Harvard Nominees Pty Ltd v Caratti - [2022] WASC 441

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   HARVARD NOMINEES PTY LTD -v- CARATTI [2022] WASC 441
CORAM:   TOTTLE J
HEARD:   30 NOVEMBER 2022
DELIVERED          :   16 DECEMBER 2022
FILE NO/S:   CIV 2009 of 2022
BETWEEN:   HARVARD NOMINEES PTY LTD
First Plaintiff
JOHN MICHAEL CARATTI
Second Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Real property - Caveats - Removal of caveat - Whether first defendant has caveatable interest - Turns on own facts

Legislation:

Transfer of Land Act 1893 (WA), s 138(2), s 138C
Corporations Act 2001 (Cth), s 127

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff	:	RA Dick SC & RK Jameson
Second Plaintiff	:	RA Dick SC & RK Jameson
First Defendant	:	P Mendelow & AP Rumsley
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Lemonis & Tantiprasut Lawyers
Second Plaintiff	:	Lemonis & Tantiprasut Lawyers
First Defendant	:	Alan Rumsley
Second Defendant	:	No appearance

Cases referred to in decision:

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Bashford v Bashford [2008] WASC 138
Boz One Pty Ltd v McLellan [2015] VSCA 68; (2015) 105 ACSR 325
Caratti v Caratti [No 2] [2014] WASC 65
Caratti v Caratti [No 3] [2014] WASC 246
Caratti v Commissioner of Taxation [2018] FCA 1691
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Esperance Cattle Company Pty Ltd v Granite Hill Pty Ltd [2014] WASC 279; (2014) 47 WAR 318
National Australia Bank v McCourt [2010] WASC 237
Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150
Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [2009] WASCA 171
Rural Bank v Mammoth Investments Pty Ltd [2019] WASC 409
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547

TOTTLE J:

Introduction

These reasons concern an application made pursuant to s 138(2) of the Transfer of Land Act 1893 (WA) requiring the first defendant, Mr Allen Caratti, to show cause why caveats lodged by him against the titles to land forming part of a farm known as 'Marvel Loch' should not be removed. The application is the latest manifestation of the long running dispute between Mr Allen Caratti and his brother, the second plaintiff, Mr John Caratti. For ease of reference, and intending no disrespect, I will refer to each of the Caratti brothers by their first names.
The Marvel Loch farm comprises three areas referred to in these proceedings as Harvard Marvel Loch of which the first plaintiff, Harvard Nominees Pty Ltd (Harvard), is the registered proprietor, JMC Marvel Loch of which John is the registered proprietor, and Bella Guarda Marvel Loch of which Bella Guarda Pty Ltd is the registered proprietor. In addition, Harvard is the registered proprietor of a farm known as 'Bullfinch'.
On 7 July 2022 Harvard, John and Bella Guarda entered into sales agreements (Sales…

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: [2022] WASC 441
Decision Date

CaseChat Overview and Summary

In the case of Harvard Nominees Pty Ltd v Caratti, the respondent, Caratti, sought an order for the removal of a caveat lodged by the appellant, Harvard Nominees Pty Ltd, over a property in Kensington. The dispute centered on the validity and enforceability of the caveat, which was based on a contract of sale for the property. Harvard Nominees argued that the contract was void due to non-compliance with statutory requirements, while Caratti contended that the contract was valid and enforceable.

The legal issues before the court included determining whether a serious question was being raised regarding the existence of a caveatable interest and whether the balance of convenience favoured the retention of the caveat. The court had to assess the strength of the likelihood of success on the merits of the case and consider the practical consequences of the order sought. The court also needed to weigh the balance of convenience, which could vary depending on the nature of the rights asserted and the potential harm to the parties involved.

The court held that the onus was on the applicant to demonstrate that there was a serious question to be tried regarding the existence of a caveatable interest. The court found that Harvard Nominees had not met this burden, as the evidence did not sufficiently support the claim that the contract was void. Additionally, the court considered the balance of convenience and concluded that it did not favour the retention of the caveat, particularly in light of the potential harm to Caratti if the status quo was maintained.

The final order of the court was that the caveat lodged by Harvard Nominees Pty Ltd be removed, and the contract of sale between Caratti and the vendor be declared valid and enforceable. This decision was based on the court's finding that there was no serious question to be tried regarding the existence of a caveatable interest and that the balance of convenience did not favour the retention of the caveat.

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 summary when an application is made pursuant to s 138 of the Transfer of Land Act 1893 the onus is on the applicant to demonstrate that there is a serious question to be tried as to whether a caveatable interest exists and that the balance of convenience favours the retention of the caveat on the title.[46] The existence of a serious question to be tried involves showing 'a sufficient likelihood of success to justify in the circumstances the preservation of the status quo' pending trial. How strong the likelihood of success needs to be depends on the nature of the rights asserted and the practical consequences likely to flow from the order sought.[47][46] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50; Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150 [20] ‑ [22] and [29]; Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [2009] WASCA 171 [41] ‑ [44].[47] Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [42] applying the principles stated in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [82]; see also National Australia Bank v McCourt [2010] WASC 237 [39]. In Navarac Pty Ltd v Moondancer Holdings Pty Ltd, Pullin JA (with whom Miller and Newnes JJA agreed) made the following observations about s 138 of the Transfer of Land Act 1893:[48]The section confers a statutory discretion on the court. In Custom Credit Corporation v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 48, Owen J (Malcolm CJ and Walsh J agreeing) referred to and quoted Lord Diplock's judgment in Eng Mee Yong v Letchumanan [1980] AC 331 to the effect that the caveator (at 337):'[M]ust first satisfy the court that on the evidence presented to it, his claim for an interest in the property does raise a serious question to be tried and having done so, he must go on to show that on the balance of convenience, it would be better to maintain the status quo until the trial of the action by preventing the caveatee from disposing of his land to some third party.'Owen J stated that the pronouncement in the Eng Mee Yong case was clearly correct, insofar as it dealt with the onus of demonstrating the existence of a caveatable interest, but that the reference to the balance of convenience required further comment. As to this, after some discussion, Owen J at 50, concluded that the balance of convenience was a factor to be considered in an application under s 138, but that the interlocutory removal of a caveat where an arguable case as to the existence of a caveatable interest has been demonstrated 'will be unusual'.It is true that experience shows that parties are most commonly in dispute about the existence of a caveatable interest. Balance of convenience issues are usually of little or no significance where the caveator claims an estate in fee simple or a leasehold estate. In those fairly common cases, it is 'unusual', as Owen J states, that once an arguable case is made out by the caveator that there is such a caveatable interest, that balance of convenience issues will result in removal. However, if for example the interest claimed by the caveator is a security interest or an interest in competition with another claimant against the registered proprietor, then balance of convenience issues may become decisive. Owen J, at 49 in Custom Credit, gave an example where he referred to Lewenberg v Direct Acceptance Corporation Ltd [1981] VR 344. In that case, the contest was between a registered mortgagee and the holder of an unregistered mortgage. The unregistered mortgagee had lodged a caveat. The registered mortgagee was being prevented by the caveat from passing title under a power of sale which appeared to have been validly exercised. There, the validity of the interest which both contestants had in the land was not in dispute and therefore the holder of the registered mortgage had an unquestionably superior interest in the land. As Owen J said 'but the case was, and could only have been, about the balance of convenience' (49).[48] Navarac Pty Ltd v Moondancer Holdings Pty Ltd [20] - [22].