Heaven Builders Pty Ltd v Moustafa

[2024] ACTSC 185

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Heaven Builders Pty Ltd v Moustafa

Citation: 

[2024] ACTSC 185

Hearing Dates: 

31 May 2024 and 14 June 2024

Decision Date: 

14 June 2024

Before:

McCallum CJ

Decision: 

(1) Pursuant to s 107C of the Land Titles Act 1925 (ACT), I grant leave to the first plaintiff to lodge a caveat on the land at Block 11 Section 71 Taylor, more commonly known as 1 Trewenack Street, Taylor, ACT 2913.

(2)    The caveat lodged by the first plaintiff pursuant to order 1 is to remain registered on title until further order of the Court or it is withdrawn by the first plaintiff.

(3)    I list the matter before myself at 9:30am on 26 July 2024.

Catchwords: 

REAL PROPERTY – CAVEATS – application to lodge a caveat – where leave is required because previous caveat has lapsed – where defendants oppose caveat due to interference with sale of the property – where builder and lawyer did not agree to an undertaking as to damages – where owners did not agree to an irrevocable undertaking to disburse proceeds of the sale to the plaintiff’s trust account – where building contract creates a caveatable interest

Legislation Cited:

Land Titles Act 1925 (ACT) s 107C

Cases Cited: 

Mayfair Build Pty Ltd v Sanoubane [2023] ACTSC 148

Parties: 

Heaven Builders Pty Ltd ( First Plaintiff)

Khalil Khan Khattak (Second Plaintiff)

Muhammad Shoaib Khan Naizi (Third Plaintiff)

Mice Kljusuric (Fourth Plaintiff)

Syeda Naila Gul (Fifth Plaintiff)

Nour Moustafa Abdelhameed Moustafa ( First Defendant)

Marwa Mohamed Elsaied Hassan Keshk (Second Defendant)

Representation: 

Counsel

B Buckland ( Plaintiffs)

Self-represented ( Defendants)

Solicitors

Bradley Allen Love Lawyers ( Plaintiffs)

Self-represented ( Defendants)

File Number:

SC 185 of 2024

McCALLUM CJ:       

EX TEMPORE REASONS (REVISED)

1․Heaven Builders Pty Ltd entered into a construction agreement with Dr Nour Moustafa and Dr Marwa Keshk.  The parties are in dispute as to whether any moneys are owed under the building agreement and, by way of cross-claim by Dr Moustafa and Dr Keshk, whether the building works were adequately performed in accordance with the requirements of the contract.  Those proceedings have been heard in the Magistrates Court and, subject to the provision of written submissions in accordance with a timetable, the Court’s decision is reserved.

2․On 31 May 2024, prior to the hearing of the proceedings in the Magistrates Court, Heaven Builders brought an urgent application in this Court for leave to lodge a caveat on the title of the property the subject of the building contract. An order of the Court is required because Heaven Builders had previously lodged a caveat and that caveat lapsed. An order of the Court is required to file a successive caveat: s 107C of the Land Titles Act 1925 (ACT).

3․When the proceedings came before me on an urgent basis as duty judge, Dr Moustafa and Dr Keshk appeared for themselves and opposed the relief sought.  Their principal concern was that the lodgement of a caveat would interfere with the sale of the property which they were endeavouring to achieve at that time.  They informed the Court that a contract for sale had been entered into but was not due to be settled until July.  In those circumstances, Heaven Builders consented to adjourn the application until today on the basis that Dr Moustafa and Dr Keshk had indicated that they would be prepared to provide an irrevocable undertaking to the solicitor retained by them to act on the sale of the property for the proceeds of sale to be paid into a controlled account to be preserved for the benefit of the builder.

4․The proceedings came back before me this morning.  The builder provided evidence of correspondence that has taken place since the matter last came before me in which the owners were asked to provide the irrevocable undertaking it had previously been indicated would be provided.  After an exchange of correspondence, the result was that no such undertaking was forthcoming.  The owners explained in correspondence that they were concerned by information they had received from people present at the house, evidently when it was open for inspection, who broadly represented that the builder had made statements which might kybosh the sale.  In those circumstances they sought, in exchange for the irrevocable undertaking, an undertaking in turn from the builder that it would not impede or obstruct the sale and that, in the event of any obstruction or impediment, it would be liable for damages to the owners.

5․The undertaking as to damages was sought not only from the builder but from Mr Seif, the solicitor acting for the builders.  It contemplated that the lawyers would be responsible for the damages to the owners and all legal costs incurred in initiating proceedings pursuant to the undertaking.  In short, the effect of the undertaking sought was to seek from the builder what a lawyer might know as an undertaking as to damages as the price of obtaining the irrevocable undertaking to preserve the proceeds of sale of the property.  The builder and the lawyer did not agree to give those undertakings and there the matter rested.

6․When the proceedings came back before me today, after hearing argument from both parties, I formed the view that Heaven Builders is entitled to the relief sought.  However, in order to accommodate the concerns of the owners, I afforded Dr Keshk, who appeared this morning on her own behalf and for her husband, an opportunity to instruct her lawyers retained on the sale in accordance with MFI 1 before the Court as follows:

1.that they act for [the defendants] in relation to the sale of the property;

2.that they have received an irrevocable authority and direction from [both defendants] to disburse from the sale of the property the net proceeds of sale to the trust account of Bradley Allen Love Lawyers; and

3.that they will notify [Bradley Allen Love Lawyers] immediately if their instructions to act on the sale of the property are terminated.

7․I note that Dr Moustafa did not appear this morning but is present in court now and that Dr Keshk represented that she had his authority to speak on his behalf this morning.

8․The matter has returned to me just now, at 2:45pm, and it has been indicated that Dr Keshk and Dr Moustafa have changed their minds, indicating that they do not propose to give an irrevocable undertaking to the solicitor because they say there will be no proceeds of sale.  It is not the role of this Court on this occasion to investigate or determine the correctness of that statement and accordingly it is necessary to determine the builder’s application on its merits.  As already indicated, I formed the view this morning that the builder is entitled to the relief sought.  That is for the following reasons.

9․The building agreement contained a clause which is standard in contracts of this kind (being the standard ACT home building contract promulgated by the Master Builders Association of the ACT) creating a charge on the land to secure monies payable to the builder.  The clause in question is clause 30, as follows:

The owner charges the Site and Works with the payment to the Builder of all money payable to the Builder under this Contract or otherwise from the carrying out of the Works.

10․In the proceedings in the Magistrates Court, there is a dispute between the builder and the owners as to the contract by which they were bound.  There was a contract entered into in December 2020 and another April 2021.  I was informed that the dispute in the Magistrates Court extends to the form of the contract of April 2021, which replaced the December contract.  However, there is no dispute that, whichever form of contract binds the parties, it contained clause 30 set out above. 

11․It is established that a clause in the form of clause 30 creates an interest in land that is a caveatable interest and, furthermore, that that caveatable interest abides the termination of the contract: see Mayfair Build Pty Ltd v Sanoubane [2023] ACTSC 148 at [13]. It follows that, subject to there being any “monies payable” to the builder under whatever form of contract is established to bind the parties, the builder presently has a caveatable interest in the defendants’ land.

12․As I have indicated, the proceedings in the Magistrates Court are reserved subject to the provision of written submissions.  It is not possible for this Court to form an assessment as to the likely fate of those proceedings, save to say that it is clear enough that the builder contends there are monies owed.

13․The only objection then to the builder having leave to lodge a fresh caveat arises from, so far as the position today is concerned, the owners’ contention that there is no utility in allowing the caveat to be lodged because there will be no proceeds of sale upon the sale of the land having regard to the extent of the secured interest.  Again, this Court cannot determine the correctness of that proposition.  What is clear enough is that, if the sale proceeds in circumstances where the builder is not granted leave to lodge a second caveat, the builder will lose the benefit, if there be any benefit, of the contractual clause which, on any view of the contract, the owners agreed to, namely the clause that charges the site and the works with any monies payable under the contract.

14․In all the circumstances I am satisfied that it is appropriate to grant leave to lodge a caveat as sought in order 2 of the originating application dated 31 May 2024.

Orders

15․For those reasons I make the following orders:

(1)Pursuant to s 107C of the Land Titles Act 1925 (ACT), I grant leave to the first plaintiff to lodge a caveat on the land at Block 11 Section 71 Taylor, more commonly known as 1 Trewenack Street, Taylor, ACT 2913.

(2)The caveat lodged by the first plaintiff pursuant to order 1 is to remain registered on title until further order of the Court or it is withdrawn by the first plaintiff.

(3)I list the matter before myself at 9:30am on 26 July 2024.

I certify that the preceding fourteen [15] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum

Associate:

Date: