
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