Mayfair Build Pty Ltd v Sanoubane - [2023] ACTSC 148

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Mayfair Build Pty Ltd v Sanoubane
Citation:	[2023] ACTSC 148
Hearing Date:	26 May 2023
DecisionDate:	14 June 2023
Before:	McCallum CJ
Decision:	Proceedings relisted on 12 July for further submissions as to the orders to be made.
Catchwords:	CAVEATS – Application to restrain removal of caveat – where building contract created a charge on the land to secure moneys owing under building contract – dispute between builder and owners as to whether any amount owing – whether there is a serious issue to be tried as to the amount owed – whether the balance of convenience favours restraining the removal of the caveat – where no proceedings for the debt have been brought – where parties did not address the issue of payment into court as security for the amount claimed
Legislation Cited:	Land Titles Act 1925 (ACT) s 107
Cases Cited:	Adrija Pty Limited v Mohamed and Ors [2013] ACTSC 120 Danthanarayana v GR8 Constructions Pty Ltd [2012] FCA 231 GR8 Constructions Pty Limited v O’Donnell [2011] ACTSC 92 Kingstone Constructions v Crispel (Supreme Court of New South Wales, Young J, 12 March 1991) Matken Constructions Pty Ltd v James [2009] ACTSC 100 Porter v McDonald [1984] WAR 271 Stone Living Pty Ltd v 3 Property Group 9 Pty Ltd [2020] ACTSC 149
Parties:	Mayfair Build Pty Ltd (ABN 65 640 189 233) ( Plaintiff) Sengaroun Sanoubane ( First Defendant) Awatta Supphasri ( Second Defendant) Registrar-General of Land Titles for the Australian Capital Territory ( Third Defendant)
Representation:	Counsel G Blanke ( Plaintiff) R Arthur ( First and Second Defendants)
Solicitors Sparke Helmore Lawyers ( Plaintiff) BAL Lawyers ( First and Second Defendants)
File Number:	SC 164 of 2023

McCALLUM CJ:

By amended originating application dated 5 May 2023, Mayfair Build Pty Ltd seeks an order preventing the removal of a caveat lodged by it over land owned by the first and second defendants, to whom I will refer as the owners. The circumstances in which the application is brought may be summarised as follows.

On 11 June 2021, Mayfair Build and the owners entered into a home building contract for the construction of a two-storey house on land that had been purchased from Mayfair Build by the owners. The building contract price was $577,750. That was in fact the second contract the owners had entered into with Mayfair Build, the first having contemplated the construction of only a single-storey house. However, for today’s purposes, it is the second contract dated 11 June 2021 that is the relevant contract.

The contract included clause 30 as follows:

30. CHARGE ON LAND
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.

The words in bold are each defined elsewhere in the contract. The word “Site” is defined to mean land.

On 21 June 2021, an engineer…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] ACTSC 148
Decision Date

CaseChat Overview and Summary

Mayfair Build Pty Ltd, a home builder, sought an order in the Supreme Court of the Australian Capital Territory preventing the removal of a caveat it had lodged over land owned by Sengaroun Sanoubane and Awatta Supphasri, referred to as the owners. The owners had entered into a home building contract with Mayfair Build for the construction of a two-storey house on land they had purchased from Mayfair Build. The contract included a clause creating a charge on the land to secure moneys owing under the contract. The builder claimed that the owners owed it a substantial sum for work completed under the contract, while the owners disputed this and claimed the contract had been lawfully terminated by them. The builder lodged the caveat on 5 April 2022, and the owners lodged a lapsing notice on 21 April 2023, resulting in the builder commencing the present application. The central issues were whether the builder had a caveatable interest and the extent of that interest.

The Court found that the charging clause in the contract was sufficient to create a charge securing payment of unpaid moneys, as established in previous cases. The Court was satisfied that the clause created an immediate charge on the land for any amount payable to the builder under the contract, or otherwise, from the carrying out of the works. The more difficult question was the extent of that interest. The builder claimed $138,000, largely comprising amounts of $1,000 claimed as a result of the owners' failure to select fittings. The owners claimed those amounts were liable to be set aside as a penalty. However, the amount claimed by the builder also included an undisputed amount relating to the construction of the waffle slab. The builder also indicated that, the contract having been repudiated, he was entitled to loss of profit, likely amounting to $150,000, making the total claim in the order of $300,000, perhaps more when interest and costs were added.

The owners did not dispute that the waffle slab was laid, and they did not purport to terminate the contract until well after that date. There was a dispute between the parties as to whether and when the contract had been terminated by the owners, but at the very least it appeared that an amount of about $57,000 was undisputed. The owners claimed, however, that no amount would be owed by them because the $1,000 weekly payments would be set aside as a penalty and further because the contract was entered into on the basis of a misrepresentation. The Court found that there was a serious question to be tried as to the builder being owed at least $57,000. In terms of the balance of convenience, the Court found that it was not appropriate to resolve factual disputes of the kind raised in the affidavit in a proceeding of this kind. Finally, the Court noted that the owners offered no substitute security for what appeared to be an undisputed amount owed under the contract.

In the result, the Court was persuaded that the caveat should not be removed at this stage. The proceedings were relisted on 12 July for further submissions as to the orders to be made.

Orders