Fare v Boral Formwork and Scaffolding Pty Ltd
[2004] WASC 220
FARE & ANOR -v- BORAL FORMWORK & SCAFFOLDING PTY LTD [2004] WASC 220
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 220 | |
| Case No: | CIV:1367/2004 | 6 SEPTEMBER 2004 | |
| Coram: | MASTER NEWNES | 22/10/04 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application to remove caveat dismissed | ||
| B | |||
| PDF Version |
| Parties: | MARK GREGORY FARE NATALIE JOY FARE BORAL FORMWORK & SCAFFOLDING PTY LTD (ACN 004 284 806) |
Catchwords: | Real property Caveat Application for caveator to show cause Guarantee charging land for money owing for goods and services supplied on credit Whether applies to money owing for hire of equipment Whether entitlement to lodge caveat only arises on default by creditor Turns on own facts |
Legislation: | Transfer of Land Act 1893 (WA), s 138 |
Case References: | Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 Fisher v Raven [1964] AC 210 Kylsilver Pty Ltd v One Australia Pty Ltd [2001] NSWSC 611 Porter v McDonald [1984] WAR 271 R v Brown (1991) 1 Qd R 221 R v Jones [1898] 1 QB 119 Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 Walsh v Palladium Carpark [1975] VR 949 White & Anor v Australian and New Zealand Theatres Ltd (1943) 67 CLR 266 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
NATALIE JOY FARE
Second Plaintiff
AND
BORAL FORMWORK & SCAFFOLDING PTY LTD (ACN 004 284 806)
Defendant
Catchwords:
Real property - Caveat - Application for caveator to show cause - Guarantee charging land for money owing for goods and services supplied on credit - Whether applies to money owing for hire of equipment - Whether entitlement to lodge caveat only arises on default by creditor - Turns on own facts
Legislation:
Transfer of Land Act 1893 (WA), s 138
(Page 2)
Result:
Application to remove caveat dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Ms P M V Edward
Second Plaintiff : Ms P M V Edward
Defendant : Mr C K K Ko
Solicitors:
First Plaintiff : Verschuer Edward
Second Plaintiff : Verschuer Edward
Defendant : Brickhills
Case(s) referred to in judgment(s):
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Fisher v Raven [1964] AC 210
Kylsilver Pty Ltd v One Australia Pty Ltd [2001] NSWSC 611
Porter v McDonald [1984] WAR 271
R v Brown (1991) 1 Qd R 221
R v Jones [1898] 1 QB 119
Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529
Walsh v Palladium Carpark [1975] VR 949
White & Anor v Australian and New Zealand Theatres Ltd (1943) 67 CLR 266
Case(s) also cited:
Nil
(Page 3)
1 MASTER NEWNES: This is an application by the plaintiffs under s 138 of the Transfer of Land Act 1893 (WA), requiring the defendant to show cause why a caveat lodged against the title to the defendant's property should not be removed.
2 The plaintiffs were formerly both directors of Millennium Hire Pty Ltd. As of 15 August 2002, Mr Fare became the sole director and secretary of the company.
3 In about 2000 an agreement was entered into between Millennium and the defendant for the hire of plant and equipment by Millennium from the defendant. On about 17 April 2000 the plaintiffs executed a document (the "guarantee") described as a "guarantee and indemnity" and addressed to "Boral Limited and each related body corporate of Boral". In an affidavit sworn 23 March 2004, Mr Fare says the guarantee was signed for the purpose of securing the performance of the obligations of Millennium arising under the hire agreement with the defendant.
4 According to Mr Fare, prior to executing the guarantee the plaintiffs raised concerns with a representative of the defendant, Mr Larkin, about the defendant's request for a personal guarantee. Mr Fare says that Mr Larkin told them that the defendant would not seek to enforce its right to execute a charge over the plaintiff's property. He assured them that the execution of the guarantee was merely a matter of formality and the defendant would only seek to enforce its rights under the guarantee if there was a direct, unreasonable or unjustified refusal or failure by Millennium to pay fees for the hire of the defendant's plant and equipment, or in the event of any damage to the defendant's plant and equipment for which Millennium refused to compensate the defendant. The plaintiffs say that, upon that representation, they executed the guarantee.
5 In an affidavit sworn on 2 September 2004, shortly before this application came on for hearing, Mr Fare says that the description in his earlier affidavit of the circumstances in which the guarantee came to be signed is not accurate. He says that on 17 April 2000 Millennium applied for a credit facility with Boral Ltd, trading as Boral Building Services, for the purpose of purchasing goods or services on credit. Prior to that time, Millennium had established a running account with the defendant for the purpose of obtaining scaffolding on hire to enable Millennium to conduct the business of supplying and erecting scaffolding on building sites.
(Page 4)
6 Mr Fare says that when the application for the credit facility was made the plaintiffs were asked by Boral Ltd to sign, and did sign, a credit application form addressed to Boral Building Services Pty Limited, a copy of which is annexed to Mr Fare's affidavit. Mr Fare says that the guarantee was signed at the same time. According to Mr Fare, both documents were signed "at the request of the defendant's representatives, Trevor Matthews and Ron Larkin" [emphasis added]. Mr Fare goes on in the next paragraph of his affidavit to say that at the time of signing the guarantee "before the representatives of Boral Limited, being Trevor Matthews and Ron Larkin" [emphasis added] nothing was said by either of them to suggest that it would extend to the "running account Millennium had established with the defendant for scaffolding hire", other than giving the assurance that the defendant would not seek to enforce the charge and it was only a formality. He says the comments about the circumstances in which the defendant would seek to enforce its rights were only made several days later.
7 I should interpolate that no explanation has been offered as to how the original explanation, which the plaintiffs now disavow, came to be put forward. That is a matter of some consequence in light of the argument advanced on behalf of the plaintiffs on the hearing of this application that the guarantee has no application to debts owing by Millennium to the defendant for the hire of equipment. Such an argument is consistent with the explanation of the circumstances in which the guarantee came to be signed which is offered in Mr Fare's affidavit of 2 September 2004, but rather at odds with the explanation offered in his affidavit of 23 March 2004 that it was to secure Millennium's obligations under the hire agreement with the defendant. In addition, in his affidavit of 2 September 2004 Mr Fare refers, interchangeably, to Messrs Larkin and Matthews as representatives of Boral Ltd and the defendant. Whilst it is clear from the evidence that at the time both men were employees of the defendant, there is no evidence that they also represented Boral Ltd.
8 On 13 November 2003 the defendant lodged a caveat against the title to the plaintiffs' property. It did so because there was at that time a dispute between the plaintiffs and the defendant as to the amount owing by Millennium to the defendant for the hire of scaffolding equipment and as to whether Millennium was in default of payments due to the defendant. The plaintiffs disputed the amount of the defendant's statements of account for October and November 2003, although they acknowledged that some amount was owing to the defendant. The plaintiffs say that that dispute was resolved in February 2004 when the defendant agreed to pay a reduced amount and that Millennium has since
(Page 5)
- paid that amount, but the defendant refuses to draw the caveat. The defendant says that Millennium was, and is, in default in the payment of moneys owing to the defendant and it is entitled to maintain the caveat in respect of that indebtedness and any future indebtedness.
9 Following the hearing of the application on 6 September 2004, the plaintiffs filed an affidavit of Mr Larkin, who says that at the relevant time he was Operations manager/Kwinana Branch manager of the defendant. He has since left the employment of the defendant. Mr Larkin says he was present with the defendant's then Bunbury manager, Mr Mathews, when the plaintiffs, at the request of Messrs Larkin and Matthews, signed the personal guarantee. He confirms that he said the matters attributed to him in Mr Fare's affidavit of 23 March 2004. Mr Larkin says in his affidavit that he told the plaintiffs the defendant would not seek to enforce its right to execute a charge over the property because he had been told that by the then acting State Manager for Western Australia of the defendant.
10 Mr Larkin denies an assertion in an affidavit sworn by the defendant's Project Co-ordinator, Mr Wood, that he told Mr Wood he had not spoken the words attributed to him by the plaintiffs.
11 The plaintiffs contended that the defendant has no caveatable interest in the plaintiffs' property and sought an order that the caveat be removed.
12 On an application of this nature, the onus is on the caveator to demonstrate there is a serious question to be tried as to whether a caveatable interest exists: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 44 – 5. Where a reasonably arguable case as to the existence of a caveatable interest has been demonstrated, the interlocutory removal of a caveat will be unusual: Custom Credit (supra) at 48 - 50. If there is a serious question to be tried, the question will not, except in the most exceptional circumstances, be determined on an application of this nature: Porter v McDonald [1984] WAR 271 at 276. Brinsden J observed in Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 at 141:
"… the jurisdiction granted by s 138 should not be exercised so as to remove a caveat unless the case is one in which it is patently clear that the estate or interest sought be protected cannot be made out …"
13 Accordingly, if a caveator is able to demonstrate a reasonably arguable case as to the existence of a caveatable interest, the ordinary
(Page 6)
- course is for the caveat to remain and the disputed question to be left for determination at trial.
14 The plaintiffs' contention that the defendant did not have a caveatable interest was based essentially on two grounds; first, that the terms of the guarantee, on which the defendant relied for its caveatable interest, did not extend to charges incurred by Millennium for the hire of equipment from the defendant; and secondly, if the guarantee did apply to hire charges, the defendant was not entitled to lodge a caveat unless at the time Millennium was in default in payments due to the defendant. The plaintiffs say Millennium was not in default when the defendant lodged the caveat. The plaintiffs also submitted that defendant had failed to comply with certain provisions of the Credit Act 1984 (WA).
15 The defendant's counsel simply submitted that the guarantee extended to hire charges owing to it by Millennium. He also submitted that at the time the caveat was lodged moneys were due and owing by Millennium to the defendant in respect of the hire of scaffolding equipment and that, based on the affidavit evidence, it was at least arguable that Millennium was in default in payment of those moneys. The defendant says it is not necessary to show that at the time the caveat was lodged Millennium was in default but, in any event, Millennium was in fact in default at that time.
16 The relevant parts of the guarantee are as follows:
"To: BORAL LIMITED ("Boral") and to each related body corporate of BORAL
I/We the undersigned have requested you to supply Millennium Hire Pty Ltd … ('the Customer')
with goods on credit. Should any Supplier elect to do so then:
(1) I/We will indemnify the Supplier against any losses, costs, charges and expenses of any nature which it might incur as a result of any default of the Customer.
(2) I/We will also be responsible to the Supplier for all outstanding monies due now or at any time in the future for goods which have been supplied or may have been supplied by it from time to time
…
(Page 7)
- (5) This guarantee and indemnity extends to credit given to the Customer in the future by a company which is not now, but is then a related body corporate of BORAL, and may in such case be enforced by BORAL.
(6) This guarantee may only be withdrawn by giving you fourteen (14) days notice in writing by certified mail, but will continue in force in respect of all debt incurred by the Customer up to the date of the withdrawal.
…
(8) In this guarantee and indemnity:-
'Goods' includes services and 'Supplier' means BORAL and each related body corporate of BORAL from whom Goods are purchased.
…
(9) For the purpose of securing the obligations and liabilities entered into by them under this Guarantee, the Guarantors agree to charge with the due and punctual payment and the complete performance of all of those liabilities and obligations, all of their legal or equitable interest (both present and future) of whatsoever nature held in any and all real property and the Guarantors hereby consent to the Company lodging a Caveat or Caveats noting its proprietary interest hereunder. The Guarantors agree to execute any documents and do all such things as may be required by the Company to affix such security upon demand by the Company."
17 The defendant is, and was at the time the guarantee was executed, a related body corporate of Boral.
18 It was argued on behalf of the plaintiffs that the guarantee is to be construed solely as a guarantee and not a guarantee and indemnity. Counsel referred to The Modern Contract of Guarantee, Donovan and Phillips, 2nd ed 1992 at page 29 and the cases cited there.
19 The plaintiffs' counsel argued that it is clear on a plain reading of the guarantee that the defendant was not entitled to lodge a caveat until some liability on the part of the plaintiffs, as guarantors, arose. Counsel for the
(Page 8)
- plaintiffs referred to Kylsilver Pty Ltd v One Australia Pty Ltd [2001] NSWSC 611 at [4], for the proposition that the debtor must be in default for the guarantors' obligation to indemnify the creditor to become enlivened. Accordingly, the plaintiffs' liability would not arise until moneys were due and owing by Millennium to the defendant and there had been default by Millennium in the payment of those moneys. There had been no default by Millennium so the plaintiffs' liability or obligation to indemnify had not been enlivened and therefore the entitlement of the defendant to lodge a caveat to secure the plaintiffs' liability or obligation had not arisen.
20 It was submitted that if the guarantee were construed otherwise, it would lead to the absurd result that the defendant would be entitled to lodge a caveat against the plaintiffs' property forthwith upon the signing of the guarantee, before any goods or services had been supplied to Millennium and regardless of the fact that no goods or services may ever be supplied.
21 In my view, it is arguable that the document incorporates obligations of both guarantee and indemnity. I do not, however, think it is necessary to pursue the effect of that. Even if treated solely as a guarantee, I consider it is arguable that the defendant was not required to wait until there was a default by Millennium before lodging the caveat. Pursuant to cl 9 of the guarantee, the plaintiffs agreed to charge their interest in the property for the purpose of securing "the obligations and liabilities entered into by them under this guarantee". The obligations and liabilities are to indemnify any supplier (as defined) that may in the future supply goods on credit to Millennium, and to be responsible for outstanding moneys which may be due at any time in the future for goods supplied to Millennium.
22 I consider it is arguable that the defendant's entitlement to lodge the caveat arose when the guarantee was signed by the plaintiffs, or alternatively, once Millennium became indebted to the defendant, even if Millennium was not in default. It was not in dispute that Millennium was indebted to the defendant for some amount at the time the caveat was lodged. The dispute was as to whether Millennium was in default.
23 I do not accept that, as submitted by the plaintiffs' counsel, the first of those constructions would necessarily lead to an absurd result, in that a caveat could be lodged in circumstances where Millennium had not acquired, and may never acquire, any goods or services from the defendant. Indeed, it might be thought to lead to a more absurd result to
(Page 9)
- construe the guarantee so as to require that Millennium must be in default before the defendant is entitled to secure the guarantors' obligations. Nor does such a construction mean that the caveat may lie unnecessarily on the title indefinitely. Under the guarantee the plaintiffs may at any time terminate the guarantee (save as to any existing debts of Millennium) by giving 14 days' notice in writing by certified mail to the defendant. The defendant's counsel accepted that the defendant's entitlement to maintain the caveat would fall with the termination of the guarantee and the discharge of any existing debts covered by it.
24 The issue then is whether at the time the caveat was lodged, the defendant had supplied Millennium with "goods on credit".
25 It was submitted on behalf of the defendant that the hire of equipment, where payment is made at the end of the hire period, constitutes the supply of goods, alternatively of services, on credit within the meaning of the guarantee.
26 The plaintiffs argued that the letting of goods on hire by the defendant to Millennium was not a contract to supply goods or services on credit, but a contractual relationship of an entirely different nature. It was submitted on behalf of the plaintiffs that, as cl 8 made clear, the guarantee only covered goods or services purchased on credit by Millennium. It was said that a contract of hire is not a contract for the purchase of services and it is plainly not a contract for the purchase of goods, the scaffolding equipment being hired by Millennium, not purchased by it. It was submitted, in the alternative, that if a hire contract could be regarded as a contract for the supply of goods or services, it was nevertheless not a contract for the supply of the equipment "on credit".
27 By cl 8 of the guarantee "Goods" includes "services". In the Shorter Oxford Dictionary the meanings of "service" include "provision of a facility to meet the needs or for the use of a person … assistance or benefit provided to someone by a person". In the Macquarie Dictionary they include "the supplying … of any articles, commodities … required or demanded".
28 In Walsh v Palladium Carpark [1975] VR 949, the question was whether the provision of car parking facilities was "the provision of services" within the meaning of the Small Claims Tribunal Act. The Full Court of the Supreme Court of Victoria held (at 956) that "services" comprehended not only the provision of work and labour, but also extended to anything that constituted "the doing of positive physical acts
(Page 10)
- which can be appropriately categorised as services". The Court held (at 959) that the undertaking of custody of a motor vehicle by the operator of a carpark could appropriately be categorised as a contract for the provision of services. The Court considered what was actually required to be done on the part of the carpark operator, concluding that the acts of the operator associated with the reception of a car and the issue of a ticket constituted the provision of services.
29 Whilst it is clear that the meaning of a particular term in a contract depends upon the proper construction of the contract as a whole, and that meanings extracted from other contexts must be approached with caution, it is apparent from the decision in Palladium Carpark, and the dictionary definitions to which I have referred, that the word "services" is of potentially wide scope. In each case, it will be necessary to look specifically to what (if anything) it is that the supplier is required to provide to the other party to determine whether anything is provided that can properly be categorised as "services".
30 It may also be the case that extrinsic evidence is admissible to identify the "services" to which the guarantee refers: Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337. In White & Anor v Australian and New Zealand Theatres Ltd (1943) 67 CLR 266 a written contract between two theatrical artists and the owner of theatres provided that the latter engaged the "sole professional services" of the artists "as required and directed" for a stated period and on certain terms. The contract did not specify the nature of the professional services. It was held that extrinsic evidence was admissible to identify the services. Lathan CJ said, at 270 - 271:
"The contract does not specify the nature of the professional services which the company hired and which the plaintiffs undertook to perform. It was therefore not only proper, but indeed, necessary, to identify such services by means of extrinsic evidence."
31 In that context, on one version of the plaintiffs' evidence (albeit a version that the plaintiffs now seek to recant) the circumstances in which the plaintiffs signed the guarantee were that Millennium, a company which they controlled, had entered into an arrangement with the defendant for the hire of plant and equipment and the contract of guarantee had been signed in favour of the defendant for the purpose of securing the performance of the obligations of Millennium arising under the hire agreement.
(Page 11)
32 On the later version of the plaintiffs' evidence, the guarantee was provided for, and is concerned solely with, the purchase by Millennium of goods on credit, or the provision of services of some other kind, from Boral Ltd or Boral Building Services Pty Ltd, although it appears from Mr Fare's affidavit of 23 September 2004 that the guarantee was requested by, and signed in the presence of, representatives of the defendant with whom at about that time Millennium had entered into an agreement for the hire of scaffolding equipment.
33 In the circumstances, I consider there is a triable issue as to whether the hire of equipment involved the supply of services, within the meaning of the guarantee.
34 The next question is whether the supply of the scaffolding equipment was "on credit". I did not understand it to be in issue that in the present case the equipment was supplied to Millennium on the basis that payment would be made for the hire at a later time.
35 It would seem that "credit" is not specifically a technical legal term: R v Brown (1991) 1 Qd R 221 at 224 per Macrossen CJ. It has been said that "credit is obtained when, with the assent of the creditor and at the behest of the debtor, a debt remains for a time unpaid or, it may be suggested, when goods or services are supplied 'in confidence of future payment' being made for them, that is 'without insisting on repayment or upon interchangeable payment' … ": R v Brown (supra). There must be assent by the creditor to the debt remaining unpaid. The assent need not be contractual and it need not be express. The time allowed may be brief and it need not be of fixed duration: Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 per Kitto J at 534.
36 In R v Jones [1898] 1 QB 119, it was accepted that a diner in a restaurant was not obliged to pay for his meal until he had wholly finished it, but he was regarded as having credit extended to him from the moment he commenced the meal. The food in that case was supplied trusting in later payment being made for it. In Fisher v Raven [1964] AC 210, Lord Dilhorne LC said (at 232):
"Whether or not credit is obtained does not depend on the length of time it was intended to be enjoyed or was enjoyed. In the case where a person consumes a meal in a restaurant, he obtains credit despite the fact that he is expected to pay immediately upon consumption of the meal".
(Page 12)
37 In such a case, possession and property in the goods passed on the basis that payment would be made later. In the present instance, possession and use of the equipment was given to Millennium on the basis that payment would be made at a later date. In my view, it is arguable that the letting of equipment on hire by the defendant, on the basis that payment would be made at some later time, was to supply the equipment "on credit" within the meaning of the guarantee. Once again, to the extent the meaning of "on credit" is ambiguous extrinsic evidence may be admissible.
38 There was an issue between the parties as to whether Millennium is currently indebted to the defendant and, if so, whether Millennium is in default in payment of that debt. To the extent they are relevant to this application, those are matters of fact that cannot be resolved on an application of this nature.
39 As I have mentioned, the plaintiffs contended that the defendant had breached various provisions of the Credit Act 1984. I did not understand it to be submitted that the effect of any such breach, if proved, was that the guarantee was unenforceable. Rather, the breaches were relied upon in support of the submission that the guarantee does not contain obligations of both indemnity and guarantee but only of guarantee. For the reasons I have given, I do not consider that that issue is material for the purposes of this application.
40 The plaintiffs also argued that the defendant was not entitled to lodge a caveat in light of the assurances given by Mr Larkin at the time the plaintiffs signed the guarantee. The plaintiffs relied, in particular, on the affidavit of Mr Larkin in which he confirms that he made the statements attributed to him by Mr Fare. Two things can be said about that submission. First, there remains an issue of fact as to whether Mr Larkin made those statements, Mr Wood having deposed that Mr Larkin had previously told him that he had not made them and, secondly, the assurances relied upon by the plaintiffs were qualified. According to the plaintiffs, Mr Larkin said the defendant would only seek to enforce its rights under the guarantee if there was "a direct, unreasonable or unjustified refusal or failure by Millennium to pay fees for the hire of the defendant's plant and equipment". Its rights included the right to lodge a caveat. It is common ground that at the time the caveat was lodged there was a dispute as to whether Millennium was in default in payment of hire charges. On the defendant's case, Millennium was in default. It is therefore arguable that there had been a "direct, unreasonable or
(Page 13)
- unjustified refusal or failure by Millennium to pay fees", that being an issue of fact that cannot be resolved on an application of this nature.
41 I consider there is a triable issue as to whether the defendant was entitled to lodge the caveat and is entitled to maintain it. On the material before me, nothing has been shown which would justify an order that the defendant remove the caveat at this stage. I would therefore dismiss the application.
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