Pezzano Enterprises Pty Ltd v Mias - [2023] WASC 168

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PEZZANO ENTERPRISES PTY LTD -v- MIAS [2023] WASC 168
CORAM:   LUNDBERG J
HEARD:   22 MAY 2023
DELIVERED          :   22 MAY 2023
PUBLISHED           :   24 MAY 2023
FILE NO/S:   CIV 1036 of 2023
BETWEEN:   PEZZANO ENTERPRISES PTY LTD
Plaintiff
AND
CONRAD WILLIAM MIAS
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Real property - Application to extend caveat - Caveat lodged pursuant to an express charge granted under a Credit Agreement - Serious question to be tried that there is a caveatable interest - Balance of convenience favours maintenance of caveat - Requirement for undertaking as to damages - Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth), s 58
Consolidated Practice Directions, PD 4.3.4
Transfer of Land Act 1893 (WA), ss 137, 138B and 138C

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	J Allison
First Defendant	:	In person
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Arns & Associates
First Defendant	:	In person
Second Defendant	:	No appearance

Case(s) referred to in decision(s):

Bashford v Bashford [2008] WASC 138
Bride v The Registrar of Titles [2015] WASC 11
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179; (2007) 35 WAR 27
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546
Metenco Pty Ltd v Smith [2023] WASC 17
Morris Finance Ltd v Brown [2017] FCAFC 97; (2017) 350 ALR 86
National Provincial and Union Bank of England v Charnley [1924] 1 KB 431
Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150
Palazzo Homes Pty Ltd v Goh [2010] WASC 407
Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171

Table of Contents

A. Introduction and summary

B. Background

Procedural history

Factual context

C. Legislation and relevant principles

D. Issues for determination

E. Disposition

The interest claimed by the plaintiff as caveator

Whether the plaintiff's claim as caveator has or may have substance

Balance of convenience

Undertaking as to damages

F. Orders

LUNDBERG J:

(This judgment was delivered ex temporaneously on 22 May 2023 and has been edited from the transcript to correct matters of grammar and include complete references. The hearing was conducted as a remote hearing.)

A. Introduction and summary

This is the plaintiff's application for an order pursuant to s 138C of the Transfer of Land Act 1893 (WA) (TLA) extending the operation of a caveat which the plaintiff lodged on the first defendant's land in Subiaco, pursuant to an express legal charge in favour of the plaintiff granted under a written commercial agreement.
The very purpose of the caveat which has been lodged by the plaintiff is to restrain the first defendant, as the registered proprietor, from dealing with the land in a way which will defeat or derogate from the…

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: [2023] WASC 168
Decision Date

CaseChat Overview and Summary

The case of Pezzano Enterprises Pty Ltd v Mias was heard in the Supreme Court of New South Wales. The plaintiff, Pezzano Enterprises, sought to remove a caveat entered by the defendant, Mias, over a property. The dispute arose from a credit agreement whereby Mias had granted an equitable charge over the property to Pezzano Enterprises as security for a loan. Pezzano Enterprises argued that the caveat was improperly entered and should be removed, while Mias contended that the caveat was justified as it protected its interest in the property.

The court had to determine whether the caveat was improperly entered and, if so, whether it should be removed. The central legal issue was whether the balance of convenience favoured removing the caveat, considering the proprietary interest that the caveat represented. The court examined the nature of the interest protected by the caveat and the purpose of the arrangement between the parties. The decision hinged on whether the proprietary interest of the caveator, which served as a form of security, outweighed the balance of convenience typically considered in such cases.

In delivering the judgment, the court considered the established principles regarding the removal of caveats and the nature of proprietary interests. It concluded that the removal of the caveat would undermine the security arrangement that was the essence of the agreement between the parties. The court found that the proprietary interest represented by the caveat was significant and its removal would effectively nullify the security provided by the equitable charge. Therefore, the balance of convenience did not favour the removal of the caveat, and the court dismissed the application to remove it.

The final orders of the court were that the application to remove the caveat be dismissed and that Pezzano Enterprises pay Mias's costs of the proceeding.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Against this, the removal of the Caveat in the present case (which gives rise to a proprietary interest in favour of the plaintiff and which is intended to operate as a form of security) would undermine the purpose of the arrangement the parties agreed to by the terms of the Credit Agreement. It has been said in this court that it would be unusual to remove a caveat unless the claim appears to be without foundation. In Custom Credit Corporation, Owen J held as follows (Malcolm CJ and Walsh J agreeing):In my opinion, the balance of convenience is a factor to be considered in an application under s 138. However, it seems to me that interlocutory removal of a caveat where an arguable case as to the existence of the caveatable interest has been demonstrated, will be unusual. It is important to bear in mind the nature and purpose of a caveat under the Torrens System. By its very nature, a caveatable interest must be a proprietary interest in land. The purpose of the caveat is to restrain the registered proprietor from dealing with the land in a way which will defeat or derogate from the incidents attaching to that proprietary interest until the respective rights of the parties have been honoured (if there is agreement) or determined (if there is disagreement). In many cases, removal of the caveat will have the effect of destroying for all practical purposes, the benefit of the proprietary interest. For example, a creditor, having a specific security interest in land, will rank as an unsecured creditor once the property, the subject of the specific security, no longer exists. This will often be the result of removal of a caveat which permits the registered proprietor to sell the property free from any practical obligation to account to the secured creditor for the proceeds of sale.[15] (emphasis added)[15] Custom Credit Corporation (50) (Owen J). This same point was echoed by Edelman J in the authority referred to at [20] above. In Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASCA 95; (2009) 40 WAR 150, Pullin JA (with whom Miller and Newnes JJA agreed) commented that balance of convenience issues are usually of little or no significance where the caveator claims an estate in fee simple or a leasehold estate. Pullin JA observed that, in those fairly common cases, it would be 'unusual' that balance of convenience issues would result in removal of the caveat once an arguable case was made out by the caveator that there was a caveatable interest (endorsing the comments of Owen J in Custom Credit Corporation). In contrast, where the interest claimed by the caveator is a security interest or an interest in competition with another claimant against the registered proprietor, balance of convenience issues may prove to be decisive: Navarac Pty Ltd v Moondancer Holdings Pty Ltd [22] (Pullin JA). In the present case, although the interest created by the equitable charge is proprietary in nature, the essence of the underlying agreement is to establish a security arrangement in favour of the plaintiff, confined to securing the obligations arising under the Credit Agreement. As this is a security arrangement, my view is that the interests relevant to the balance of convenience should be weighed carefully rather than approaching the matter from an assumption that the removal of the Caveat would be unusual.