Pascoe v Pamela McKessar
[2019] WASC 229
•3 JULY 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: PASCOE -v- PAMELA MCKESSAR [2019] WASC 229
CORAM: HILL J
HEARD: 6 JUNE 2019
DELIVERED : 3 JULY 2019
FILE NO/S: CIV 1058 of 2019
BETWEEN: JOHN DURHAM PASCOE
Applicant
AND
PAMELA MCKESSAR
First Respondent
REGISTRAR OF TITLES
Second Respondent
Catchwords:
Caveats - Application to extend the operation of three caveats - Whether applicant has established that his claim to an interest in the land has or may have substance - Balance of convenience - Whether caveats may be amended in the manner sought by the applicant - Application for amendment of caveats from absolute caveats to subject to claim caveats - Application for amendment to description of parties in caveat - Undertaking as to damages - Turns on own facts
Legislation:
Interpretation Act 1984 (WA)
Transfer of Land Act 1893 (WA)
Result:
Applications allowed
Category: B
Representation:
Counsel:
| Applicant | : | Mr T H Offer |
| First Respondent | : | In Person |
| Second Respondent | : | No appearance |
Solicitors:
| Applicant | : | Michael Rogers & Associates |
| First Respondent | : | In Person |
| Second Respondent | : | No appearance |
Case(s) referred to in decision(s):
Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd [2004] WASC 14
Bride v The Registrar of Titles [2015] WASC 11
Chen v Sunshine Light Property Pty Ltd [2017] WASC 14
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Docklands Press v Stewart [2014] VSC 536
Midland Brick Co Pty Ltd v Lilley, (Unreported, WASC, Library No 2214, 27 September 1991)
Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287
Palazzo Homes Pty Ltd v Goh [2010] WASC 407
Wallace v Perkins [2009] WASC 154
Woodford v Pattinson [No 2] WASC 334
Yaran Holdings Pty ltd v Goldsmith 7 Pty Ltd [2014] WASC 171
HILL J:
By originating summons filed 14 January 2019, the applicant seeks to extend the operation of three caveats ('Caveats') pursuant to the Transfer of Land Act 1893 (WA) s 138C.
The Caveats are currently in the form of 'absolute caveats'. That is, they absolutely forbid the registration of any instrument affecting the estate or interest claimed by the applicant in the land.
By chamber summons filed 18 February 2019, the applicant seeks orders to amend the Caveats from absolute caveats to subject to claim caveats, that is, caveats that forbid the registration of any instrument affecting the estate or interest claimed by the applicant unless such instrument be expressed to be subject to the claim of the applicant. By chambers summons filed 8 May 2019, the applicant seeks orders to amend the description of the applicant and first respondent in the Caveats from, respectively, 'lender' and 'borrower' to 'mortgagee' and 'mortgagor'.
The applications were listed for hearing on an urgent basis before Acting Justice Strk on 21 January 2019 and 13 March 2019. On 22 February 2019, Acting Justice Strk extended the operation of the Caveats until further order of the court.
The matter came before me for hearing on 6 June 2019.
For the reasons which follow, the Caveats will be extended, but in the amended form of 'subject to claim' caveats. Further, the description of the applicant and first respondent in the Caveats will be amended from, respectively, 'lender' and 'borrower' to 'mortgagee' and 'mortgagor.
In these reasons, I deal with the following:
(1)the materials before the court;
(2)the history of the matter;
(3)the legal principles applicable to the extension of caveats;
(4)whether the applicant has established that his claim to an interest in the land has, or may have, substance;
(5)where the balance of convenience lies; and
(6)whether the caveats may be amended in the manner sought by the applicant.
Materials before the court
In support of his applications, the applicant has filed three affidavits: the affidavit sworn by the applicant on 14 January 2019 and filed 15 January 2019; the affidavit sworn by the applicant on 31 January 2019 and filed 4 February 2019; and the affidavit sworn by Stewart Milne, accountant, on 4 February 2019 and filed 8 February 2019. The applicant also relied on two outlines of submissions to extend the operation of, and amend, the Caveats filed 20 February 2019 and 8 May 2019, together with an undertaking as to damages proffered by the applicant by his solicitors dated 8 February 2019 and an undertaking as to damages proffered by the applicant dated 13 March 2019.
The extension of the operation of the Caveats and their amendment were opposed by the first respondent, who appeared in person. The first respondent relied upon the affidavit sworn by her and filed on 21 January 2019; a second affidavit sworn by her on 15 February 2019 and filed on 18 February 2019; and a third affidavit sworn by her on 21 March 2019 and filed on 22 March 2019. The first respondent also relied upon two outlines of submissions filed on 5 March 2019 and 22 May 2019.
The history of the matter
The caveats
The applicant is a trustee of the Samson Street Superannuation Fund and the PHBB Murray Street Superannuation Fund ('the Superannuation Funds'). In his capacity as trustee of the Superannuation Funds, on 21 September 2016, the applicant lodged three caveats to protect his interest in three parcels of land:
(a)N439649C relating to Lot 557 on Plan 41358, being the whole of the land described in Certificate of Title Volume 2571 Folio 357;
(b)N439650C relating to Lot 8 on Plan 5762, being the whole of the land described in Certificate of Title Volume 1108 Folio 44; and
(c)N439651C relating to Lot 10 on Plan 13045, being the whole of the land described in Certificate of Title Volume 1702 Folio 76.
The interest in land claimed
In each of the caveats, the estate or interest in the land claimed by the applicant was identical, namely, 'an equitable estate' by virtue of:
'A MORTGAGE UNREGISTERED MADE BETWEEN THE LENDER JOHN DURHAM PASCOE AND THE BORROWER PAMELA ELIZABETH MCKESSAR AND HER PTY COY. DATED 10TH MAY 2010.'[1]
[1] Affidavit of JD Pascoe filed 15 January 2019 'JDP1' – 'JDP3'.
The applicant's evidence in relation to the interest protected by the Caveats is as follows.
(a)From approximately March 2007, the Superannuation Funds made a series of loans to the first respondent.[2]
(b)As at March of 2009, the total amount owed by the first respondent to the PHBB Murray Street Superannuation Fund was not less than $152,621, and the total amount owed to the Samson Street Superannuation Fund was not less than $108,379.[3]
(c) In March 2009, the first respondent signed an acknowledgement of debt for each of the Superannuation Funds. I note that in respect of the Samson Street Superannuation Fund, the acknowledgement of debt is in a different amount to that set out above at (b) and states that as at 1 March 2009, the amount outstanding was $27,249.[4]
(d)In or about March 2009, an oral agreement was made between the first respondent and the applicant that liability for the existing loans would be transferred from the first respondent to Bladebay Pty Ltd, a company of which the first respondent was sole director and shareholder. It was further agreed between the first respondent and the applicant that any further loans advanced by the Superannuation Funds for the benefit of the first respondent would be paid to Bladebay Pty Ltd.[5]
(e)As part of the agreement referred to at (d) above, the first respondent agreed to guarantee the obligations of Bladebay Pty Ltd to the Superannuation Funds, and executed three mortgages[6] in his favour 'in furtherance of those guarantee obligations'.[7] The applicant says that the first respondent '…guaranteed the assignment both verbally and by handwritten letter … which was received by electronic means on 22 May 2009.'[8] In this regard, the handwritten letter contains the following sentence:[9]
I will also guarantee the Bladebay loans so that is easier for you to collect.
(f)As part of the agreement referred to at (d) above, the first respondent consented to the lodgement of the Caveats to protect the Superannuation Funds' interests, as mortgagees of the properties. Pursuant to this agreement, the applicant lodged the Caveats[10] on 21 September 2016.[11]
[2] Affidavit of JD Pascoe filed 15 January 2019 par 4; affidavit of JD Pascoe filed 4 February 2019 pars 5 ‑ 10.
[3] Affidavit of JD Pascoe filed 15 January 2019 par 5.
[4] Affidavit of JD Pascoe filed 4 February 2019, 'JDP4'.
[5] Affidavit of JD Pascoe filed 15 January 2019 par 6.
[6] Affidavit of JD Pascoe file 15 January 2019, 'JDP7' – 'JDP9'.
[7] Affidavit of JD Pascoe filed 15 January 2019 par 7.
[8] Affidavit of JD Pascoe filed 4 February 2019 par 8, and 'JDP3'.
[9] Affidavit of JD Pascoe filed 4 February 2019 'JDP3'.
[10] Affidavit of JD Pascoe filed 15 January 2019 par 8.
[11] Affidavit of JD Pascoe filed 15 January 2019, 'JDP1' - 'JDP3'.
The applicant deposed in relation to the interest protected by the Caveats as follows.[12]
Pamela remained in continual need of money. She was at that time building the house at 1 Redmile Avenue, York and I agreed to lend further amounts of money to enable her to complete the residence but only subject to the condition that I receive security over her three properties situated at 9 Boddington Parkway, Ashby, Unit 10, Level 1 Keiron, 18 Woodlands Street, Woodlands where Pamela lives and 8 Redmile Road, York. Accordingly Pamela was willing to sign mortgages over all three properties in the amounts of $50,000.00 for Ashby, $275,000.00 for York and $145,000.00 for Woodlands. The mortgage amounts were intended to secure not only past borrowings but also future amounts to be lent to Pamela under the arrangement discussed and agreed at this time.
[12] Affidavit of JD Pascoe filed 4 February 2019 par 10.
I note that in respect of the mortgage granted over the Ashby property, the amount secured by the mortgage is $130,000 and not the $50,000 referred to above.[13]
The District Court proceedings
[13] Affidavit of JD Pascoe filed 15 January 2019, 'JDP9'.
On 19 April 2017, the applicant (in his capacity as trustee of the Superannuation Funds) commenced two sets of proceedings in the District Court of Western Australia. The first District Court proceeding, CIV 1219 of 2017, was commenced by the applicant on behalf of the Samson Street Superannuation Fund against Bladebay Pty Ltd. The second District Court proceeding, CIV 1220 of 2017, was commenced on behalf of the PHBB Murray Street Superannuation Fund against Bladebay Pty Ltd.
In the District Court proceedings, the applicant seeks repayment of moneys from Bladebay Pty Ltd that the applicant says were loaned and remain outstanding.[14] The first respondent has been joined as the second defendant in each of the District Court proceedings. The Superannuation Funds are seeking to recover from the first respondent as guarantor.[15]
[14] Affidavit of JD Pascoe filed 15 January 2019 par 9.
[15] Affidavit of JD Pascoe filed 15 January 2019 par 10.
I am informed by the applicant that the first respondent has filed defences in each of the District Court proceedings alleging that:
(a)the Superannuation Funds have no present entitlement to repayment of the moneys owed by Bladebay Pty Ltd; and
(b)there was no agreement on the part of the first respondent to guarantee the obligations of Bladebay Pty Ltd.[16]
[16] Affidavit of JD Pascoe filed 15 January 2019 par 11.
The first respondent's evidence is that '[the] supposed debt owed by Bladebay Pty Ltd is being defended on the basis that it relates to an equity arrangement with accounting practices'[17] and that some payments were for services performed.[18]
[17] Affidavit of PE McKessar filed 21 January 2019 pars 1, 16.
[18] Affidavit of PE McKessar filed 21 January 2019 par 16; affidavit of PE McKessar filed 18 February 2018 par 6.
The first respondent also says that all of the matters deposed to at pars 4 ‑ 8 of the applicant's affidavit filed on 15 January 2019, which paragraphs are substantively reproduced at [12] above, are 'being disputed in the District Court.'[19]
Notices issued pursuant to the Transfer of Land Act s 138B and conferral
[19] Affidavit of PE McKessar filed 21 January 2019 par 15.
On 2 January 2019, the second respondent, on the application of the first respondent, issued notices pursuant to the Transfer of Land Act s 138B.[20] On 14 January 2019, the applicant issued an originating summons seeking that the operation of the Caveats be extended until further notice.
Interim orders
[20] Affidavit of JD Pascoe filed 15 January 2019 'JDP4' – 'JDP6'.
On 21 January 2019 and 22 February 2019, Acting Justice Strk made orders extending the operation of the Caveats pending the hearing and determination of the applications.[21]
[21] By orders made on 21 January 2019 and by papers only orders made on 22 February 2019.
The first respondent is not represented in this proceeding. By making the interim orders and appropriate programming orders, the court has endeavoured to provide the first respondent with as much time as possible to file materials, whilst also affording prompt determination of the application.
Legal principles applicable to the extension of caveats
The general principles relating to the extension of a caveat under the Transfer of Land Act s 138C are well established. They were summarised by Edelman J in Bride v The Registrar of Titles as follows:[22]
[22] Bride v The Registrar of Titles [2015] WASC 11 [11] ‑ [16] (footnotes omitted).
Section 137 of the Transfer of Land Act 1893 (WA) enables a beneficiary or other person claiming an estate or interest in land to lodge a caveat. Section 138C(2) provides for the Supreme Court's powers when a caveator applies to the Supreme Court for an order extending the operation of a caveat, as follows:
…
(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; or
(ii)may make an order extending the operation of the caveat until the further order of the court; or
(iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
and
(b)if not satisfied that 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.
In assessing whether to grant the extension of the caveat the two broad issues are (1) whether the caveator's claim in respect of the estate or interest in land 'has or may have substance' and (2), whether the balance of convenience favours the retention of the caveat and the appropriate orders to be made.
The first issue is whether the caveator's claim in respect of the estate or interest in land 'has or may have substance'. This is sometimes expressed as whether the caveator can show that there is a serious question to be tried, or whether the caveator can prove a prima facie case. In assessing whether the caveator has proved that the claim has, or may have substance, the Court does not ordinarily evaluate the applicant's evidence or undertake a preliminary trial.
The requirement that the caveator's claim of substance be in respect of a claim of an 'estate or interest in land' has been held to mean that the claim must concern a proprietary interest in land.
The second issue is the balance of convenience in extending the caveat. The court considers the balance of convenience when it decides whether to exercise its discretion to extend the caveat. The balance of convenience is not independent of the strength or weakness of the caveator's claim. Rather, the apparent strength or weakness of the case for relief at trial is a relevant consideration on the balance of convenience.
An important factor in considering the balance of convenience is if the failure to extend a caveat will have the effect of destroying, or substantially impairing, the benefit of the proprietary interest which is claimed.
Whether the applicant's claim to an interest in the land has or may have substance
The onus is on the applicant to demonstrate that the caveatable interest he claims has or may have substance.[23]
[23] Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 50 (Owen J)
The interest claimed by the applicant is the interest of an equitable mortgage over the land. This is an interest which is capable of supporting a caveat.[24]
[24] Chen v Sunshine Light Property Pty Ltd [2017] WASC 14 [21] and the authorities cited therein.
The first respondent does not concede that the applicant's claim has or may have substance. She has raised the following matters in objecting to the continuation of the Caveats.
First, the first respondent suggests that she did not sign the mortgage documents. In this regard, the first respondent deposes that she has no recollection of signing the mortgage documents[25] and asserts that it was not possible for Stewart Milne to have witnessed her signing them.[26] The first respondent claims that these documents 'are fraudulent'[27], although she does not specifically deny executing the documents.
[25] Affidavit of PE McKessar filed 21 January 2019 pars 8 and 23.
[26] Affidavit of PE McKessar filed 21 January 2019 par 7; 'C'; affidavit of PE McKessar filed 18 February 2018 par 7 ‑ 14.
[27] Affidavit of P E McKessar filed 21 January 2019 par 20 and 23; affidavit of PE McKessar filed 18 February 2018 par 16.
I note that the execution of the mortgage documents is the subject of conflicting evidence. The applicant relies on his affidavits filed in this proceeding, together with the affidavit of Stewart Milne.
Second, the first respondent deposes that she did not guarantee the loans made to Bladebay Pty Ltd. She says that the 'entire point of the equity arrangement being in a limited liability company was to exclude personal liability.'[28]
[28] Affidavit of PE McKessar filed 21 January 2019 par 13.
Third, the first respondent deposes that she did not agree to the Caveats being lodged against the land.[29]
[29] Affidavit of PE McKessar filed 21 January 2019 par 12; affidavit of PE McKessar filed 18 February 2018 pars 4 and 17.
In relation to these three matters, the first respondent says that she is 'not permitted under the terms of [her] first mortgage agreement to allow a second mortgage to be put on the titles, so it doesn't make sense to [her] that [she] would agree to a mortgage document.'[30] She also refers to the delay of about 6 years in the lodgement of the Caveats in support of her claim that no caveats were ever agreed.[31]
[30] Affidavit of PE McKessar filed 21 January 2019 par 8; affidavit of PE McKessar filed 18 February 2018 par 3.
[31] Affidavit of PE McKessar filed 21 January 2019 par 21.
In argument, the first respondent submitted that even if there was an oral agreement to provide a guarantee, the guarantee was unsecured and she did not agree to provide security over the three properties.
In respect of each of these matters, the court cannot resolve factual disputes on a hearing to resolve an application to extend a caveat, which is done on affidavit. All of these matters are the subject of conflicting evidence and it is not appropriate for the issues to be substantively determined now.
Fourth, the first respondent refers to the timing of the payments to her and to Bladebay Pty Ltd. She deposes that '[the] cash payments made to [her] and to Bladebay Pty Ltd for the 'Bladebay' equity arrangement [disputed in the District Court], were made prior to May 2010, with the exception of $1,024 made on 27 May 2010. It does not make commercial sense to secure a supposed loan with mortgage documents after the payments have been made.'[32]
[32] Affidavit of PE McKessar filed 21 January 2019 par 9; affidavit of PE McKessar filed 18 February 2018 par 2.
While a guarantee supported by only past consideration is unenforceable, a guarantee which is supported by present or executory (or future) consideration can secure past debts.[33] The first respondent concedes that not all advances were past advances. Further, the evidence of the applicant, particularly the evidence at par 10 of the applicant's second affidavit, would need to be weighed in the balance. In that paragraph, the applicant stated that 'the mortgage amounts were intended to secure not only past borrowings but also future amounts to be lent to [the first respondent] under the arrangement discussed and agreed at this time.'[34]
[33] Docklands Press v Stewart [2014] VSC 536 [36], referred to in Modern Contract of Guarantee [2.1200]. See also Midland Brick Co Pty Ltd v Lilley, (Unreported, WASC, Library No 2214, 27 September 1991).
[34] Affidavit of JD Pascoe filed 14 February 2019 par 10.
I have considered the first respondent's submissions and I am not persuaded there is sufficient doubt about the validity of the mortgages to undermine the serious question to be tried as to the existence of the equitable interest claimed by the applicant.
Fifth, the first respondent claims that the Caveats may have the ultimate effect of putting the applicant in a position of priority over her other unsecured creditors.[35] The priority that may be afforded to the holder of an unregistered mortgage by a caveat in a priority dispute is not a matter capable of casting doubt over the validity of the interest claimed.
[35] Affidavit of PE McKessar filed 21 January 2019 pars 10 – 11, and 25; affidavit of PE McKessar filed 18 February 2018 pars 18, 20.
In relation to the arguments raised by the first respondent, the question I have to answer is whether the applicant's claim (as caveator) has or may have substance. That is, is there a serious question to be tried about whether the unregistered mortgage creates an equitable estate or interest over the first respondent's land? As noted above, in assessing whether the caveator has proved that the claim has, or may have, substance, the court does not undertake a preliminary trial. The court cannot resolve factual disputes on a hearing to resolve a caveat extension application, which is done on affidavit.
I have also considered the evidence before me concerning the existence and terms of the alleged guarantee and mortgages. The alleged guarantee and the mortgages, while in writing, have not been fulsomely documented. There is, however, no complaint by the first respondent that the mortgages and guarantee do not meet the formal requirements.
I have weighed in the balance the apparent inconsistencies in the applicant's evidence about the debt outstanding to Samson Street Superannuation Fund, the amount of the mortgage over Ashby and that neither the Caveats nor the mortgages refer to the alleged guarantee.
However, having regard to all of the affidavit evidence before me, I am not persuaded that there is sufficient doubt about the validity of the mortgages and the guarantee to undermine the serious question to be tried as to the existence of the equitable estate claimed by the applicant. It is appropriate for these issues to be substantively determined at trial in the District Court proceedings.
As noted above, the applicant has described his interest in the land as 'an equitable estate'. I accept the applicant's submissions that the equitable interest in the land he claims by reason of the equitable mortgages falls within an equitable estate by reason of the Interpretation Act 1984 s 5.
In all of the circumstances, I am satisfied that the applicant has discharged his onus to demonstrate that the caveatable interest he claims may have substance. The applicant has shown a sufficient likelihood of success in his claim of an equitable estate to justify continuation of the Caveats.[36]
[36] Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171 [70].
For the avoidance of any doubt, while I accept that the applicant has demonstrated there is a serious question to be tried in relation to the existence of an equitable interest in the land by virtue of the unregistered mortgages and alleged guarantee, nothing in what I have said should be construed as resolving the question of whether the first respondent or Bladebay Pty Ltd owe money to the applicant as guarantor and borrower, respectively, and if so, in what amount. That question needs to be resolved in the two proceedings before the District Court.
The balance of convenience
I now turn to the question of the balance of convenience. In my opinion, the balance of convenience favours the extension of the operation of the Caveats. There are a number of considerations which lead me to that conclusion.
First, there is a lack of evidence before me concerning what consequences may arise if the Caveats are extended. For example, the first respondent has not deposed to any present intention to deal with the land. However, certain assertions are made by the first respondent as to consequences adverse to her interests that will arise if the caveats are extended.
The first respondent asserts that the existence of the Caveats were relied upon in support of the successful application made by the applicant in the District Court proceedings to join the first respondent as a defendant in those proceedings. She asserts that the continuance, renewal or change of status of the Caveats will be prejudicial to her defence in those proceedings.
Further, the first respondent claims that as a registered tax practitioner and registered superannuation auditor, her being added as a defendant in the District Court proceedings has had a negative impact on those registrations, possibly with these being put at risk of continuance and this being a risk to the first respondent's earning capacity.[37]
[37] The first respondent's outline of submissions filed 5 March 2019 par 10.2.
By the outline of submissions filed in this proceeding, the first respondent says that she seeks damages for the amount of the claim made against her in the District Court proceedings. She says that the applicant claims just under $400,000 in each proceeding before the District Court. She asserts that '[t]his is the loss that she will make due to the prejudice created by the existence of the Caveats.' The loss claimed is $790,000.[38]
[38] The first respondent's outline of submissions filed 5 March 2019 par 10.3.
I understand from the submissions made on behalf of the applicant that by the District Court proceedings, the applicant seeks to enforce the guarantee alleged as against the first respondent.
There is no evidence before me to support what appears to be the position advanced by the first respondent that allowing the Caveats to lapse will have the effect of altering her status as a party to the District Court proceedings.
Second, the first respondent suggests that the Caveats will prefer the applicant and the Superannuation Funds should she enter bankruptcy. The balance of convenience cannot properly favour removal of the caveats simply by reason that the applicant may ultimately succeed in establishing the enforceability of the unregistered mortgage, and obtain the benefit afforded by lodgement of the caveats.
Third, the first respondent deposes that should she have judgments entered against her in the District Court proceedings, she would have no choice but to appoint a trustee in bankruptcy. She also deposes to the approximate extent of her unsecured debt as at January 2019.[39]
[39] Affidavit of PE McKessar filed 21 January 2019 par 11.
I accept the submission made on behalf of the applicant that, in these circumstances, the removal of the Caveats has the potential to prejudice the applicant's interests. That is, if the operation of the Caveats are not extended, the applicant will lose the only security he has in respect of the indebtedness alleged to be guaranteed by the first respondent.
On the evidence before me, I have reached the conclusion that the balance of convenience supports the maintenance of the status quo.
Whether the Caveats may be amended in the manner sought by the applicant
The applicant seeks to have the operation of the Caveats extended in an amended form. The applicant concedes that the nature of his interest in the caveated properties does not justify an absolute bar on the registration of instruments affecting that interest or estate.[40] The concession is properly made.[41]
[40] Applicant's outline of submissions filed 20 February 2019 par 28.
[41] Palazzo Homes Pty Ltd v Goh [2010] WASC 407 [5] (Le Miere J); Wallace v Perkins [2009] WASC 154 [63]; Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287 [342] (Hasluck J); Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129, 131 (Burt CJ); and Binningup Nominees Pty Ltd v Brogue Tableau Pty Ltd [2004] WASC 14 [35] (Pullin J).
The applicant seeks an order that the Caveats be amended in each case by deleting the word 'Absolutely' and substituting in its place the words 'Unless such Instrument be expressed to be subject to the Caveator's claim'. The application is opposed by the first respondent.
The applicant also seeks an order that the Caveats be amended by deleting the word 'lender' and substituting in its place the word 'mortgagee', deleting the word 'borrower' and substituting in its place the word 'mortgagor', and deleting the words 'and her Pty Coy.'[42]
[42] Applicant's summons to amend caveats filed 8 May 2019
The Transfer of Land Act s 138C(2)(a)(iii) relevantly provides that, where the court is satisfied that the caveator's claim has or may have substance, the court '…may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged …'.
The power to amend a caveat was considered by Le Miere J in Palazzo Homes Propriety Limited v Goh.[43]
[43] Palazzo Homes Pty Ltd v Goh; see also Woodford v Pattinson [No 2] [2017] WASC 334 [42] ‑ [49] (Pritchard J).
In that case, his Honour observed that 'a caveator may not lodge a caveat which goes beyond the legitimate claim necessary to protect the caveator's rights'.[44] However, his Honour went on to say that 'the caveator's claim has or may have substance if there is a serious question to be tried that the caveator has a caveatable interest in the land notwithstanding that the caveat is an absolute caveat where the estate or interest claimed by the caveator only justifies a "subject to claim" caveat'.[45]
[44] Palazzo Homes Pty Ltd v Goh [5] (Le Miere J) (cases cited omitted).
[45] Palazzo Homes Pty Ltd v Goh [16] (Le Miere J).
On the question of amendment of a caveat, his Honour observed that:[46]
It is now generally accepted in Australia that the power to make such order as the court considers appropriate, or as to the court seems fit, in dealing with an application to remove a caveat, includes the power to order amendment of the caveat as a condition of its retention.
[46] Palazzo Homes Pty Ltd v Goh [7] (Le Miere J) (cases cited omitted).
His Honour went on to observe that that power was reflected in the provisions of the Act:[47]
Section 138(2) of the Act provides that on a registered proprietor summoning a caveator to show cause why a caveat should not be removed the court may make such order as the court or judge may seem fit. The power to make such order as the court may seem fit includes the power to order that the caveat be amended.
The preponderance of authority in Australia is that the power to make such order as the court considers appropriate, or as to the court seems fit, in dealing with an application to remove a caveat does not empower the court to order an amendment of a caveat which would result in the substitution of a different estate or interest than the estate or interest claimed in the caveat.
...
Section 138C(2)(a)(iii), amongst other things, empowers the court to make such orders as it thinks fit concerning the caveat. But that power is conditioned by the requirement that the court be satisfied that the caveator's claim has or may have substance. On an application to extend the operation of a caveat s 138C(2)(a)(iii) confers on the court a limited power to allow the terms of the caveat to be amended. Amendment may be permitted so as to enable the caveat to express better or more fully the interest which is claimed in the caveat. However, amendment is not permitted so as to alter the interest which is claimed and therefore a different interest.
Section 138C(2) of the Act empowers the court to order that a caveat be amended if the court is satisfied that the caveator's claim has or may have substance. What is encompassed within 'the caveator's claim'? It may refer to the estate or interest being claimed, in this case an equitable charge ... , or it may extend to the dealings which the caveat forbids, in this case it absolutely forbids the registration of any instrument affecting the estate or interest of the caveator.
[47] Palazzo Homes Pty Ltd v Goh [8] ‑ [9], [14] - [15] (Le Miere J) (cases cited omitted).
His Honour then concluded, having regard to the power in s 138C(2)(a)(iii), that:[48]
[T]he court has power to amend the caveat so that it forbids the registration of any instrument affecting the estate or interest claimed by the plaintiff unless it is subject to the claim of the plaintiff rather than absolutely forbidding the registration of any such instrument.
[48] Palazzo Homes Pty Ltd v Goh [23] (Le Miere J); as noted in Woodford v Pattinson [No 2] [48] (Pritchard J).
I respectfully agree with his Honour's conclusion.
In this case, I find that the interest claimed in each of the Caveats is an equitable mortgage and that the proposed amendments enable the Caveats to express better the interest claimed. The technical deficiencies in the form and content of the Caveats should not be allowed to deprive the applicant from the advantage of lodging a caveat where he has otherwise established that there is a serious question to be tried that he has a caveatable interest in the land, and that caveatable interest is the same caveatable interest that is claimed in the caveat.
I accept the submission made on behalf of the applicant that the amendment will not serve to alter the interest claimed but rather narrow the scope of the administrative injunction.[49]
[49] Applicant's outline of submissions filed 20 February 2019 par 34.
Determination and orders
For the reasons given, I accept that the applicant has established that there exists a serious question to be tried that the unregistered mortgages give rise to equitable estates or interests in the land which can be protected by the Caveats, and that the balance of convenience presently supports the maintenance of the status quo.
For the reasons given, I will also exercise the power under the Transfer of Land Act s 138C(2)(a)(iii) to order the amendment of the Caveats as a condition of their retention.
I propose to make orders to the following effect:
1)Subject to compliance with Order 2, pursuant to the Transfer of Land Act 1893 (WA) s 138C, the operation of the following caveats be extended until further order:
a)N439649C relating to Lot 557 on Plan 41358, being the whole of the land described in Certificate of Title Volume 2571 Folio 357;
b)N439650C relating to Lot 8 on Plan 5762, being the whole of the land described in Certificate of Title Volume 1108 Folio 44; and
c)N439651C relating to Lot 10 on Plan 13045, being the whole of the land described in Certificate of Title Volume 1702 Folio 76.
2)Pursuant to the Transfer of Land Act 1893 (WA) s 138C(2)(a)(iii), each of the caveats referred to in Order 1 be amended by:
a)deleting the word 'Absolutely' and substituting in its place the words 'Unless such Instrument be expressed to be subject to the Caveator's claim'; and
b) deleting the word 'lender' and substituting in its place the word 'mortgagee'; and
c)deleting the word 'borrower' and substituting in its place the word 'mortgagor'; and
d) deleting the words 'and her Pty Coy'.
3)The costs of the applications be reserved pending the determination of the District Court proceedings known as CIV 1219 of 2017 and CIV 1220 of 2017.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ME
Associate to the Honourable Justice Hill15 JULY 2019
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