John Street Marina Pty Ltd v Minister for Transport - [2005] WASC 171

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: JOHN STREET MARINA PTY LTD -v- MINISTER FOR TRANSPORT [2005] WASC 171

CORAM: JENKINS J

HEARD: 22 JULY 2005

DELIVERED : 22 JULY 2005

PUBLISHED : 5 AUGUST 2005

FILE NO/S: CIV 1294 of 2005

BETWEEN: JOHN STREET MARINA PTY LTD (ACN 080 524 634)
Plaintiff
AND
MINISTER FOR TRANSPORT
Defendant

Catchwords:

Conveyancing - Caveats - Application for damages for lodging caveat without reasonable cause

Legislation:

Transfer of Land Act 1893, s 70A, s 138B, s 140

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Ms P E Cahill
Defendant: Mr S C England

Solicitors:

Plaintiff: Allens Arthur Robinson
Defendant: Lawton Gillon

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

Bolton v Excell, unreported; FCt SCt of WA; Library 930175; 22 February 1993

Case(s) also cited:

Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106
Consolaro v Consolaro [2002] WASC 92
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Hooke v Holland [1984] WAR 16
Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Woodings v Stevenson (2001) 24 WAR 221

JENKINS J: By originating summons dated 15 March 2005, the plaintiff claims compensation from the defendant in the sum of $4,568.10 pursuant to the Transfer of Land Act 1893 ("the Act"), s 140 for lodging a caveat against a related company's land without reasonable cause.

Background Facts

The related company, Lester Group Ltd ("the Lester Group"), is the registered proprietor of land described as lot 51 on strata plan 39106 and being the whole of the land comprised in certificate of title volume 2563 and folio 529 ("the land").
On 25 August 2004 the defendant lodged a caveat, number I998211, over the land. The estate or interest claimed in the caveat was a right to use the land for parking.
A statutory declaration of Stephen Glen Jenkins, dated 19 November 2004, was attached to the caveat. The statutory declaration declared that Mr Jenkins was the acting manager, regional and asset performance in the Department of Planning and Infrastructure. He stated that by a riverbed lease the defendant granted to Lilburne Pty Ltd a leasehold estate in that portion of the Swan River at North Fremantle, which was more particularly described in the lease, for a term of 17 years commencing on 15 April 1989. By various deeds of assignment the lease was assigned to the Lester Group and then to the plaintiff.
The assignment occurred in February 2003 with effect from 1 July 2002. The plaintiff is the current lessee of the riverbed lease. The defendant is the holder of the reversionary estate in the land the subject of the riverbed lease. The land the subject of the riverbed lease is used for the operation of a marina known as Pier 21 Marina. The Pier 21 Marina adjoins the land. The land is also part of a larger parcel of land which the Lester Group had developed, or was developing at the time of lodgement of the caveat, by the construction of approximately 45 residential units on it ("the adjoining land").
It was a condition of approvals granted by the Western Australia Planning Commission ("the WAPC") and the City of Fremantle to the development of the adjoining land, including the land, that provision was made for parking by users of the Pier 21 Marina on the adjoining land. Those parking facilities were ultimately situated on the land. Mr Jenkins asserted that by reason of these facts the Minister for Transport, as holder of the reversionary estate in the premises the subject of the riverbed lease, was entitled to an interest in the land.
A requisition notice was sent to the defendant seeking clarification of the estate and interest claimed. Mr Jenkins declared a second statutory declaration dated 19 November 2004, where he said that the nature of the interest claimed was the right to use the land for parking. Apart from attaching a copy of the lease to the statutory declaration and repeating the nature of the estate or interest claimed, the substance of the statutory declaration was the same as the first.
There is no dispute between the parties as to the accuracy of the facts asserted by Mr Jenkins, other than the claim that they give rise to a caveatable interest. Mr Jenkins has sworn an affidavit dated 12 May 2005 in these proceedings, which provides some further detail in respect to the history of the matter. I also have regard to the affidavits of Adrian John Lester, the first of which was sworn on 17 March 2005 and the second of which was sworn on 21 July 2005. They also provide further details as to the background of the matter.
In respect to the assertion that it was a condition of the development of the adjoining land that the Lester Group provide parking spaces for users of the Pier 21 Marina, Mr Jenkins annexed a letter dated 30 November 1998 from the Minister for Planning which in part states that parking accommodation of 171 spaces is, in his opinion, sufficient to cater for the demand likely to be generated by the development itself and to provide reasonable parking facilities for the marina. The Minister said that this conclusion took into account the proposal to allocate a marina pen to each unit holder in the development. Mr Jenkins also annexed a letter dated 29 December 1998 from the WAPC which states, as condition 14, that each residential unit shall be allocated a marina pen and that such pens shall not be used or occupied independently of the residential unit to which the pen is assigned.
Mr Jenkins also attached a letter dated 11 March 1999 from the Minister for Planning to the architects for the Lester Group. Condition 22 of the schedule of conditions imposed in respect to the permission for development of the adjoining land required the Lester Group to submit details of residential and marine parking allocation and management in the form of a management plan to the satisfaction of the director urban management, prior to the occupation of the buildings. That management plan is not in evidence before me.
Mr Jenkins further annexed to his affidavit a copy of an e‑mail dated 8 March 2005 from a planning officer with the City of Fremantle to the Lester Group's property managers, which states that 108 car parking bays are provided for residents, 18 for visitors and 46 for the marina. Whilst it is not clear from this email, Mr Jenkins asserts that this was the requirement of the City of Fremantle. It is not seriously disputed by the plaintiff that it was a condition of the development of the adjoining land that car parking be provided on the adjoining land for the benefit of users of the Pier 21 Marina.
Mr Jenkins goes on to say that the Lester Group and the plaintiff on the one hand and the defendant on the other were engaged in a protracted dispute in relation to a rent review under the riverbed lease. The basis of the dispute between the parties was whether or not the car parking facilities to be provided on the adjoining land for the benefit of the marina should be taken into account in the assessment of the reviewed rent payable under the riverbed lease.
The dispute was referred to an independent valuer for determination. The independent valuer obtained a legal opinion from an independent firm of solicitors. In accordance with that opinion, the valuer determined that the rental valuation of the land the subject of the riverbed lease should take into account the fact that no‑cost car parking for users of the Pier 21 Marina was to be provided on the adjoining land.
The independent legal advice reviewed the material that I have already referred to and concluded that the Lester Group was required to provide at least 46 car parking bays on its adjoining land for Pier 21 Marina users, as a condition of development approval. The advice went on to say:
"Conditions contained in a development approval define the scope of the approval and are part of it (Northcott Pike & Associates Pty Ltd v Berri District Council (1984) 55 LGRA 119. As the conditions imposed are an aspect of the consent and are not separate they must be carried out. In Proprietors of Strata Plan 20754 v Hawkesbury City Council (1991) 73 LGRA 1999 Mahoney J stated at 212:
'It has been generally accepted in this branch of the law that a development consent "runs with the land" in the sense that a subsequent owner of the land may, subject to the terms of the legislation, rely upon the authority given by that consent in respect of the use of the land. It has been accepted also that, if this be so, then conditions affecting the consent equally bind the subsequent owner or user of the land.' (Emphasis added)
In that case the owner of land had failed to provide car parking facilities in accordance with the regulations of the local council's code and this constituted a breach of one of the conditions attaching to the development approval.
While it is not correct to state (as per Mr Richmond's response dated 14 August 2003) that the development approval had 'attached parking in perpetuity', it is our view that the Original Owner, the New Owners and any subsequent purchaser of a residential lot on the Adjoining Land are bound by the requirement that 46 car parking bays be allocated and made available to the users of the Marina. The condition is binding until at least any further application is made to the relevant authorities to re‑develop the land or change its current use."
The rental determination of the independent valuer recited and relied upon this independent legal valuation. Mr Jenkins says that by reference to the independent legal opinion in the rental determination and on advice obtained from the defendant's solicitors, he honestly believed that the defendant, as the holder of the reversionary estate in the premises, had a caveatable interest in the land, being the right for users of the Pier 21 Marina to, at no cost, use 46 car parking bays situated on the land.
It is not clear when Mr Jenkins received the advice from the defendant's solicitor which he refers to in this part of the affidavit. He has annexed a copy of a written advice provided by the defendant's solicitors to the managing agent as part of the process of the rent determination. In that advice the author quotes an advice from the Lester Group's solicitors to the effect that it would be unreasonable to value the riverbed lease on the basis that it is anticipated that the Lester Group will make parking for the marina available on its adjoining property, because to do so would be to value the lease as if the lessor was the owner of the car parking area. The author of the defendant's solicitor's advice says in respect to that opinion that it is misconceived and the author says:
"It is not a question of Lester Group Ltd making parking available for the marina on [the adjoining land] but a condition of the development of [the adjoining land] which obliges Lester Group Ltd, as the owner of [the adjoining land], to make those parking facilities available."
It is not clear to me whether this is the advice that Mr Jenkins refers to in his affidavit or whether it is separate advice. Whilst the opinion in the written advice touches on issues that may be relevant to a consideration as to whether the defendant had a caveatable interest in the land, it certainly is not an opinion to the effect that the defendant had such an interest.
Mr Jenkins' affidavit does not go into any detail at all as to the nature of the advice that he says he received, the date he received it, the subject of it, the strength of it, or any other information about it. The plaintiff says I should conclude that the advice that Mr Jenkins refers to is the advice in respect to the riverbed lease and was not actual advice as to whether or not the defendant had a caveatable interest in the adjoining land or the land itself.
I do not believe that I am able to come to that strong a finding. I find that it is not clear to me that Mr Jenkins received any specific advice to the effect that the defendant had a caveatable interest in the land prior to him giving instructions to lodge the caveat. I make this finding in light of the oral submissions made to me by the defendant's counsel today. He says that Mr Jenkins did receive advice about the caveatable interest prior to him lodging it. Again, no proof was given to me of that. Consequently, I do not find it alters the conclusion that I have just stated.
Mr Jenkins deposes that based on his belief he instructed the defendant's solicitors to lodge a caveat over the land to protect the defendant's interest in it.
After the Lester Group received notice that the caveat had been lodged, it instructed its solicitors to apply to have the caveat removed. It seems that the Lester Group and the solicitors assumed that instructions were given on the same conditions as to remuneration as were contained in the terms of engagement entered into by the Lester Group with its solicitors on 5 July 2002 in respect to work done on the riverbed lease. However, there is no evidence before me that there was an express agreement at that time that those would be the terms of engagement.
On 8 December 2004 Mr Adrian Lester, a director of the plaintiff and the Lester Group Ltd, executed an application form pursuant to the Act, s 138B, requiring the Registrar of Titles to give the caveator 21 days' notice to apply to this court for an extension of the caveat. The Lester Group is named as the applicant.
This notice was received by the defendant's solicitors on 20 January 2005. This was the first contact the defendant or its solicitors had had from the Lester Group in respect to the caveat. The defendant then sought and received advice from his solicitors that they considered that the defendant did have a caveatable interest. This advice was conveyed to the Lester Group's solicitors on 4 February 2005. By the same correspondence the defendant requested the Lester Group to withdraw the application under the Act.
In response, the Lester Group's solicitors, by letter dated 7 February 2005, advised the defendant's solicitors that they did not consider that the mere imposition of a development condition conferred on any third party an estate or interest in the land. On 8 February 2005 the defendant's solicitor advised Mr Jenkins that after considering the solicitors' letter and carrying out further research, he was not certain as to whether the defendant had a caveatable interest in the land. He recommended that the defendant obtain counsel's opinion on the question.
Apparently an oral opinion was obtained from counsel and on the following day the solicitor advised Mr Jenkins that he did not consider that the defendant had a caveatable interest in the land.
Mr Jenkins immediately instructed the defendant's solicitor not to apply to this court for an order extending the operation of the defendant's caveat and to advise the Lester Group's solicitor accordingly. Thus the caveat was allowed to lapse.
Mr Jenkins deposes that prior to the lodgement of the caveat he, on behalf of the defendant, genuinely, honestly and reasonably believed, on the basis of the facts that I have set out previously, that the defendant had a caveatable interest and that he had reasonable cause to lodge a caveat to protect its interests in the land. He deposes that as soon as he ceased to hold that belief he advised the defendant's solicitors not to take any further action and to advise the Lester Group's solicitors accordingly.
In support of its application for damages the plaintiff has filed an affidavit of Mr Lester, as I have said, sworn 21 July 2005. Mr Lester deposes that the Lester Group and the plaintiff are both wholly owned subsidiaries of Balwyn Holdings Pty Ltd. Further, because the Lester Group has made the land available to the plaintiff for use as car parking for the marina, since 2003 all expenses incurred in relation to the land made available to the plaintiff for use as a car park have been borne by the plaintiff. Thus, when Lester Group's solicitors were instructed to act in respect of the caveat, the invoices in respect to such work were paid by the plaintiff.
In an earlier affidavit of Mr Lester, the one sworn 17 March 2005, he deposed and provided evidence that Lester Group's solicitors had invoiced the plaintiff $4568.10 in respect to work done in connection with the caveat and its removal. Most of the work done was research into the question as to whether the defendant had a caveatable interest over the land.
Thus the situation appears to be that it was Lester Group which entered into an agreement with the solicitors to provide advice with respect to the riverbed lease at certain hourly rates. However, since 2003, because of the relationship between the Lester Group and the plaintiff as well as the requirement that the Lester Group provide the car parking spaces on the land for the benefit of the users of the marina, the work that the solicitors did in respect to the caveat was invoiced to the plaintiff and paid by it. This is why it is the plaintiff which seeks damages.

Legal Principles

The Act s 140, states:
"140. Compensation for lodging caveat without reasonable cause
Any person lodging any caveat with the Registrar either against bringing land under this Act or otherwise without reasonable cause shall be liable to make to any person who may have sustained damage thereby such compensation as a judge on a summons in chambers shall deem just and order."
In Bolton v Excell, unreported; FCt SCt of WA; Library 930175; 22 February 1993, Malcolm CJ stated the following principles were applicable to applications under s 140. First, the onus is on the party claiming damages to prove that the caveat was lodged without reasonable cause. Secondly, the test to be applied in determining whether a caveator has reasonable cause to lodge a caveat for the purposes of the act, section 140, is not whether the caveator had a caveatable interest at that time the caveat was lodged, but whether the caveator had an honest belief based on reasonable grounds that he or she had such an interest. Thirdly, that belief is to be judged as of the date that the caveat was lodged.
Thus, the test contains both subjective and objective elements. The subjective element is whether the caveator had an honest belief that he or she had a caveatable interest in the land. The objective element of the test is whether the belief was based on reasonable grounds. The caveator's belief and the determination of whether it was based on reasonable grounds are to be determined against the background of all the relevant facts and circumstances.

Did the Defendant have a Caveatable Interest?

I turn first to the issue as to whether the defendant had a caveatable interest in the land. The defendant does not concede that it did not have a caveatable interest in the land.
Conditions of development approval are often secured by other conditions. For example, in this case there was a condition of development that certain land be ceded free of cost to the crown for the purpose of a public reserve. In other cases, a condition may be placed on the development approval that the proprietor consent to a notation being placed on the title, pursuant to the Act, s 70A, of a condition that affects the use or enjoyment of the land. There may also be conditions placed on a development which require the proprietor to create a covenant or easement for the benefit of the local government or a public authority. The provisions of the Act, Pt IVA are relevant in this respect. Some of those types of conditions may require the proprietor to create caveatable interests in favour of a local government or a public authority, including the defendant. However, there was no such condition placed on this development approval in respect to the requirement to provide car parks for the users of the Pier 21 Marina. Indeed, the requirement to provide parking on the adjoining land is not set out in any detail. It seems that the details of the requirement were to be clarified in the management plan to be submitted.

I presume that this was also the method chosen to secure the provision of the appropriate car parking. That is, to ensure that a management plan was created and it was submitted before development could occur. I note that I have not seen the management plan. A condition for a management plan to secure the requirement to provide parking for the marina simply does not give rise to a legal or equitable interest in the burdened land in favour of the defendant. Neither does any of the other material that Mr Jenkins relies upon, requiring the Lester Group to provide such parking.
In my view, an interest in land creating a caveatable interest must be a proprietary interest and a condition of the nature imposed in this case, does not create a proprietary interest in land. No authority has been cited to me to suggest that it does.
Of course there could be conditions in a management plan that would give rise to an equitable interest if, for example, it was part of the management plan that the proprietor agreed to create an easement as part of the management plan. There's no evidence before me that this was done in this case. Consequently, I have no difficulty in concluding that the requirement to provide parking on the adjoining land for the users of the marina did not give rise to a caveatable interest in the land in favour of the defendant.

Did the Defendant have an Honest Belief?

I now turn to the question of whether the caveator had an honest belief that the defendant had a caveatable interest. Mr Jenkins was clearly acting as the agent of the defendant for the purposes of this matter. I have no trouble in accepting the uncontroverted evidence of Mr Jenkins that he honestly believed that the defendant had a caveatable interest in the land.

Did the Defendant have a Belief Based on Reasonable Grounds?

I now turn to the question of whether the defendant's belief was based on reasonable grounds. The evidence establishes that Mr Jenkins believed that pursuant to conditions on the development of the adjoining land, car parking was required to be provided for the foreseeable future on the land for the benefit of the users of Pier 21 Marina.
Further, he had legal advice that the development condition bound all subsequent owners of the Lester Group's land. The legal advice which contains this information also quoted legal authority to the effect that development consent "runs with the land" in the sense that a subsequent owner of the land may rely upon the development condition.
I accept that it would be reasonable in the circumstances for a layperson to consider that a development condition of this nature would give rise to a suggestion or a possibility of some kind of interest in the burdened land by the proprietor of the land which benefits from the condition that may be able to be protected by a caveat. However, I do not think that these facts give rise to reasonable grounds for Mr Jenkins to believe that the defendant had a caveatable interest. There is a difference.
At most it could be said that Mr Jenkins would have been justified in exploring that suggestion or possibility by obtaining some specific and reasoned legal advice to the effect that the defendant had a caveatable interest or indeed by doing his own research on the issue. There is no evidence before me that he took these steps before instructing solicitors to lodge the caveat. Neither is there any evidence of a need to act on an urgent basis.
I have had regard to the fact that Mr Jenkins says in his affidavit that his belief was partly based on legal advice that he received. As I have said, I have no details of that legal advice. I have no idea what it said. It does not seem to me that that assertion can dilute the overwhelming case on the plaintiff's side that not only was there no caveatable interest but that the defendant did not have a belief on reasonable grounds that there was a caveatable interest.
Consequently I am of the view that the plaintiff has satisfied me that the defendant did not have reasonable grounds for believing she had a caveatable interest in the land.

Has the Plaintiff Suffered Loss by the Lodgement of the Caveat?

However, before the plaintiff can be entitled to any compensation, it must satisfy me that by virtue of the lodgement of the caveat, it has suffered loss. To quote s 140, compensation is payable to any person who "may have sustained damage thereby". "Thereby" being a reference to the lodgement of the caveat. Section 140 goes on to say that "such compensation is payable as a judge on summons in chambers shall deem just".
No authorities have been provided to me on the issue of causation. Construing s 140 as best that I can, my view is that the question as to whether the plaintiff has sustained damage by the lodgement of the caveat is to be determined on the basis of the usual legal principles as to causation. It seems to me that the following words which refer to compensation being payable as the Judge "shall deem just" is a reference to the quantum of such compensation.
I do not accept the defendant's submission that what this means is that compensation should not be ordered unless there was a legal obligation on behalf of the plaintiff to pay any costs related to the removal of the caveat. It seems to me that s 140 can include situations where it may be reasonable in all the circumstances for such damage to be incurred.
In this case there is no direct link between the plaintiff's loss and the defendant's action in lodging the caveat.
It was the Lester Group which was affected by the caveat over its land. Indeed, it could be argued that the caveat was to the benefit of the plaintiff. The reason why the plaintiff suffered loss as a consequence of the caveat was because it apparently voluntarily agreed to pay the Lester Group's costs relating to the land on which the car park stands.
The affidavit material before me establishes that as a consequence of the fact that the Lester Group's land has been made available to the plaintiff for use as a car park for the marina, since 2003 all expenses incurred in relation to the land have been borne by the plaintiff. The way Mr Lester puts it in his affidavit is that because the land was made available "accordingly" since 2003, all expenses incurred in relation to the land have been borne by the plaintiff. No further details are given of what the plaintiff's counsel has referred to as this commercial agreement or arrangement.
The word "accordingly" really begs the question as to the relationship between the provision of the car parking and the payment of the expenses. Nothing has been put before me to establish that there was any legal requirement to pay the expenses. Whilst I have said that that is not necessary, it is something that I think can be and should be taken into account. Secondly, nothing has been put to me as to any contractual obligation to pay the expenses and, thirdly, nothing has been put to me as to the details of any non‑contractual agreement. Fourthly, the two factual statements, one that land has been made available to the plaintiff for use as a car park for the marina and the second one being that since 2003 all expenses incurred in relation to the land have been borne by John Street Marina, do not logically follow.
As the defendant has pointed out, the requirement that the land be made available to the plaintiff for use as a car park for the marina was a condition of the development of the adjoining land. It was not a private agreement between the plaintiff and the Lester Group that this occur. It was not a voluntary situation on behalf of the Lester Group. It was rather a requirement, as I have said, for development.
Therefore, it is not at all clear to me why the plaintiff would volunteer or, in the words of the plaintiff's counsel, enter into a commercial arrangement to pay all expenses incurred in relation to the land. I can perhaps understand why it would agree to maintain the land, as the car parking on it was for the users of the marina. However, this expense has nothing to do with the physical maintenance of the land.
Further, as I have said, the costs incurred by the Lester Group with respect to the caveat did not directly or indirectly benefit the plaintiff. The costs were incurred for the Lester Group's benefit of keeping its title clear. This does not seem to me to be in any way related to the interests of the plaintiff. There is no evidence before me of any assignment from the Lester Group to the plaintiff of a right to damages.
Thus, I am not satisfied that the damages claimed by the plaintiff were sustained by it as a consequence of the defendant's action in lodging a caveat over the land. Before coming to this conclusion I have taken into account the relationship between the plaintiff and the Lester Group. However, that relationship cannot alter the fact that they are separate legal entities with separate interests and obligations.
It does not seem to me that the court can determine an issue of causation simply on the basis of the voluntary arrangements between the party which was affected by the caveat and the party who chose to pay the affected party's losses occasioned thereby. The plaintiff apparently sustained loss because it has voluntarily agreed to pay all the Lester Group's expenses in respect to the land, whether or not they related to the provision of the car parks. It does not seem to me that the cost for Lester Group to clear its title to the land is a cost which is reasonable for the plaintiff to pay in the circumstances. Neither does it necessarily flow from the defendant's actions and neither am I satisfied that there is any legal obligation on the plaintiff to pay the damages.

Damages

This finding then disposes of the application. However, as I have indicated that I would determine all issues between the parties, I will conclude my reasons by dealing briefly with the assessment of damages. As I have said, damages would be assessed on what I believe would be just between the parties. If I was wrong in respect to my findings with respect to causation, I would be prepared to order that compensation be ordered in favour of the plaintiff.
In my view, it would be reasonable to permit the defendant to have the bill taxed before a final order was made in respect to those damages but other than that I would not uphold the defendant's submissions in respect to the amount of damages having been unnecessarily increased by Lester Group making its request of the registrar of Title before writing to the defendant. Whilst in this, as in all cases, the courts encourage parties to attempt to resolve matters on an informal basis before going to law, in my view the costs involved in sending the Registrar of Titles the request under section 138B is but a very small portion of the costs incurred by the plaintiff.
The majority of the costs are in respect to the solicitor's time in researching the issue. This time would have had to have been spent whether or not the letter was sent to the Registrar. Consequently, I would not be prepared to reduce the plaintiff's claim because its first step was to contact the Registrar of Titles rather than the defendant. In any event, the plaintiff had an obligation to mitigate its loss. The statutory procedure provided for in the Act, s 138B is one means by which a proprietor may mitigate its loss when a caveat is lodged. The action was, in my opinion, reasonable.

Conclusion

I would dismiss the application.