Pacific Ventures P/L & ANR v RAMS Developments P/L No. Scciv-01-304
[2001] SASC 67
•15 March 2001
PACIFIC VENTURES PTY LTD & SOUTHWICK DEVELOPMENTS PTY LTD v RAMS DEVELOPMENTS PTY LTD (IN LIQUIDATION)
[2001] SASC 67
Civil
OLSSON J
Introduction
This is an application, pursuant to SCR 96A.02, for leave to appeal from the dismissal by a District Court Judge of an appeal from a District Court Master.
It arises from a somewhat complicated chain of events. These require detailed analysis in order to appreciate the issues now arising for consideration.
The narrative history
The respondent is a building contractor. The applicants are the owners of three allotments of land situated at 31-33 Seaview Road, Tennyson.
It is said that, on or about 14 June 1999, the applicants entered into a contract with the respondent, whereby the latter was to build three houses on the Tennyson land.
The respondent avers that it carried out certain work under the contract, whereby $217,440 became due and payable by the applicants to it. It appears that various disputes had arisen between the parties and the applicants refused to pay the respondent’s claim.
It is alleged by the respondent that, by notice in writing dated 2 February 2000 directed to the two applicants, it demanded payment of the above sum. That demand was not satisfied.
Accordingly, on 3 February 2000, the respondent registered a notice of lien in respect of the land in question. That land was, at that time, all in a single title. The three allotments have since become the subject of three separate titles, which are said to have issued on or about 11 February 2000.
Be that as it may, on 11 February 2000 the respondent commenced an action in the District Court against the applicants.
It is to be observed that, having pleaded the foregoing general situation (albeit in more detail than my summary of it) the respondent merely claimed the sum of $217,400, interest and costs. There was no specific claim for an order to enforce the lien, although the statement of claim pleaded the registration of the notice of lien on the title to the land.
In this regard it is important to note the express provisions of s 15 of the Worker’s Liens Act 1893, which stipulates that:-
“15.. Every lien under this Act upon the estate or interest of any owner or occupier shall cease unless an action shall be brought against the owner or occupier for enforcement of the lien within fourteen days from the registration thereof.”
It will at once be seen that an issue arises as to whether or not the action which was commenced by the respondent could fairly be described as an action brought “for enforcement of” the relevant lien. I shall return to that question in due course.
The applicants filed a defence and counterclaim in the action against them. They asserted defective work, non satisfaction of the requirements of the contract; and that any claim of the respondent was unenforceable by reason of the fact that the respondent did not hold an appropriate licence pursuant to the Building Work Contractor’s Act, 1995. The applicants counterclaimed damages for breach of contract, negligence, breach of statutory warranties and breach of the Trade Practices Act.
On 8 May 2000 the present applicants made application to a Master for orders that the lien registration cease or, in the alternative, that the respondent withdraw it.
On 6 June 2000 the respondent passed a special resolution for its voluntary winding up.
The matter came before the Master on 29 June 2000, at which time, by consent, he ordered as follows:-
“1..... Pursuant to Section 32 of the Workers’ Liens Act 1893 the effect of the Lien and the registration thereof be modified by the plaintiff releasing part of the land over which the Lien is registered being the land comprised in Certificate of Title Register Book Volume 5733 Folio 819 from the effect of the Lien to enable the defendant to sell the land and pay the whole of the proceeds of such sale to the mortgagee to be applied against monies due to the mortgagee at 7 February 2000.
2.In all other respects the plaintiff’s Lien and the registration thereof be unaffected by this order.
3...... The parties are directed to do all things and execute all necessary documents to give effect to this order.
4.Either party may apply for further orders and directions.”
As I understand the situation this was to permit the sale of one of the houses which, by then, had been completed and was the subject of a contract of sale.
The order appealed against
The proceedings again came before the Master on 21 August 2000, at which time the applicants sought orders that the respondent’s claim be struck out, and judgment be entered for the applicants.
Having heard preliminary argument the Master directed the parties to file detailed written submissions. They did so and he heard further oral argument on 26 September 2000.
On 23 October 2000 he pronounced the order which was the subject of the appeal to the learned District Court Judge and published written reasons for so doing.
In his reasons the Master noted that it was the contention of the present applicants that, by reason of non compliance with s 15 of the Workers’ Liens Act, the lien claimed had ceased and, accordingly, it should be removed from the relevant titles.
He next observed that it was the further contention of the applicants that, because there had been three building projects and one of those had been completed and the house sold, if there was a valid, subsisting lien, then, at the very least, it should be varied as to each remaining title, so as to limit the claim as to each property to the actual claim in respect of that property and not remain as a mere global claim.
The Master finally recorded that counsel for the applicants had also stressed the defence based on the provisions of the Building Work Contractors Act 1995 and the assertion that, in any event, this rendered the claimed lien patently unenforceable.
The reasons noted assertions as to serious prejudice said to have been accruing to the applicants and a series of responses advanced by counsel for the respondent in answer to the above arguments.
Without descending to fine detail, the conclusions expressed by the Master may be summarised thus:-
A claim for enforcement of the lien pursuant to s 15 of the Workers’ Liens Act was implicit in the statement of claim;
Despite non compliance with the licensing provisions of the Building Work Contractors Act, the respondent was still entitled to pursue a claim for quantum meruit;
It was fairly arguable that the original contract was for a global contract sum spanning all three houses and that the whole original claim was properly the subject of a single lien claimed on what was, originally, a single title for all three houses.
The learned Master summarised his ultimate conclusions thus:-
“Notwithstanding my rejection of Mr Jenner’s submissions, I am conscious that there remains on each of the titles still owned by the defendants, liens in the sum of $217,440, claimed for the work undertaken in respect of the three houses built by the plaintiff. The existence of these liens has occasioned the need for the defendants to refinance the project, and to tie up capital which would otherwise be used for further projects. Both the plaintiff and the defendants have tabled summaries of the plaintiff’s progress claims. On the plaintiff’s version, these total $216,954.00 for the three houses, and on the defendants’ version, the equivalent amount is $152,628.00. What sum is ultimately awarded, if at all, can only be determined at trial, but the plaintiff is entitled to the security of a lien and I would not be disposed to diminish the total amount of the lien below the figure claimed by the plaintiff, namely $216,954.00. In view, however, of the prejudice asserted by the defendants, which I am entitled to take account of in the balancing exercise referred to in MSP Group (supra), I cannot see how an injustice would be caused to the plaintiff were I to apportion the total amount claimed equally between the two remaining titles: although both summaries acknowledge that the progress claims and variations differ between the houses, the amounts are not so dissimilar that an equal apportionment would be inappropriate.”
He therefore proceeded to make an order in these terms:-
“1.... I refuse the applications to strike out the plaintiff’s claims and for judgment for the defendants or for the liens registered by the plaintiff to be cancelled.
2.I order that the lien number 8831106 with respect to Certificates of Title Register Book Volume 5733 Folios 820 and 821 be modified to the effect that the lien on each such title is to be reduced to the sum of $108,720.00.
3...... I direct the defendants to lodge minutes of order for settling and give liberty to either party to apply to attend before me to speak to the minutes and in relation to the costs of and incidental to this application if so advised.
4.I give liberty to the plaintiff if so advised, to amend the statement of claim in terms of the matters referred to on the plaintiff’s behalf during argument, and the defendants are at liberty to amend their defence if so advised in consequence of any such amendment.”
Subsequent steps in the action
On 6 November 2000 the present applicants lodged an appeal against the Master’s order. It basically sought to challenge each of his major conclusions.
The matter again came before the Master on 30 November 2000. It is by no means clear how or why this occurred.
On 27 November 2000 the applicants proffered a banker’s guarantee to the court, by letter, saying that it was lodged to effect the cessation of the lien on one of the residual titles, to enable settlement to occur on a sale of the subject house.
There is a cryptic fiat on file dated 30 November 2000, which merely records “I decline to make an order and direct that the registry upon [the] request of the defendants return the Bank Guarantee to them”.
A cross appeal against the order of 23 October 2000 was filed by the respondent on 1 December 2000. This complained that it was inappropriate for the Master to apportion a total amount claimed between two titles.
The proceedings again came before the Master on 4 December 2000. The court file is singularly devoid of information as to precisely how this came about.
I am informed from the bar table that this was as a consequence of an oral application in what appears to have been something of a desperate bid to find some practical means of releasing the title to the second house property to enable the sale of it to be finalised. After some debate, during which counsel for the respondent resisted any attempt to replace the claimed lien with a Baker’s Guarantee, the Master made an order expressed as under:-
“The Defendants by their counsel having undertaken that the cancellation of the lien by this order does not have the effect of removing the foundation of the Plaintiff’s claim to enforce the lien and to seek declarations in respect thereof and the Defendants having this day lodged at Court an unconditional banker’s guarantee in the form attached to these minutes for an amount of up to $217,440.00 to abide the outcome of this action and so as to secure the cancellation of the lien claimed by plaintiff in respect of Certificates of Title Register Book Volume 5733 Folios 820 and 821 THE COURT ORDERS:
1...... That the lien number 883 1106 with respect to Certificates of Title Register Book Volume 5733 Folios 820 and 821 be cancelled.
2.That the question of costs be reserved.
3...... Liberty to apply to either party at short notice if necessary.”
The appeal and cross appeal against the Master’s order of 23 October 2000 came before the learned District Court Judge on 6 and 8 December 2000 respectively. She reserved her decision. On 22 January 2000 she published reasons for her conclusions and made a formal order dismissing the appellant’s appeal. She made no order as to the cross appeal, commenting that this had “been overtaken by a subsequent order made by the Master on 4 December 2000.”
Having rehearsed the key issues arising from the notice of appeal the learned District Court Judge had this to say:-
“I have doubts as to whether an issue as fundamental to the plaintiff’s claim as this could properly be determined as an interlocutory matter by way of an application pursuant to Section 32.
But the defendants’ appeal faces another even more fundamental difficulty. The plaintiff contends that in view of the Master’s orders of 4 December 2000 cancelling the lien, any appeal against his earlier refusal to do so - and indeed any appeal against earlier orders modifying the effect of the lien - is incompetent. As Mr Wilkinson put it, ‘there are no legs left in the application appealed from’. The substantive orders sought in the application of 8 May 2000 having been obtained, although by a different means, there is nothing left for an appellate court to consider.
Acceptance of this agreement would dispose of all three grounds of appeal. Mr Jenner’s response to the argument did not, as I see it, meet the difficulty. He argued that upon a finding that the Master’s decision was wrong I could amend the appeal in terms of the relief sought (which was cancellation of the lien or, in the alternative, modification of it) and utilize Rule 97.1(i) [sic] to reverse or vary the Master’s orders of 4 December, which he said were incidental to the decision under appeal.
In my view for the reasons advanced by Mr Wilkinson, the appeal is indeed incompetent. I find that in asking the court for an order that the lien be cancelled and in providing security for the plaintiff’s claim in the form of an unconditional bankers guarantee, the defendants effectively abandoned their rights under section 32 Worker’s Liens Act.
Accordingly the appeal is dismissed. I will hear the parties on costs.”
The present application
The order of the learned District Court Judge precipitated the present application for leave.
The applicants seek leave to appeal on two grounds, namely:-
That the learned appeal judge erred in characterising the appeal as incompetent; and
That the learned appeal judge should have characterised the effect of the orders made on 4 December 2000 as being incidental or consequent upon the order appealed from and thus being capable of variation or reversal under DCR 97.10(i).
Issues arising
At the outset it is important to note that there has never been any appeal against the order of the Master made on 4 December 2000.
In terms, that order specifically cancelled the registration notice of lien upon the undertaking of the appellants that such cancellation was not to “have the effect of removing the foundation of the Plaintiff’s [respondent’s] claim to enforce the lien and to seek declarations in respect thereof”.
It is stating the obvious to say that the fundamental aim of the Workers’ Liens Act is to provide security for proper claims in respect of building work by way of a charge on the subject land, to the extent that there may be equity in it and moneys still owing by the building owner under a relevant contract. In the instant case the practical and legal effect of the Master’s order of 4 December 2000 was to discharge that security and substitute a quite different form of security for it, ie a Banker’s Guarantee.
The wording of the relevant undertaking is a little ambiguous, but I understand the essential thrust of it to be that the cancellation of the lien was intended to be without prejudice to the right of the respondent to prove the quantum of moneys lawfully due to it and then recover so much of those moneys from the guarantor as would have been recoverable under the lien, had any action to enforce it been prosecuted to judgment.
(Mr Jenner, of counsel for the applicant, said that the wording of the undertaking was based on what occurred in Marriott Industries Pty Ltd v Mercantile Credits Ltd; Maesbury Plumbers Pty Ltd, Intervenor (1991) 160 LSJS 288 (“Marriott Industries”). The Full Court there accepted that where, as here, a registered lien was cancelled by order under s 32 of the Worker’s Liens Act, upon the furnishing of a Banker’s Guarantee of payment to abide the event of the enforcement action, it remained open, in that action, for the Court to deal with the matter upon the footing that, if the relevant party had a valid claim to enforce the lien immediately prior to its formal cancellation, then an appropriate declaration of the extent of that liability could be made for the purpose of enforcing the guarantee.)
In other words, if it be accepted that the present action did, implicitly, seek the enforcement of the lien, then it abated to the extent that such enforcement was no longer possible. However, it did not abate at all in relation to the money claim and any issue as to what (if any) moneys were payable by the applicants to the respondent, at the date of registration of the lien, pursuant to the arrangements entered into between them.
However the learned District Court Judge may have expressed herself, I take her reasoning to be:-
On any view the fundamental issues sought to be ventilated in this matter were not appropriate for summary disposal on an interlocutory basis, particularly pursuant to s 32 of the Worker’s Liens Act.
In any event, the effect of the order of 4 December 2000 was to bring to a conclusion any element of the claim directly based on that statute, ie s 32 was no longer relevantly applicable and could not be invoked, because, as she put it, the appellants had abandoned their rights under that section.
Because the relief sought by the appeal sought to involve s 32 in relation to relief with regard to a lien which no longer existed, the appeal was incompetent. Moreover, DCR 97.10(i) could not fairly be resorted to to reverse or vary the Master’s order of 4 December 2000, as being incidental to the order appealed against.
Let me say at once that it appears to be unarguable that DCR 97.10(i) had relevance in this matter. That sub-rule merely empowers a Judge, when disposing of an appeal, to reverse or vary any interlocutory orders which are “incidental to or consequent upon the decision under appeal”.
The plain fact of the matter is that the order of 4 December 2000 was, in no sense, incidental to or consequent on the order of 23 October 2000. It dealt with a quite different issue, namely whether the lien claimed could be replaced by a Banker’s Guarantee. It would be quite inappropriate, in the context of an appeal against the earlier order, by a side wind, to revamp the content of the latter order which was, itself, appealable at the time; and in respect of which no appeal had been prosecuted.
The notice of appeal to the learned District Court Judge sought the following specific relief:-
“1.... That the appeal be allowed.
2.That the lien number 8831106 with respect to certificate of Title Register Book 5733 Folios 820 and 821 be cancelled;
3...... In the alternative to order 2 that the lien number 8831106 with respect to certificate of Title Register Book 5733 Folios 820 be modified to the effect that the lien on that title is to be reduced to the sum of $75,062.00.
4.In the alternative to order 2 that the lien number 8831106 with respect to certificate of Title Register Book 5733 Folios 821 be modified to the effect that the lien on that title is to be reduced to the sum of $70,858.00.
5...... That the plaintiff be at liberty to file an application seeking leave to amend that exhibits any proposed amendment to its statement of claim within 21 days.
6.That the appellants have their costs of the appeal and of the application;
7...... That the matter be returned to the general directions list.”
It is at once apparent that all principal heads of relief related to what was then a non existent lien - one which could not be resurrected, because it had been cancelled by the order of 4 December 2000.
With respect, it was technically inaccurate to say, as did the learned District Court Judge, that the appeal was “incompetent”. I do not think that, in literal terms, that was what she was really seeking to convey. Rather, it was the situation that the appeal was, on the face of it, a patently abortive exercise, because the relief sought could never have been granted.
It may well also be arguable that it was not accurate to suggest that the appellants had, literally, abandoned all of their s 32 rights. Section 29 of the statute authorises the joinder of related money claims with claims to enforce a lien. In turn, s 32 empowers a party said to be prejudicially affected (inter alia) by such a claim to apply to the Court “to have such claim ... cancelled or the effect thereof modified”, whereupon such order may be made as deemed just.
I must confess that I am by no means clear as to precisely what is meant by the section so expressed in relation to a related claim, by way of contrast with a lien registered under the Act. It seems obvious that the intention of the statute, read as a whole, is that cancellation of a lien is not, automatically, to bring a related money claim to an end and any action on foot may properly continue as to the latter. It will be for future decision as to what the practical operation of s 32 may be in such a scenario.
Conclusion
I have dwelt on the foregoing matters at some length to illustrate that, in my opinion, the claim to relief sought to be prosecuted by the appellants by its proposed appeal is plainly untenable, as was its appeal to the learned District Court Judge. The whole basis of the appellant’s approach appears to me to be misconceived.
Leave to appeal must be refused.
I hasten, however, to make the point that such a conclusion is not to gainsay the type of approach envisaged in Marriott Industries.
It still remains open to the applicant, within the primary proceedings, to have the issue litigated as to what, if any, residual liability was protected by the original lien and, thus, what, if any, liability arises under the Banker’s Guarantee. This is not the type of issue which falls for determination on an interlocutory application. The proper approach is to have the matter brought on for trial as soon as is practicable, so that all outstanding questions may be addressed.
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