Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd

Perron Investments Pty Ltd was the principal contractor in a building project and Tim Davies Landscaping Pty Ltd was a subcontractor. Tim Davies Landscaping sought to place a caveat on the title of the land owned by Perron Investments to secure payment for landscaping work and materials. The nature of the dispute was the validity of the Romalpa clause in the subcontract, which purported to give Tim Davies Landscaping an equitable interest in the land if the landscaping work and materials became fixtures. The court involved was the Supreme Court of Queensland.

The legal issues to be decided were whether the Romalpa clause could give rise to a caveatable interest in the land of the principal, whether the principal had knowledge of the Romalpa clause, and whether the landscaping work and materials gave rise to an equitable lien. The court had to determine if the elements of the test for extension of a caveat were met, which were the same as that for an interlocutory injunction. The onus was on the caveator to demonstrate that there was a serious question to be tried as to whether a caveatable interest existed and that the balance of convenience favoured the extension.

The court held that the respondent failed to establish that there was a serious question to be tried in respect of either caveat and, accordingly, the Master erred in the exercise of his discretion in extending the operation of the caveats. The court found that the starting assumption for the assessment of the proposition was that on its proper construction, the Romalpa clause in the subcontract gave the respondent a right of access to the appellant's land to remove its goods that had become fixtures. However, the court did not accept the appellant's contentions that a Romalpa clause can only give rise to an equitable interest in land in circumstances where the person who is capable of creating or transferring the interest in land is the person liable to pay for the goods, that the supplier's sole remedy is contractual, or that the grant of access to its land does not survive the termination of the head contract.

The court granted leave to appeal, allowed the appeal, set aside the orders of the Master, and dismissed the respondent's application to extend the operation of the caveats. The court found that the respondent had not established a serious question to be tried in respect of either caveat and that the Master had erred in the exercise of his discretion in extending the operation of the caveats. The court held that the onus was on the caveator to demonstrate that there was a serious question to be tried as to whether a caveatable interest existed and that the balance of convenience favoured the extension. The court held that the respondent had not met this burden of proof.