Letila Pty Ltd (Receivers and Managers Appointed) v DeBoni - [2005] WASC 6

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LETILA PTY LTD (RECEIVERS AND MANAGERS APPOINTED) -v- DEBONI & ORS [2005] WASC 6

CORAM: COMMISSIONER SIOPIS SC

HEARD: 18 JANUARY 2005

DELIVERED : 18 JANUARY 2005

PUBLISHED : 8 FEBRUARY 2005

FILE NO/S: CIV 1052 of 2005

BETWEEN: LETILA PTY LTD (RECEIVERS AND MANAGERS APPOINTED)
Plaintiff
AND
MICK DEBONI
CHERYL LYNN DEBONI
First Defendants
THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Extension of caveat - Termination of contract for the sale of land - No caveatable interest - Turns on own facts

Legislation:

Transfer of Land Act, s 138C

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr J L Sher
First Defendants           :     Mr D L Jones
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Corrs Chambers Westgarth
First Defendants           :     Joanne Matich & Associates
Second Defendant         :     No appearance

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

Custom Credit Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
KLDE Proprietary Limited (In Voluntary Liquidation) v Commissioner of Stamp Duties for the State of Queensland (1984) 155 CLR 288

Case(s) also cited:

Capper v Thorpe [1998] HCA 24
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Halse v Embling & Anor, unreported; FCt SCt of WA; Library No 970734; 22 December 1997
Jandric v Jandric [1999] WASC 22
Porter v McDonald & Anor [1984] WAR 271

COMMISSIONER SIOPIS SC: This is an application for the extension of a caveat under s 138C of the Transfer of Land Act.
The application was heard on 18 January 2005 on an urgent basis because the caveat, unless extended, was due to expire at midnight on 19 January 2005. I dismissed the application at the end of the hearing of the originating summons and advised that I would deliver my reasons later.
The plaintiff is under the control of Mr Simon Andrew Reid and Mr Jeffrey Lawrence Herbert who were appointed as receivers and managers by a Notice of Appointment dated 28 May 2004. The caveat which is the subject of this application was lodged by the plaintiff on 12 November 2004.
The caveat lodged by the plaintiff describes the first defendants as the registered proprietor. The interest claimed by the plaintiff is an interest "in fee simple as purchaser". The plaintiff relies on this statement in the caveat to support its claim: "Contract of Sale dated 10 May 2002 and 27 August 2003 made between the Registered Proprietor as vendor and Letila Pty Ltd (Receivers and Managers) as purchaser. On 28 May 2004, Simon Reid and Jeffrey Lawrence Herbert were appointed receivers and managers of the purchaser." The caveat forbids the registration of any interest affecting the estate or interest "absolutely".
The facts appear from the affidavit of Mr Simon Andrew Reid dated 18 January 2005.
A contract for the sale of Lot 15 Burges Siding Road, York, being Lot 15 on Diagram 89041 of the whole of the land in Certificate of Title volume 2058, folio 395 was entered into on 10 May 2002 between the first defendants as vendors and the plaintiff, acting through a director, Mr Eric Metcalf, as the purchaser. The material terms of the contract were that the purchase price was to be $230,000, the purchaser was to pay a non‑refundable deposit in the sum of $100,000 within seven days of the purchaser obtaining all appropriate approvals to allow the plaintiff to purchase the adjoining property; and settlement was to occur within 12 months after the date that the deposit was paid. The contract was otherwise subject to the joint form of general conditions for the sale of land in Western Australia (2000 revision).
Between May 2002 and December 2002 the plaintiff paid a total of $145,000 in part payment of the purchase price to the first defendants as vendors. However, the plaintiff was not able to pay by the settlement date the balance of the purchase price in the sum of $85,000. Thereafter, the plaintiff and the first defendants agreed in writing to vary the terms of the contract by agreeing that the plaintiff would pay the balance of the purchase price in the following instalments:
(i)$35,000 on 15 April 2004;
(ii)$40,000 on 15 May 2004; and
(iii)$10,000 on 15 June 2004
The variation agreement also provided that the settlement date would be postponed until 14 days after the final payment and that "these and all payments are non‑refundable in the event of the sale not going through".
Mr Reid says that from his review of the documents and discussions with Mr Metcalf, he learnt that the plaintiff failed to pay the first defendants any of the payments referred to in the variation agreement and that the first defendants had terminated the sale agreement and retained the $145,000.
On Mr Reid's instructions, the plaintiff's solicitors wrote a letter to the first defendants dated 18 August 2004, demanding the repayment of the $145,000 to the plaintiff. The plaintiff's solicitors alleged that the vendors had in effect no right to retain the monies because they had not complied with default notice provisions in the joint form in relation to the plaintiff's failure to pay the balance of the purchase monies under the variation agreement, and the first defendants were therefore precluded from terminating the sale contract and retaining the monies paid. The plaintiff also alleged that the sale contract as varied was subject to the Sale of Land Act 1970 and that the plaintiff reserved all their rights to argue that the purported termination of the contract was unlawful, being a contravention of the Act.
The receivers and managers learned more about the circumstance in which the contract was purportedly terminated by the first defendants and the monies retained by them, when, on 21 September 2004 Mr Metcalf gave Mr Herbert a document dated 20 April 2004, signed by Mr Metcalf on behalf of the plaintiff, and by the first defendants. The document reads:
"Re: Contract of Sale - Lot 15 Burges Siding Rd, York.
In terms of the Contract of Sale dated 6 May 2002, the variations and extensions thereto completed (the Contract), the part payment due on 15 April having been not paid within the 3 day period stipulated, as director, I confirm that Letila P/L has defaulted on the Contract which it is acknowledged and accepted as having come to an end without the need of either party giving notice to the other.
Further, I confirm that the deposit and payments made to date as stipulated in the Contract in consequence of such breach, are not refundable by the Seller and retained as liquidated damages.
[Signed] E V Metcalf
Director - Letila Pty Ltd
We confirm the cancellation of the Contract
[Signed] M DeBoni C L DeBoni"
On 22 October 2004 Mr Herbert learned that the first defendants had listed the property for sale. On 12 November 2004 Mr Herbert instructed the plaintiff's solicitors to lodge the caveat which has been referred to above and is the subject of this application.
On 16 November, acting on Mr Herbert's instructions, the plaintiff's solicitors wrote a further letter to the vendors advising that the purported termination of the contract by the first defendants was of no effect as they failed to serve a notice on the plaintiff as required by s 6(1) of the Sale of Land Act, prior to purporting to so terminate the contract.
However, the letter went on to say:
"Further, your conduct in placing the property for sale, demonstrates your intention to no longer to be bound by the Contract. We are instructed that our client accepts your repudiation of the Contract."
The plaintiff's solicitor's letter also demanded that the first defendants repay the sum of $145,000.
On 7 December 2004 the solicitors for the first defendants replied to the plaintiff's solicitors' letter of 17 November 2004, by denying an obligation to repay the monies and stating that the contract had been terminated by mutual agreement.
On 30 December 2004 the plaintiff's solicitors received a notice under s 138B of the Transfer of Land Act 1893 from the Department of Land and Information advising that the caveat would lapse unless the plaintiff obtained an order extending the operation of the caveat from the Supreme Court by 19 January 2005.
In light of those facts I now turn to consider whether the caveat should be extended.
Section 138C of the Transfer of Land Act 1893 provides:
"(1)A caveator who is served with a notice under section 138B(1) may apply to the Supreme Court, in accordance with the 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;
(ii)may make an order extending the operation of the caveat until the further order of the Court; or
(iii)may make such orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
(b)if not satisfied 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."
A caveatable interest must be a proprietary interest in the land (Custom Credit Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 50). Whether the caveator's claim has or may have substance is to be determined by reference to that criterion.
As mentioned earlier, the caveator's claim is founded on its claim to be a purchaser under the contract for the sale of land dated 10 May 2002 and 27 August 2003. A specifically enforceable contract for the sale of land is capable of giving rise to an equitable interest in land in favour of the purchaser (KLDE Proprietary Limited (In Voluntary Liquidation) v Commissioner of Stamp Duties for the State of Queensland (1984) 155 CLR 288). However, in this case, the plaintiff, by its solicitor's letter of 16 November 2004, elected to terminate the contract for the sale of land relying on an alleged repudiation by the first defendants. The plaintiff is, therefore, by reason of its election to terminate the contract, in no position to seek specific performance. Indeed, it is common cause between the plaintiff and the first defendants that the contract has been terminated. The only issue between the parties is whether the contract was terminated by mutual agreement or at the instance of the plaintiff by having accepted the repudiation of the first defendants.
In the circumstances, the contract is no longer capable of giving rise to an interest in land in favour of the plaintiff and not able to found a sufficient basis to support a caveat.
In the circumstances, I am not satisfied that the caveator's claim has or may have substance.
I accordingly dismiss the application.