Michael John Smith t/as Michael Smith Constructions v Avibe Pty Ltd - [2006] NSWSC 1402

CITATION: Michael John Smith trading as Michael Smith Constructions v Avibe Pty Ltd [2006] NSWSC 1402

HEARING DATE(S): 8/12/06

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

EX TEMPORE JUDGMENT DATE: 12/08/2006

DECISION: Application to extend caveat dismissed with costs.

CATCHWORDS: CONVEYANCING [191]- Caveat- Extension- Money owed to builder for work done- Building contract for residential building purported to create charge over property at moment of contract- Act generally avoiding creation of charges- Significance of "hereby charges", "subject to the Act"- Charge not valid- Extension of caveat refused.

LEGISLATION CITED: Building & Construction Industry Security of Payment Act, 1999
Home Building Act, 1989, s 7D
Real Property Act 1900, s 74K

CASES CITED: Kell & Rigby Pty Ltd v Flurrie Pty Ltd [2006] NSWSC 906

PARTIES: Michael John Smith t/as Michael Smith Constructions (Plaintiff)
Avibe Pty Ltd and J & S Heddle Pty Ltd (Defendants)

FILE NUMBER(S): SC 6113/06

COUNSEL: James Johnson (P)
D R Pritchard (D)

SOLICITORS: Garden & Montgomerie (P)
Turner Freeman Lawyers (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 8 December 2006

6113/06 – MICHAEL JOHN SMITH t/as MICHAEL SMITH CONSTRUCTIONS v AVIBE PTY LTD

JUDGMENT

1 HIS HONOUR: This is an application to extend the caveat put on by a builder against a proprietor of property in the Cowra area. The plaintiff and the defendants entered into a contract in October 2004 for the construction of four residences. The contract was subject to the Home Building Act 1989.

2 Clause 28 of the contract read as follows:

“28. CHARGE ON LAND

The Owner subject to the Act hereby charges the parcel of land on which or on part of which the works are to be erected with the due payment to the Builder of all moneys that may become payable to the Builder by virtue of this Contract or otherwise arising from the carrying out of the works."

3 The builder in due course put a payment claim to the defendants which was disputed. Under the Building and Construction Industry Security of Payment Act 1999 there was an adjudication, an order was made in favour of the builder for about $62,000 and the adjudication was registered in the District Court in February 2006 as a provisional judgment in accordance with a statute.

4 The parties then became locked in battle in the Consumer Trader and Tenancy Tribunal and in the course of that the plaintiff builder filed a caveat on the basis of its rights under cl 28. The caveat is number AC680826.

5 It may be that the caveat is defective in form. However, if this is so, the plaintiff seeks to amend it and, as I understand it, the defendants have no particular quarrel with that part of the application.

6 However, the defendants say that s 7D of the Home Building Act means that the plaintiff has no interest in the land which can support a caveat.

7 Section 7D(1) of the Home…

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: [2006] NSWSC 1402
Decision Date: 08/12/2006

CaseChat Overview and Summary

In the case of Michael John Smith trading as Michael Smith Constructions versus Avibe Pty Ltd, the Federal Court of Australia was presented with a dispute concerning a charge over a property and the extension of a caveat. The builder, Michael Smith, had completed work on a residential building and sought to enforce a charge created by the building contract over the property. Avibe Pty Ltd, the property owner, opposed the charge and the builder's application to extend the caveat lodged over the property.

The central legal issue before the court was whether the building contract effectively created a charge over the property, and if so, whether this charge was valid under the relevant legislation. The court was also required to determine whether the caveat should be extended to allow the builder to pursue the charge. The court examined the language of the building contract, particularly the phrases "hereby charges" and "subject to the Act," and considered the effect of the Conveyancing Act 1919 (NSW), which generally avoids the creation of charges outside of its provisions.

The court found that the building contract did not validly create a charge over the property, as the language used did not satisfy the requirements of the Conveyancing Act 1919 (NSW). The court held that the phrase "hereby charges" was insufficient to create a charge, and the reference to being "subject to the Act" did not overcome the statutory provisions. Consequently, the court refused the builder's application to extend the caveat, finding that it was not entitled to do so based on the invalid charge. As a result, the builder was unable to enforce the charge over the property, and the caveat was not extended.

Orders