Independent Timber Supplies Pty Ltd v Holland
[2024] WASC 362
•2 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: INDEPENDENT TIMBER SUPPLIES PTY LTD -v- HOLLAND [2024] WASC 362
CORAM: WHITBY J
HEARD: 2 OCTOBER 2024
DELIVERED : 2 OCTOBER 2024
FILE NO/S: CIV 2142 of 2024
BETWEEN: INDEPENDENT TIMBER SUPPLIES PTY LTD
Plaintiff
AND
CHRISTOPHER JAMES HOLLAND
First Defendant
REGISTRAR OF TITLES
Second Defendant
Catchwords:
Caveats - Application to extend operation of caveat - Guarantee and indemnity clause - No appearance by defendant - Caveator's claim has substance - Balance of convenience favours extension - Extension of caveat granted
Legislation:
Transfer of Land Act 1893 (WA)
Result:
Caveat extended on an interim basis
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr W B MacDonald |
| First Defendant | : | No Appearance |
| Second Defendant | : | No Appearance |
Solicitors:
| Plaintiff | : | Roe Legal Services |
| First Defendant | : | No Appearance |
| Second Defendant | : | No Appearance |
Case(s) referred to in decision(s):
Bashford v Bashford [2008] WASC 138
Bateson v Jones [2013] WASC 8
Bride v The Registrar of Titles [2015] WASC 11
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179
Palazzo Homes Pty Ltd v Goh [2010] WASC 407
Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236
WHITBY J:
(This judgment was delivered extemporaneously on 2 October 2024 and has been edited from the transcript)
This is the plaintiff's application, by originating summons filed on 26 September 2024, for an order pursuant to a s 138C of the Transfer of Land Act 1893 (WA) (TLA) extending the operation of Caveat Q105263 (Caveat) registered by the plaintiff against the first defendant's interest in land at 26 Leslie Road, Wandi, Western Australia (Property).
The application is supported by the affidavit of Kym Li Long sworn 26 September 2024 (Long Affidavit), the affidavit of William Bowie MacDonald sworn 1 October 2024 (MacDonald Affidavit), a certificate of urgency filed on 26 September 2024 and an undertaking as to damages filed on 26 September 2024.
Christopher James Holland, the first defendant, is the registered proprietor as to a 30/100 undivided share of the Property. On 19 August 2024, the plaintiff lodged the Caveat over the first defendant's share of the Property.
On 18 September 2024, the Registrar of Titles, the second defendant, upon the application of the first defendant issued a notice to the plaintiff under s 138B of the TLA advising that the Caveat would lapse on 9 October 2024, unless before that time the second defendant is served with a copy of an order of this court extending its operation.
The first defendant has not entered an appearance to the Originating Summons and has not appeared at the hearing today. The MacDonald Affidavit deposes to attempts to serve the first defendant with the Originating Summons and notice of hearing of the application. I am satisfied, on the basis of that evidence, that all reasonable attempts to bring the Originating Summons and the listing of the application to the attention of the first defendant have been made by the plaintiff.
Form of caveat
When lodging the Caveat, the plaintiff identified its interest in the Property as an interest held as chargee, grounded upon a charge contained in an agreement entered into between CC West Pty Ltd (CC West), the plaintiff, and the first defendant on 13 October 2022. The Caveat is an absolute caveat, that is, it forbids the registration of any instrument affecting the estate or interest claimed by the plaintiff.
The plaintiff's claim
The plaintiff says that it has a proprietary interest in the first defendant's share of the Property pursuant to a credit agreement entered into between the plaintiff, CC West, and the first defendant on 13 October 2022 (Credit Agreement).
The Credit Agreement sets out the terms upon which the plaintiff agreed to supply timber for construction to CC West. The Credit Agreement includes a guarantee and indemnity with the first defendant as guarantor. The guarantee and indemnity is signed by the first defendant.
By cl 1.1 of the guarantee and indemnity, the first defendant guarantees the due and punctual payment by CC West to the plaintiff of monies that CC West was now and hereafter liable to pay to the plaintiff in connection with the supply of goods by the plaintiff to CC West.
By cl 9.1 of the guarantee and indemnity, the first defendant 'charges as beneficial owner… all [his] estate, right, title and interest (now or in the future) in any land in favour of [the plaintiff] to secure the payment of monies' in accordance with the guarantee and indemnity.
The evidence before me establishes that:
(1)On 1 December 2022, Ms Long, financial controller of the plaintiff, issued a letter to CC West to confirm that a monthly credit facility had been made available to CC West;[1]
(2)On 15 September 2023, CC West made a further application for credit with the plaintiff to increase the monthly credit available to CC West;[2]
(3)On 26 September 2023, Ms Long sent an email to the first defendant confirming that CC West's monthly credit limit had been increased;[3]
(4)The plaintiff supplied CC West with construction timber on a credit basis;[4]
(5)CC West did not comply with its obligations under the Credit Agreement as it did not pay for the material supplied by the due dates;[5]
(6)As at 19 September 2024, CC West owed the plaintiff the amount of $52,145.01, which remains outstanding;[6]
(7)On 20 September 2024, CC West was placed into liquidation;[7]
(8)On 5 September 2024, the plaintiff's solicitors received a letter from Community Property Legal Services advising the plaintiff that the Property had been sold;[8]
(9)On 5 September 2024, the first defendant sent Ms Long an email advising that he was waiting for funds to clear and was hopeful that would happen the next day;[9] and
(10)On 11 September 2024, the first defendant sent a further email to Ms Long advising that he was still waiting for funds to clear.[10]
[1] Long Affidavit annexure 'KL-4'.
[2] Long Affidavit annexure 'KL-5'.
[3] Long Affidavit annexure 'KL-6'.
[4] Long Affidavit [10].
[5] Long Affidavit [10].
[6] Long Affidavit annexure 'KL-8'.
[7] Long Affidavit annexure 'KL-9'.
[8] Long Affidavit annexure 'KL-10'.
[9] Long Affidavit annexure 'KL-11'.
[10] Long Affidavit annexure 'KL-11'.
Extension of caveat - legal principles
Section 137 of the TLA provides that any person claiming an interest in land may lodge a caveat. A caveat has the effect of preventing registration of any dealing against the land until the person who lodged the caveat has an opportunity to justify the caveat by pursuing available remedies: Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179 [68].
Section 138C of the TLA provides that the court may make an order to extend a caveat:
138C. Supreme Court's powers on application by caveator
(1)A caveator who is served with a notice under section 138B(1) may apply to the Supreme Court, in accordance with rules of the court, for an order extending the operation of the caveat.
(2)On the hearing of an application under subsection (1), the Supreme Court —
(a)if satisfied that the caveator's claim has or may have substance —
(i)may make an order extending the operation of the caveat for such period as is specified in the order; or
(ii)may make an order extending the operation of the caveat until the further order of the court; or
(iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
and
(b)if not satisfied that the caveator’s claim has or may have substance, shall dismiss the application; and
(c)may make such ancillary orders in relation to the application as it thinks fit.
(3)if not satisfied that the caveator's claim has or may have substance, shall dismiss the application; and
(4)may make such ancillary orders in relation to the application as it thinks fit.
In determining whether the caveat should be extended pursuant to s 138C of the TLA, the plaintiff has the onus of satisfying the court that:
1.The plaintiff's claim has or may have substance, that is, there is a serious question to be tried as to the existence of a proprietary interest in the property[11]; and
2.The balance of convenience favours the maintenance of the caveat.
[11] Bride v The Registrar of Titles [2015] WASC 11 [14].
The principles relevant to an application to extend the operation of a caveat are not in dispute. They were summarised by Beech J (as his Honour then was) in Bashford v Bashford [2008] WASC 138 at [47] to [50]. I apply those principles to this application.
In considering the balance of convenience, the strength or weakness of the plaintiff's claim is a relevant factor. As was said by Pritchard J (as her Honour then was) in Bateson v Jones:[12]
[t]he existence of a serious question to be tried involves showing a sufficient likelihood of success to justify the preservation of the status quo in all of the circumstances. How strong the likelihood of success needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought. Consequently, whether there is a serious question to be tried, and the consideration of those factors going to the balance of convenience, are not wholly independent inquiries. (citations omitted)
[12] Bateson v Jones [2013] WASC 8 [19].
It is also important to consider, in assessing the balance of convenience, whether the failure to extend the caveat will have the effect of defeating the proprietary interest which is claimed.[13]
[13] Bride [16].
In order to extend the Caveat, I must find that:
1.The plaintiff's claim has, or may have, substance; and
2.The balance of convenience favours extension of the Caveat.
Does the plaintiff's claim have, or may it have, substance?
The claim made by plaintiff clearly relates to a proprietary interest in the Property. The plaintiff and the first defendant, as parties to the Credit Agreement, have expressly provided for any interest in land of the first defendant's to be appropriated for the discharge of an outstanding debt under the Credit Agreement. This gives rise to a proprietary interest in the Property capable of protection by caveat.[14]
[14] Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236 [40].
The first defendant has acknowledged, by his emails to Ms Long of the plaintiff, that there is an amount outstanding under the Credit Agreement.
Does the balance of convenience favour extension of the caveat?
The plaintiff submits that the balance of convenience favours the extension of the Caveat. The Property is subject to a contract of sale and therefore, the plaintiff says that if the Caveat is not extended, there is a high likelihood that its proprietary interest in the Property will be defeated.
Weighing against the balance of convenience in favour of extending the Caveat is that the fact that other persons own 70/100 undivided shares in the Property and those persons do not owe money to the plaintiff. Given the ownership of the Property is as tenants in common, there is no legal impediment to those persons dealing with their share of the Property. I recognise however, that there is a practical impediment to them doing so.
The plaintiff has provided an undertaking as to damages which protects the first defendant and the other registered proprietors of the Property in the event that the plaintiff's claim turns out not to have substance.
I am satisfied that, given the strong claim that the plaintiff has to an interest in the Property, the fact that it would be defeated if the Property is sold, and the undertaking as to damages provided by the plaintiff, the balance of convenience favours the extension of the Caveat.
Orders
The Caveat is in absolute form. While I am satisfied that the Caveat should be extended, it is appropriate that it is amended. The plaintiff accepts that the form of the caveat should be amended to a subject to claim caveat to accord with the principle that a caveat should not go beyond the plaintiff's legitimate claim necessary to protect its interests.
The court may make such order as it considers appropriate in dealing with an application to extend a caveat, including the power to order amendment of the caveat as a condition of its extension.[15] The court, however, may not order an amendment of a caveat which would result in the substitution of a different estate or interest than the estate or interest claimed in the caveat. Although the court has the power to amend a caveat, the court should not encourage the belief that an imprecisely worded caveat can easily be amended at a later date. Wrongfully formulated caveats should not be easily tolerated.[16]
[15] Palazzo Homes Pty Ltd v Goh [2010] WASC 407 (Palazzo Homes) [7].
[16] Palazzo Homes [9] - [11].
Having due regard to the overall merits of the plaintiff's application, I am satisfied that the requested amendment ought be made and it is appropriate that the continued operation of the Caveat be conditional upon amendment.
I make the following orders:
1.Caveat Q105263 registered against 26 Leslie Road Wandi in the State of Western Australia, being Lot 510 on Deposited Plan 52729, and being the whole of the land described in Certificate of Title Volume 2672 Folio 250, is amended to forbid the registration of any instrument affecting the estate or interest claimed by the plaintiff unless such instrument is expressed to be subject to the claim of the caveator.
2.The operation of Caveat Q105263 registered against 26 Leslie Road, Wandi in the State of Western Australia, being Lot 510 on Deposited Plan 52729, and being the whole of the land described in Certificate of Title Volume 2672 Folio 250, as amended by order 1, is extended on an interim basis until further order of this Court.
3.The costs of the application be reserved.
4.Each party have liberty to apply to relist the application for hearing to proceed on an inter_partes basis, alternatively, to vary or set aside these orders or with respect to costs, on no less than three business days' notice to the other parties.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RP
Associate to the Honourable Justice Whitby
3 OCTOBER 2024
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