Letila P/L v Trippe Investments P/L
[1991] FCA 508
•21 AUGUST 1991
Re: LETILA PTY LIMITED
And: TRIPPE INVESTMENTS PTY LIMITED; GODDARD OF AUSTRALIA PTY LIMITED; ARTHUR
CREEK IRRIGATION COMPANY PTY LIMITED and GUS TRIPPE
No. WA G67 of 1991
FED No. 508
Real Property - Courts and Judges
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)
CATCHWORDS
Real Property - Torrens System - caveat against dealings - alleged oral contract for sale of land part performed - claim for specific performance - alternatively for relief under Trade Practices Act - alternatively promissory estoppel - subsequent dealing lodged for registration - 14 day notice issued - motion to restrain Registrar of Titles from registering dealings - jurisdiction of Federal Court - cross vested jurisdiction - accrued jurisdiction doubtful - criteria for grant of relief - sufficiency of undertakings.
Courts and Judges - Federal Court - jurisdiction - motion to restrain dealings under Transfer of Land Act 1893 (WA) - cross vested jurisdiction - accrued jurisdiction doubtful.
Trade Practices Act 1974 s.52
Transfer of Land Act 1893 s.138
Stamp Act 1921 (WA) s.31B(1)(a)
Jurisdiction of Courts (Cross Vesting) Act 1987 (WA) s.4(1)
Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) s.4(2)
Smith v. Smith (1986) 161 CLR 217
Eng Mee Yong v. Letchumanan (1980) AC 331
Kuper v. Key West Constructions Pty Ltd and Registrar of Titles (unrep. Sup Ct of W.A. 12/10/90; Library Number 8539
Porter v. McDonald (1984) WAR 271
Casella v. Sumreal Nominees Pty Ltd (unrep Sup Ct of W.A. 31 May 1989; Library Number 7688)
Bullock v. Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464
HEARING
PERTH
#DATE 21:8:1991
Counsel for the Applicant : Mr J. Pitman
Solicitors for the Applicant : Taylor Smart
Counsel for the Respondents : Mr P.D. Martino
Solicitors for the Respondents : Mallesons Stephen Jaques
ORDER
The Court orders that undertakings as to damages in the usual form having been given by the applicant and by Hazety Pty Ltd:
1. The Registrar of Titles be joined as third respondent to the action.
2. The Registrar of Titles be and is hereby restrained until the hearing and determination of the application or further order from registering any dealing with the land the subject of Caveat E648619 lodged at the Office of Titles on 8 July 1991 by the applicant.
3. The applicant is within 7 days to file and serve evidence upon affidavit of its assets and liabilities as trustee of the Eric Metcalf Family Trust and those of Hazety Pty Ltd including any charge or other encumbrance on the funds held by Hazety Pty Ltd in account No. 34 773-9672 with the National Australia Savings Bank, Midland Branch.
4. Until the hearing and determination of the application or further order, Hazety Pty Ltd shall not encumber or otherwise deal with or dispose of the funds held to its credit in the said account, save to the extent necessary to meet any bank charges in relation to the administration of the account.
5. There shall be liberty to any party to apply to vary or discharge these orders.
6. The costs of the applicant's motion be reserved.
7. A copy of this order to be served upon the Registrar of Titles.
Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
REASONS FOR JUDGMENT ON MOTION TO EXTEND CAVEAT
This is the return of a motion for an order under s.138 of the Transfer of Land Act 1893 (WA) to direct the Registrar to delay registering dealings with land which is the subject of an action for specific performance of a contract of sale and other relief in this Court.
Letila Pty Ltd ("Letila") is the corporate trustee of a discretionary trust. Eric William Metcalf, a farmer, and his father, Leslie Metcalf, are two of its directors. Trippe Investments Pty Ltd ("Trippe"), Goddard of Australia Pty Ltd ("Goddard") and Arthur Creek Irrigation Company Pty Ltd ("Arthur Creek") own a cattle station property near Kununurra called Kingston Rest. The land is comprised in 7 freehold and 4 leasehold titles. Augustus Trippe is a director of the three companies. On 9 July 1991 Letila filed an application seeking an order that the three companies perform an agreement said to have been made with Letila, for the sale of the station property together with plant, equipment and cattle. Damages were claimed in the alternative. By its statement of claim (amended on 15 August 1991), Letila alleges that on or about 5, 6 and 7 July 1991 it agreed to buy from the companies, who agreed to sell, the Kingston Rest station with cattle and certain plant and equipment for $550,000 subject to some adjustment for cattle numbers. The contract was said to have been made between Eric Metcalf on behalf of Letila, and Augustus Trippe on behalf of the companies. It is said to have been partly oral, partly in writing and partly implied from conduct. In the alternative it is said that statements indicating a commitment to the sale made on behalf of the vendors were misleading or deceptive or likely to mislead or deceive contrary to s.52 of the Trade Practices Act 1974. A plea based upon promissory estoppel is also raised.
As appears from the affidavit of Letila's solicitor, Godfrey Edward Taylor, he was instructed during June and July to act for Letila in relation to the proposed purchase of the station. He received his instructions from both Eric and Leslie Metcalf. The owners of Kingston Rest were represented by Brian Cooney, a Darwin solicitor. Taylor said that on 5 July 1991 he spoke to Cooney by phone. A substantial draft contract had been prepared by him and forwarded to Cooney. Cooney had sent, through his Perth agents, a draft mortgage as their negotiations were being conducted on the basis that the vendors would carry vendor finance to the extent of $200,000. Taylor said that in the course of their conversation, he and Cooney reached agreement on all the terms of the proposed contract. He telephoned Eric Metcalf on that afternoon and advised him accordingly. On Saturday, 6 July, he sent a letter by fax to Cooney. The letter was expressed to be a formal offer signed by Taylor under a power of attorney on behalf of Letila and Eric and Leslie Metcalf. He enclosed a letter from the Department of Land Administration in relation to the special leases. The Department there advised that it had no objection to the proposed transfer of the leases to Letila. It was evidently a term of the proposed contract that Letila would commence a muster of the cattle on the property on the afternoon of 5 July. Eric Metcalf, in his affidavit, said that he began on that day and carried out the muster as agreed. The vendor companies are also said to have participated in the muster and on that basis to have partly performed the agreement.
Metcalf deposed to a number of telephone conversations with Trippe on 5, 6 and 7 July. He said that on 5 July he told Trippe that Letila was concerned that the vendors might be negotiating with another party and that Letila would only bring its men on to the station to commence the muster if there were a contract. He also told Trippe that if he were not prepared to agree that they had a contract then Letila would not go ahead, but would withdraw. Trippe, he said, responded:
"Yes we have a deal so go ahead with the muster. Any other party is too late."
On 6 July 1991, according to Metcalf, he again said to Trippe that Letila was only carrying on with the muster on the basis that there was a contract between Letila and the vendors and Trippe reiterated that they had a contract. And on 7 July he said he again stated to Trippe that Letila was only proceeding on the basis that there was a contract and advised that a helicopter would need to be engaged the next day to assist in the muster. Trippe replied to the following effect:
"We have a deal, go ahead and bring the chopper in tomorrow, the deal is as agreed between us and will be signed up next day as has been agreed by Mr Cooney and Mr Taylor."
According to Metcalf he asked Trippe to confirm this advice to Gary King who was assisting him in the muster. He handed the telephone to King who spoke with Trippe. King, he said, told him that Trippe said words to the effect that he confirmed there is a contract between Letila and the vendors, that the paperwork would be signed the following day and that he should bring in the helicopter and keep the muster going.
Trippe in an affidavit sworn 19 August 1991 gave a different account of these exchanges. He referred to the letter from Taylor to Cooney dated 6 July 1991 which he said he did not see until 7 July and a letter of response from Cooney of 7 July 1991. In that letter, after referring to various amendments which had been discussed, Cooney had said:
"It would be appreciated if you could confirm that my proposals concerning exchange are acceptable to your client. I have noted that this transaction remains subject to contract, i.e. that the parties will become bound only by exchange (or constructive exchange) of executed counterparts and payment of the deposit to my Perth agents."
According to Trippe, he was telephoned on Friday, 5 July, by Metcalf who advised that he had arrived in Kununurra on the previous afternoon and asked if there were any problem with him starting the muster the next day. Trippe said he told Metcalf that Cooney had advised him not to allow the muster to proceed until the contract had been signed. He told Metcalf that he was very disappointed that contracts had not been exchanged before Metcalf had left Perth. Metcalf said that if the muster were not started the next day, it could be delayed for several weeks because of a wedding. Trippe then said that he guessed it would not hurt to start the muster.
He said that Metcalf rang him again on Saturday, 6 July and
that he advised Metcalf as follows:
"I have talked to my solicitor Brian Cooney and he is concerned about starting the muster before there is a formal exchange of contracts. On his advice I can only agree to the muster provided the final form of the contract is settled. However the contract remains subject to formal exchange of executed counterparts and payment of deposit. Any acts that you undertake whether with my permission or knowledge or not in reliance upon a contract having been concluded are expressly undertaken at your entire risk and cannot be relied on as an act of part performance by you. My solicitor Brian Cooney dictated this statement to me."
Metcalf, he said, replied that he would telephone his solicitors to see if things could be speeded up. Trippe responded that he was happy with that, but took it that he would start the muster that day. Metcalf advised that he would. Later on the same day, according to Trippe, Metcalf phoned again and they discussed the matter generally. Metcalf, he said, told him that Letila's solicitors and Cooney were in agreement over the two clauses that had been in dispute and as Letila's solicitors expected to fax amendments to the clause to Cooney that afternoon, he thought a contract could be signed that afternoon. However, Cooney had said that he did not think he would be ready to exchange contracts before Monday. Trippe said he responded that he thought Cooney was right because a mortgage to be annexed to the contract still had to be put into final form and he, Trippe, didn't see how they could close before Monday. On 7 July, according to Trippe, Metcalf again rang him in Darwin and they discussed the progress of the muster generally. Trippe said that Metcalf told him some people had been to the station "poking around". He said that he told Metcalf they had permission to go to the station and had been introduced by Elders Real Estate, Kununurra. He said he told Metcalf that he had told the prospective purchasers that Letila and the vendor companies were advanced in their negotiations, however, that there was no contract and no deposit had been paid. Later on the same day, according to Trippe, Metcalf telephoned him and Trippe told him that he had been advised by his lawyer not to sign the letter of offer because the vendors should not be committed until all documents were finalised. Metcalf, he said, asked him when the documents would be finalised and he told him that he did not see why they could not have an exchange of documents by noon on the Monday. Metcalf said he wanted to hire a helicopter for the muster the next day which meant it was going to be an expensive muster and he wanted to know if the deal was no or not. Trippe's affidavit then went on:
"19. I replied that if things don't work out and we didn't finalise the contract then I would pay for the whole of the helicopter cost. I advised him that I didn't see why we should settle the next day but I would not sign any documents until there was a formal exchange of contracts.
20. Mr Metcalf then asked me to speak to Mr Gary King who I knew from employing him previously was a casual stockman. I also knew from previous conversations with Mr Metcalf that the applicant had engaged Mr King to conduct the muster.
21. Mr King asked me the question: "Well is it on or off?"
Mr King was insistent that I answer that simple question and I assumed he was talking about the muster. I recollect answering him: "The muster is on"
although I may have merely answered: "Its on""
Trippe has deposed that on 8 July 1991, the vendor companies entered into a written agreement with Brian Thomas Garstone, Alan David Garstone and Muriel Faye Garstone to sell them Kingston Rest. Settlement of that contract was due to take place on 5 August 1991.
According to Eric Metcalf he was advised at about 11am on 8 July that the vendors had that day sold the property to another party and would not be proceeding with the sale to Letila. Metcalf told Trippe that Letila would enforce the contract. On the same day Letila lodged a caveat No. E 648619 against the properties at the Land Titles Office, Perth. The caveat indicated that Letila claimed an estate or interest "as purchaser of the registered lands" by virtue of "an oral agreement for the sale of land made on or about 5 July 1991 between the registered proprietors and the caveator as set out in the Statutory Declaration of Godfrey Edward Taylor sworn the 8th July 1991".
On 5 August 1991 the Registrar of Titles gave notice to Letila that a mortgage from the vendor companies had been lodged at the office for registration and that at the expiration of 14 days from the date of service of the notice, the caveat would be deemed to have lapsed and that unless otherwise directed by the Court or a Judge he would upon such expiration proceed with registration. The notice was issued under s.138 of the Transfer of Land Act 1893. The mortgage in question was dated 25 July 1991 securing an advance of $100.
The application came on for initial directions on 5 August 1991 at which time programming orders were made, including a direction that Letila file and serve an amended statement of claim on or before 12 August 1991. An order was also made that the trial of the action be expedited and that Letila apply to the Registrar on or before 26 August for an appointment to fix a hearing date. On 13 August 1991, an amended statement of claim not having been filed, the respondents moved at short notice for an order that unless the applicant had filed and served its amended statement of claim by 5pm on 14 August 1991, the proceedings be stayed as to the whole of the relief claimed by the applicant. While the respondent did not consent to the orders sought, it did not oppose them, and orders were made accordingly on 13 August. The amended statement of claim, having been filed on 15 August, an order was made on that date on a motion from the applicant that the stay of proceedings ordered on 13 August 1991 be lifted. On the following day a further motion was filed by the applicant returnable on 20 August in which the following orders were sought:
1. The Applicant be given leave to join in the Registrar of Titles in respect of the removal of a Caveat on the land the subject of this action.
2. That the period of fourteen (14) days given by the Registrar of Titles by Notice dated 5 day of August 1991 to the Applicant be extended until either:
(a) the outcome of the Applicant's action in the Federal Court against the First Respondents and the Second Respondent which relates to the land the subject matter of the said notice; or
(b) the hearing of the application for the removal of the caveat be adjourned for hearing on a date to be fixed.
3. The Registrar of Titles be directed to delay the registration of mortgage number E668425 for such further period as this Court may order.
4. Such further order or orders as this Court shall in the circumstances deem fit.
The Registrar's notice dated 5 August was served on the applicant's solicitors on 7 August 1991 and the 14 day period specified in the notice expires on 21 August. Argument on the motion proceeded on 20 August and was resumed today following the filing of some additional material to which reference will be made later in these reasons.
Section 138 of the Transfer of Land Act authorises a Judge of the Supreme Court to direct the Registrar of Titles to delay registering any dealing with land the subject of a caveat. The section is in the following terms:
"Upon receipt of such caveat the Registrar shall notify the same to the person against whose application to be registered as proprietor or (as the case may be) to the proprietor against whose title to deal with the estate or interest such caveat has been lodged; and such applicant or proprietor or any person claiming under any transfer or other instrument signed by the proprietor may if he think fit summon the caveator to attend before the Supreme Court or a Judge in chambers to show cause why such caveat should not be removed; and such court or Judge may upon proof that such caveator has been summoned make such order in the premises either ex parte or otherwise as to such court or Judge may seem fit. Except in the case of a caveat lodged by or on behalf of a beneficiary claiming under any will or settlement or by the Registrar pursuant to the direction of the Commissioner every caveat lodged against a proprietor shall be deemed to have lapsed as to the land affected by the transfer or other dealing upon the expiration of fourteen days after notice served on the caveator that such proprietor has applied for the registration of a transfer or other dealing unless in the meantime such application is withdrawn. A caveat shall not be renewed by or on behalf of the same person in respect of the same estate or interest except subject to the state of the register book at the time of the renewal of such caveat; but if before the expiration of the said period of fourteen days or such further period as shall be specified in any order made under this section the caveator or his agent appears before a judge and gives such undertaking or security or lodges such sum in court as such judge may consider sufficient to indemnify every person against any damage that may be sustained by reason of any disposition of the property being delayed then and in such case such judge may direct the Registrar to delay registering any dealing with the land lease mortgage or charge for a further period to be specified in such order or may make such other order as may be just."
In support of its motion, Letila has proffered an undertaking as to damages. Trippe, however, says that a search carried out by his solicitor at the Australian Securities Commission has revealed that Letila's principal activity is to act as a trustee for a discretionary trust and that its assets are offset by its liabilities. On the basis of the information obtained from that search, he believes that Letila may be unable to meet any undertaking as to damages. A further affidavit was filed today sworn by Leslie Charles Metcalf stating that Letila has contracted to purchase the land the subject of this action as trustee for the Eric Metcalf Family Trust to which it has been appointed trustee in lieu of Wheldon Vale Pastoral Company Pty Ltd. Wheldon had purchased two farms known as "Picton" and "Dodds" in April 1989 for about $600,000. They are unencumbered and arrangements are presently being made to transfer title to them to Letila. In addition, it is said, that the trust has further assets by way of plant worth $30,000, tractors worth $120,000 and a truck worth $100,000. The Metcalfs are also directors and shareholders of a company called Hazety Pty Ltd which holds in an account (No. 34 773-9672) with the National Australia Bank a sum of $423,636. A copy of a bank statement dated 31 July 1991 was exhibited to the affidavit. The Metcalfs are prepared, on behalf of Hazety, to offer an undertaking as to damages by that company in addition to the undertaking offered by Letila. A written undertaking was exhibited to the affidavit. Counsel for the respondent however, pointed out that the material did not disclose the liabilities of either company.
The submission was also made that if there were an oral agreement as alleged for the sale of the land sufficient to support a caveat, then a statement of the kind required by s.31B(1)(a) of the Stamp Act 1921 (WA) should have been lodged with the Commissioner of State Taxation. It was contended that in the event no such statement had been lodged the caveat should not have been accepted. By material subsequently placed before the Court however, it appears that a s.31B Statement of Transaction was lodged with the Commissioner, together with a request for assessment on 8 July 1991 and a copy sent to the Registrar of Titles on 11 July 1991. The point was conceded by counsel for the respondents at the resumed hearing today.
It was not suggested that the Court does not have power to make an order under s.138 of the Transfer of Land Act 1893 (WA). Section 4(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (WA) provides that the Federal Court has and may exercise original jurisdiction with respect to State matters. A "State matter" is defined in s.3(1) of that Act to include a matter in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State. Section 4(2) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) provides that:
"4(2) Where -
(a) the Supreme Court of a Territory has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b) the Federal Court, the Family Court or the Supreme Court of a State or of another Territory would not, apart from this section, have jurisdiction with respect to that matter,
jurisdiction is conferred on the court referred to in paragraph (b) with respect to that matter."
Section 138 confers jurisdiction on the Supreme Court of Western Australia and, subject to the possibility that it might fall within the accrued jurisdiction of this Court, that statutory jurisdiction is conferred on this Court by virtue of the provisions of the cross vesting legislation referred to above. It seems unlikely that the jurisdiction created by s.138 of the Transfer of Land Act could be regarded as an element of this Court's accrued jurisdiction. It is in terms conferred by s.138 upon a designated court which is the Supreme Court of Western Australia - Smith v. Smith (1986) 161 CLR 217 at 240-241 and 250. It is, however, not necessary to explore this question further as jurisdiction was not disputed. The question in the end is whether or not I should make the principal order which is sought, that is, to direct the Registrar to delay registering any dealing with the land.
The concept of a caveat as a statutory injunction of an interlocutory character was endorsed by the Privy Council in Eng Mee Yong v. Letchumanan (1980) AC 331, in which their Lordships said at 335:
"The caveat under the Torrens System has often been likened to a statutory injunction of an interlocutory nature restraining the caveatee from dealing with the land pending the determination by the court of the caveator's claim to title to the land, in an ordinary action brought by the caveator against the caveatee for that purpose. Their Lordships accept this as an apt analogy with its corollary that caveats are available, in appropriate cases, for the interim protection of rights to title to land or registrable interest in land that are alleged by the caveator but not yet proved."
See also Kuper v. Key West Constructions Pty Ltd and Registrar of Titles (unrep Sup Ct of W.A. 12/10/90; Library Number 8539) at p 27 (Malcolm C.J.).
The section contemplates two procedures whereby the question of the continuance of a caveat may be agitated. In the first place, there is an application for removal which may be brought by the registered proprietor or an applicant for registration as such or any person claiming under any transfer or other instrument signed by the proprietor. The second procedure applies when a dealing has been lodged and a 14 day notice served. Then an application for an interlocutory restraint upon the Registrar may be brought by the caveator, as has been done in this case. In Eng Mee Yong the Privy Council was concerned with Malaysian Torrens Title legislation, being the National Land Code 1965, the relevant provisions of which differed in certain respects from those of the Transfer of Land Act 1893 (WA). Nevertheless, their Lordships' observation at p.336 that there is no difference between what a caveator must establish to defeat a caveatee's application for removal and what must be established to obtain an extension of the caveat under the Malaysian legislation, is also applicable to the West Australian legislation save that the second procedure for which s.138 provides does not involve an extension of the caveat which lapses automatically, but rather for injunctive relief in lieu of the lapsed caveat. There is no policy basis upon which any substantial distinction could be drawn between the criteria upon which the questions of removal or of making an injunctive order should be determined. In each case the guiding principles are those relevant to the grant of interlocutory injunctive relief. The caveator must satisfy the court that on the evidence presented to it, the claim to an interest in the property raises a serious question to be tried, and having done so 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 the land to some third party - Eng Mee Yong v. Letchumanan (supra) at 337; Porter v. McDonald (1984) WAR 271 at p 276 (Rowland J.); Casella v. Sumreal Nominees Pty Ltd (unrep Sup Ct of W.A. 31 May 1989; Library Number 7688) at p 4 (Commissioner D.R. Williams QC).
I would add the qualification that as in cases involving the grant of interlocutory relief generally the criteria of a serious case to be tried and the incidence of the balance of convenience are interdependent - Bullock v. Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 472. Thus, the strength of the applicant's case may have some impact on the extent to which the balance of convenience should favour the grant of the relief sought. In the context of s.138 there is a specific requirement before an extension can be granted that the caveator appearing before a judge seeking to delay registration of the relevant dealing "gives such undertaking or security or lodges such sum in court as such judge may consider sufficient to indemnify every person against any damage that may be sustained by reason of any disposition of the property being delayed...". This requires satisfaction on the part of the judge that the undertaking or security is sufficient. The onus is upon the caveator in such a case to so satisfy the judge.
In this case Letila has established that it has a serious case to be tried. Further, so far as it is possible to judge from the untested affidavit material before me, the case cannot be regarded as a weak one. In saying so, I emphasise that this view is purely provisional. There has been no cross-examination of the parties and it may well be that at trial further evidence will be adduced which casts that presently before me in a different light. As to the balance of convenience, it is to be observed that the immediate occasion of the motion is an attempt by the registered proprietors of the land to effect registration of a $100 mortgage. That is hardly a transaction which, if delayed, will occasion them or anybody else any great loss. There has not been presented for lodgment any transfer of land pursuant to the sale to the Garstones although settlement was to have been on 5 August. Little appears from the evidence about the contract of sale to them or its terms or their likely response to any delay. What is clear is that if the caveat presently lodged lapses and no restraining order is directed to the Registrar, then Letila will lose its opportunity to protect its claimed interest in the land and at least some of the remedies it seeks may become unavailable to it. It is not clear in such a case that damages will prove an adequate or effectively enforceable remedy.
I am satisfied that the case demonstrated by the applicant and the balance of convenience favours the grant of the order sought. As to the undertakings proffered, they are sufficient for the present to support an order subject to the protection that there will be liberty to apply to vary or discharge the order and a requirement that within seven days evidence of the liability position as well as the asset position of both companies be filed. In addition there will be an order restraining Hazety Pty Ltd from dealing with or disposing of the funds in the National Bank of Australia account. In the event that the applicant is unable to satisfy the respondents that the undertakings are sufficient in the light of the additional material, the respondents may apply under the general liberty which I propose to order.