Pacific Building Services Pty Ltd v Lau

[2017] ACTSC 245

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Pacific Building Services Pty Ltd & Anor v Lau & Ors

Citation:

[2017] ACTSC 245

Hearing Date(s):

23 August 2017

DecisionDate:

24 August 2017

Before:

McWilliam AsJ

Decision:

1.    The applicants are to withdraw Caveat 2043640 forthwith.

2.    The applicants are to pay the respondents’ costs of the proceedings.

Catchwords:

CAVEATS – Land Titles Act 1925 (ACT) s 107 – joint tenants – only one possibly grants equitable interest to creditor – creditor caveats whole of property – caveat impermissible

Legislation Cited:

Court Procedures Rules 2006 (ACT) r 706

Land Titles Act 1925 (ACT) s 107

Cases Cited:

Adrija Pty Ltd v Mohamed, Ahmed and Registrar General ACT Land Titles Office [2013] ACTSC 120

Andrews v Wilcox [2008] NSWSC 280

Boral v Aghili [2009] ACTCA 18

Depsun and Anor v Tahore Holdings Pty Ltd (1990) 5 BPR 11,314
GR8 Constructions Pty Ltd v O’Donnell [2011] ACTSC 92
John Lampard Pfeiffer v Colin James Cummins (unreported, ACT Supreme Court, Gallop J, 2 July 1986)

Piroshenko v Grojsman & Others [2010] VSC 240; 27 VR 489

Parties:

Pacific Building Services Pty Ltd ACN 132 571 343 (First Applicant)

Amrollah Aghili (Second Applicant)

Henry Han Ho Lau (First Respondent)

Shuk Han Lau (Second Respondent)

Hanson Australasia Pty Ltd ACN 128 924 443 (Third Respondent)

Representation:

Counsel

Mr Abbas (Applicants)

Mr Johannessen (Respondents)

Solicitors

High Ford Law Practice (Applicants)

Johannessen Legal & Migration (Respondents)

File Number(s):

SC 147 of 2017

McWilliam AsJ:

1. By Originating Application filed 9 May 2017, the applicants, Pacific Building Services Pty Ltd ACN 132 571 343 (Pacific) and its director, Mr Amrollah Aghili seek the extension of a caveat lodged on 27 July 2016 and numbered 2043640 (Caveat).  

1. The Caveat was lodged on the title of a property in O’Malley, in the Australian Capital Territory (Property), the registered proprietors of which are the first and second respondents to this application, Mr Henry Han Ho Lau and Mrs Shuk Han Lau.  They are listed on the Certificate of Title as joint tenants.

1. The genesis for the application was the service on 28 April 2017 of a lapsing notice (dated 21 April 2017), pursuant to s 107(2)(a) of the Land Titles Act 1925 (ACT). Under s 107(2)(b) of that statute, the registrar-general shall, not less than 14 days from the date of service of the lapsing notice, remove the caveat from the register, ‘unless the court otherwise orders.’

1. The Caveat has been extended pending further order of the Court and the hearing of this application.  As with Adrija Pty Ltd v Mohamed, Ahmed and Registrar General ACT Land Titles Office [2013] ACTSC 120 (Adrija), the relief sought is in terms more suited for an interlocutory order pending the determination of a substantive application. However, this was not an application where urgent orders were sought before the start of proceedings, such as to enliven Rule 706 of the Court Procedures Rules 2006 (ACT). No party indicated that any future proceedings were contemplated at this stage.

1. Rather, I have adopted a course similar to that adopted by Master Mossop (as his Honour then was) and treated the application as one for an order of the Court that the Caveat not be removed.

1. For reasons that follow, I have found it unnecessary to determine any questions as to the existence or otherwise of a caveatable interest.  This is because the Caveat itself is defective as a matter of substance, not form, and accordingly must be withdrawn.

Principles

1. In Adrija, Master Mossop stated at [21] that in order to justify an order preventing the removal of the caveat, the caveator’s claim to an interest in the land must raise a serious question to be tried and the balance of convenience must favour of the extension of the caveat as opposed to other options: GR8 Constructions Pty Ltd v O’Donnell [2011] ACTSC 92 at [24]-[27]; John Lampard Pfeiffer v Colin James Cummins (unreported, ACT Supreme Court, Gallop J, 2 July 1986). The onus of establishing that there is a serious question rests with the caveator: see also Piroshenko v Grojsman & Others [2010] VSC 240; 27 VR 489 at [7].

Context of the application

1. The reason the Caveat was apparently considered necessary by the applicants (as gleaned from the evidence before the Court) was that on 13 June 2016, Mr and Mrs Lau entered into a contract for sale of the Property to a third party, namely Spring Range Road Pty Ltd (ACN 167 593 339) who although not formally made a party in these proceedings (as it was ultimately not necessary), was on notice of them and also represented by the legal representative for the respondents.  There was some evidence in the transfer before the Court that the sale was meant to complete on 27 July 2016, although the passing of that date was apparently no cause for expedition, as confirmed by the legal representative for the respondents. 

1. The applicants contend that the contract for sale was in the nature of a sham but whether that was so is also unnecessary to decide for the resolution of the present application.  The contention is recorded merely to make it clear, for the purpose of any subsequent proceedings, that the mere fact that the contract for sale has been referred to here as part of the historical context to these proceedings does not indicate any considered factual finding on that question.

The asserted caveatable interest

1. The asserted interest supporting the Caveat arises from a Project Management Agreement, dated 10 October 2008 (Agreement) entered into between the applicant’s predecessor, Choice Design and Construction Services Pty Ltd ACN 132 571 343 (‘the Project Manager’) on the one hand, and Mr Lau and the third respondent, Hanson Australasia Pty Ltd ACN 128 924 443 (Hanson), on the other.  Mr Lau and Hanson were jointly and severally defined as the Client in the Agreement.

1. The stated object of the Agreement was for the Project Manager to administer the design and manage and supervise the construction and completion of building works in respect of a number of blocks of land located at Macgregor in the Australian Capital Territory.

1. It appears that the Project Manager completed that task, but has remained substantially unpaid by either or both of the first or third respondents.  In evidence before me was a Default Judgment obtained on 21 July 2016 by the applicants against the first and third respondents for the sum of $930,098.00, plus costs and interest on a specified portion of the debt. 

1. It is unclear from the documents in evidence in these proceedings how the second applicant, as director of Pacific but not a party to the Agreement, was able to obtain default judgment in his own right.  From the Originating Claim founding the Default Judgment, which was also in evidence before me, it appears Mr Aghili personally claimed damages for misleading and deceptive conduct in trade or commerce, and on a quantum meruit basis.

1. In any event, rather than seek to enforce the Default Judgment through channels such as the issuing of a creditor’s statutory demand as against the third respondent, or bankruptcy notice in respect of the first respondent, the applicants have instead had recourse to clause 13(1)(g) of the Agreement as the underlying foundation for the Caveat, which is in the following terms:

(g) The client personally guarantees and indemnifies the project Manager for any payment due to it, without any deduction or set off whatsoever and if the client not to be able to meet its obligations, the Project Manager may recover the amount of these payments from the client, in such case, the project manager may, amongst other recovery rights, take a charge of the real property of the client.

1. In the case put by the applicants, there were two issues for determination. The first was whether the words ‘take a charge of the real property’ entitled the present applicants to an equitable interest in land at all.  The second was whether the reference to ‘the real property of the client’ extends to the Property, being the residential home owned by Mr Lau and his wife.  If both those questions are answered in the affirmative, the applicants submit they have a caveatable interest.

1. It is difficult to see how Mr Aghili would be entitled to any equitable interest in the Property solely on the basis of the above clause, as only the formerly named corporate entity was defined as the Project Manager under the Agreement.

1. However, the proper construction of clause 13(1)(g) of the Agreement, at least in respect of the first applicant, is a serious question to be tried. 

1. In light of the findings below, the ultimate interpretation of the clause is best left for another day.  I have also borne in mind the comments of the Court of Appeal in Boral v Aghili [2009] ACTCA 18 (being a different person from the present second applicant) at [2] and [5] as to the appropriate time for considering construction issues concerning the enforcement of a charge, albeit that such judgment was in the context of relief sought before the commencement of other proceedings.

The terms of the Caveat

1. The more immediate difficulty for both the applicants is the words of the Caveat itself.  The ‘registered proprietor/s’ as described on the Caveat are Mr and Mrs Lau.  It will be recalled that Mrs Lau is neither a party to the Agreement nor the subject of the Default Judgment.

1. Further, the alleged interest in the Property is described on the Caveat in the following handwriting:

1. Mr Aghili gave oral evidence in these proceedings (without objection) that his handwriting set out above only refers to one proprietor.  However, in my view, it is plain that notwithstanding the spelling, the words used refer to ‘the proprietors’, being both Mr and Mrs Lau. 

1. In Andrews v Wilcox [2008] NSWSC 280 (Andrews), Hammerschlag J stated at [27]:

A joint tenant, or a tenant in common, may encumber his interest in land so as to compel his co-owner to submit to the encumbrance if that encumbrance does not interfere with the right of his co-owner to his possession of the land and his other rights with respect to the land: Hedley v Roberts [1972] VR 282 at 288.

1. In any event, even if Mr Aghili’s evidence that the above words refer to only one proprietor were to be accepted, the registered proprietor/s listed on the Caveat as being affected are both Mr and Mrs Lau.  As was the case in Andrews (at [23]), it is the description of the ‘registered proprietor’ to include Mr and Mrs Lau, and without any reference to the fact that the Caveat is limited to Mr Lau’s interest as joint tenant, that is undoubtedly the origin of the difficulty.

1. The Caveat plainly interferes with Mrs Lau’s rights with respect to the property and in those circumstances the Caveat cannot stand.

1. There was no formal application to amend the Caveat before the Court, and the parties did not make submissions on the question.  In other jurisdictions, amendments have been permitted as falling within the power of the Court, however an amendment defining the interest claimed has been held to be a course which is not open: see Andrews at [29], where Hammerschlag J had earlier (at [22]) referred to the relevant authority, being Depsun and Anor v Tahore Holdings Pty Ltd (1990) 5 BPR 11,314 in which McClelland J said this (at 11,320):

The Court has power under s74 MA (2) to order withdrawal of a caveat and to ‘make such other or further orders as it thinks fit’. I would construe this provision as conferring on the Court power to make such other order as it thinks fit as an alternative to an order for withdrawal of the caveat, as well as power to make such further order as it thinks fit in addition to an order for withdrawal of the caveat. The second ground of the claim in the present case might arguably have justified an alternative order for amendment of the caveat so as to limit its prohibition to the registration of dealings by way of mortgage or transfer of the subject property to any person from or by whom execution of a deed corresponding to the deed of 1 July 1988 had not been procured. In my opinion the Court is empowered to make an order for amendment of the prohibitory provisions of a caveat (see Re The Victorian Farmers Loan and Agency Co (1987) 22 VLR 629; Queensland Estates Pty Ltd v Co-Ownership Land Development [1969] St R Qd 150), although not of the provisions defining the interest claimed (see Re Spencer (1904) 4 SR (NSW) 471; Midwarren Estates Pty Ltd v Retek [1975] VR 575). [Emphasis added.]

1. As the legislation there under consideration was different, the powers of this Court may differ, and without the benefit of considered argument, no conclusion on the powers of this Court should be made.  Assuming without deciding that this Court did have power (through statute or the inherent jurisdiction of the Court) to amend the Caveat in accordance with the above principle, the principle expressly does not extend to redefining the interest so as to limit it to Mr Lau.

Conclusion

1. I will therefore make an order that the Caveat be removed.  In relation to costs, in my view, the appropriate order is that costs follow the event.

1. In the event that any party wishes to apply for a variation of the order as to costs, they are to contact my associate within seven days of the date of these orders seeking directions for submissions on the question, which will be determined on the papers.

1. The orders of the Court are:

1.    The applicants are to withdraw Caveat 2043640 forthwith.

2.    The applicants are to pay the respondents’ costs of the proceedings.

I certify that the preceding twenty-nine [29] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam.

Associate:

Date: 24 August 2017