Crane Distribution Ltd v Gordon

[2010] WASC 202

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CRANE DISTRIBUTION LTD -v- GORDON [2010] WASC 202

CORAM:   HALL J

HEARD:   22 JULY 2010

DELIVERED          :   22 JULY 2010

FILE NO/S:   CIV 2113 of 2010

MATTER                :A Notice Pursuant to Section 138B of the Transfer of Land Act 1893

BETWEEN:   CRANE DISTRIBUTION LTD

Plaintiff

AND

JOHN CHARLES GORDON
First Defendant

THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Real property - Caveat - Application to extend operation of caveat - Ex parte application - Serious question to be tried - Balance of convenience

Legislation:

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

Result:

Caveat extended

Category:    B

Representation:

Counsel:

Plaintiff:     Mr P N Poliwka

First Defendant              :     No appearance

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Q Legal

First Defendant              :     No appearance

Second Defendant         :     No appearance

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

Bashford v Bashford [2008] WASC 138

City of Fremantle v Moltoni (No 1) Pty Ltd [2009] WASC 261

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

Jandric v Jandric [1999] WASC 22

Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95

Parola v Parola [2009] WASC 190

Porter v McDonald [1984] WAR 271

Stacey v Stacey [2010] WASC 85

HALL J:  (This judgment was delivered extemporaneously on 22 July 2010 and is edited from the transcript).

1. The plaintiff, Crane Distribution Ltd, which I will hereinafter refer to as Crane, has applied for an order extending the operation of a caveat over property jointly owned by the first defendant, John Charles Gordon.

2. In support of the application, an affidavit of Lewis Raymond Haigh has been filed by the plaintiff.  On the basis of that affidavit the following facts can be drawn.  Crane entered into a credit agreement with J & D Gordon Plumbing Pty Ltd on 11 October 2006.  That agreement provided that Crane would extend credit to J & D Gordon Plumbing for goods delivered in any calendar month.  Unless otherwise agreed, the amount owing for the goods was to be paid on or before the last trading day of the following month.

3. The first defendant, Mr Gordon, provided a guarantee and indemnity to Crane.  That guarantee does not nominate the guarantor in the space provided but it is signed by Mr Gordon in the place for the guarantor to sign.  In those circumstances, the purport and effect of the guarantee appears clear; that is, Mr Gordon was agreeing to be liable for the moneys owing by J & D Gordon Plumbing to Crane under the credit agreement.

4. Clause 15 of the guarantee provides that the guarantor charges all his interest in real property with the amount of any indebtedness to the supplier, Crane, owing at any particular time.  In particular the clause provides that the guarantor consents to the registration of caveats to give effect to the charge created.

5. On 8 September 2009, Crane lodged a caveat over the land contained in Certificate of Title Volume 2191 Folio 522.  That property is jointly owned by Mr Gordon and Dorothy Patricia Gordon.  The caveat expressly only relates to Mr Gordon's interest in the land.  The caveat states that the interest in the land claimed by Mr Crane is:

   written guarantee, indemnity and charge dated 11 October 2006, whereby John Charles Gordon as guarantor charged all of his interest in any real property, both present and future, with any amounts owing by J & D Gordon Plumbing Pty Ltd, ACN 118375250, to the caveator from time to time.

6. Mr Haigh deposes that as at 19 July 2010 the amount owing under the credit facility was $171,477.33.

7. Mr Gordon applied to the Registrar of Titles pursuant to s 138B of the Transfer of Land Act 1893 (WA) for a notice to be served on the caveator that the caveat will lapse within 21 days unless action is taken to extend it. The notice was issued and received by Crane on or about 7 July 2010. The lapse date is 29 July 2010.

8. On 21 July 2010 an originating motion seeking an extension of the caveat was filed by the solicitors acting for Crane.  It is apparent both from the motion and the submissions filed that it was intended that this application would be made ex parte.  The only stated ground for making an application, on an ex parte basis was that s 138C(3) provides for an ex parte application to be made.

9. Section 138C(3) provides that the court may make an interim order ex parte.  There is of course no requirement that an order be made ex parte.  It is discretionary and the grounds for exercising the discretion must exist.  There must be exceptional circumstances to justify proceeding without notice to an affected party:  Stacey v Stacey [2010] WASC 85 and Parola v Parola [2009] WASC 190.

10. Counsel for the plaintiff has referred me to the decision of McKechnie J in City of Fremantle v Moltoni (No 1) Pty Ltd [2009] WASC 261, in particular at [31]. In that case his Honour referred to the general practice of extending caveats by way of an interim application that is brought ex parte. His Honour, however, did not in that decision approve that practice and indeed he noted that nothing he said was in any way a derogation of what had been said by Beech J in Parola v Parola.  In Moltoni, his Honour McKechnie J went on to say that there should have been notice given in that case in any event.

11. It should also be noted that urgency does not necessarily justify no notice being given.  Notice can be given, even if short. One obvious reason why ex parte applications should be avoided if possible is that it may prove difficult, if not impossible, to determine the effect that an extension order may have on the registered proprietor.  Even an interim order can have a significant effect if, for example, there is some proposed contract in respect of the property that is due to settle:  Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95.

12. In the present case, Crane had from 7 July 2010 to bring proceedings and put Mr Gordon on notice of them.  There is no evidence in the affidavit of Mr Haigh which explains why no application was made until 21 July 2010.  In submissions today counsel has said that the affidavit from Mr Haigh was only received on 21 July and therefore filed with the application on that day, but that in itself does not explain why the application could not have been made earlier.

13. A caveator cannot rely upon urgency which is self‑created to justify proceedings being made ex parte.  In any event, there appears to have been no attempt to serve Mr Gordon or put him on notice of this application.  Indeed, it would seem that the application was made on the assumption that the plaintiff had a right to an ex parte hearing.

14. Having said that, it is nonetheless necessary to take into account the merits of the application and the effect that denial of it may have on the plaintiff.  Section 138C(2) provides that the court may make an order extending a caveat if satisfied that the caveator's claim 'has or may have substance'.  The onus is on the caveator to demonstrate that there is a serious question to be tried as to whether a caveatable interest exists:  see Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50 and Jandric v Jandric [1999] WASC 22 [5].

15. The caveat should not be removed unless the claim to an estate or interest in the land appears to be without foundation:  Porter v McDonald [1984] WAR 271, 276 and Custom Credit (48).  The balance of convenience is a factor that must be considered where there is an application to extend a caveat.  Nevertheless, interlocutory removal of a caveat is unusual where an arguable case as to the existence of a caveatable interest has been demonstrated:  Custom Credit (50) and Bashford v Bashford [2008] WASC 138.

16. In my view, the evidence before me does demonstrate that there is a serious question to be tried as to whether Crane has the interest in the land as claimed in the caveat filed on 8 September 2009, being caveat L067707.

17. As to the balance of convenience, I note that the interest claimed is of a security nature rather than a proprietary interest.  I refer in that regard to Navarac and the judgment of Pullin J at [22]. Nonetheless, the amount said to be owing is reasonably large and it can be inferred that recovery would be prejudiced if the caveat were to expire. In those circumstances, with some reservations, I am satisfied that the balance of convenience favours extension.

18. That conclusion can be more reasonably reached by taking into account that it is my intention to include in the orders a requirement that the plaintiff provide an undertaking as to damages within seven days of the making of these orders.  That will be a condition subsequent to the making of the orders.  Failing the giving of such an undertaking, the orders will lapse.