Pindan Pty Ltd v Property Nominees Pty Ltd - [2006] WASC 91

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: PINDAN PTY LTD -v- PROPERTY NOMINEES PTY LTD & ANOR [2006] WASC 91

CORAM: BLAXELL J

HEARD: 9 MAY 2006

DELIVERED : 24 MAY 2006

FILE NO/S: CIV 1348 of 2006

BETWEEN: PINDAN PTY LTD (ACN 009 009 072)
Plaintiff
AND
PROPERTY NOMINEES PTY LTD (ACN 008 726 485)
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Caveats - Application to extend operation of caveat - Caveat lodged by building contractor claiming balance due for construction of strata titled apartment complex - Caveat lodged against last two apartments to be sold - Whether building contractor holds equitable lien - Priority of any equitable lien over the interest held by purchaser under contract of sale

Legislation:

Transfer of Land Act 1893 (WA), s 137, s 138C

Result:

Application to extend caveat refused

Category: B

Representation:

Counsel:

Plaintiff:     Mr R J Price
First Defendant             :     Mr B C Smith
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Jackson McDonald
First Defendant             :     Ilberys Lawyers
Second Defendant         :     No appearance

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

Butler v Fairclough (1917) 23 CLR 78
Eades v Reilly, unreported; SCt of WA; Library No 980675; 20 November 1998
H G & R Nominees Pty Ltd v Caulson Pty Ltd [2000] VSC 126
Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326
Hewett v Court (1983) 149 CLR 639
Kang v Kwan & Ors [2002] NSWSC 1187
Kirfield Ltd v First Trade Consulting Pty Ltd & Anor [2005] WASC 277
Lavery v R & I Bank of Western Australia Ltd, unreported; FCt SCt of WA; Library No 950468; 7 September 1995
Sanctuary Park Toodyay Pty Ltd v Griffin Plant Hire [2003] WASC 174

Case(s) also cited:

KT & T Developments v Tay (1995) 13 WAR 363
Muschinski v Dodds (1985) 160 CLR 583
Peyton v Malinis Nominees Pty Ltd [2003] WASC 136
Spunter Pty Ltd v Hall [2006] WASC 6

BLAXELL J: This is an application under s 138C of the Transfer of Land Act 1893 (WA) ("the Act") to extend the operation of a caveat lodged by the plaintiff against land of which the first defendant is the registered proprietor. The land comprises two strata titled apartments forming part of a 70 unit apartment complex constructed by the plaintiff under a building contract with the first defendant. The plaintiff claims an equitable lien over the apartments for payment of the sum of $901,853.73 (plus GST) said to be the balance due and owing under the contract.
The first defendant acknowledges that the sum of $134,041.60 is due under the contract, but has withheld payment of these moneys by reason of a potential counterclaim for damages. The first defendant denies that any other moneys are owing under the contract, and also denies that there is any basis for the plaintiff to claim an equitable lien.
The plaintiff lodged the caveat on 9 March 2006, but prior to then the first defendant had sold the two…

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: [2006] WASC 91
Decision Date: 24 MAY 2006

CaseChat Overview and Summary

Pindan Pty Ltd, a building contractor, sought to extend the operation of a caveat it had lodged against two apartments within a strata titled complex, claiming a balance was due for construction work. Property Nominees Pty Ltd, the purchasers of the apartments, opposed the application, arguing that Pindan had no caveatable interest. The dispute was heard by the Supreme Court of Western Australia. The central legal issues revolved around whether Pindan held an equitable lien over the apartments and, if so, whether this lien had priority over the interests of the purchasers under their contracts of sale.

The court considered whether Pindan's delay in lodging the caveat affected the strength of any equitable interest it might hold. It was noted that Pindan was aware the apartments were on the market for sale but did not lodge the caveat until after contracts of sale had been executed. The court held that Pindan's delay in lodging the caveat meant the purchasers acquired their interests without being aware of the potential competing claim, which significantly weakened Pindan's equitable lien. The court applied the principle from Heid v Reliance Finance Corporation Pty Ltd that equity favours the party whose merits are stronger, and in this case, the balance of convenience favoured the purchasers. The court concluded that Pindan's equitable interest, if it existed, did not have substance due to the delay in lodging the caveat, and thus the application to extend the caveat was dismissed.

Given the findings, the court made no orders extending the operation of the caveat, effectively dismissing Pindan's application. The purchasers were not required to take any further action in response to the dismissed application.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

This same principle was referred to in Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326, where Mason and Deane JJ held (at 339):" ... priority in time of creation gives the better equity. But where the merits are unequal and favour the later interest, as for instance where the owner of the later equitable interest is led by conduct on the part of the owner of the earlier interest to acquire the later interest in the belief or on the supposition that the earlier interest did not then exist, priority will be accorded to the later interest."Their Honours also stated (at 341):"For our part we consider it preferable to avoid the contortions and convolutions associated with basing the postponement of the first to the second equity exclusively on the doctrine of estoppel and to accept a more general and flexible principle that preference should be given to what is the better equity in an examination of the relevant circumstances. It will always be necessary to characterize the conduct of the holder of the earlier interest in order to determine whether, in all the circumstances, that conduct is such that, in fairness and in justice, the earlier interest should be postponed to the later interest." In the present instance, the plaintiff delayed in lodging a caveat even though it was aware that the apartments were on the market for sale. If the caveat had been lodged prior to the contracts of sale with Mr Hunt, it is my view that he would almost certainly have become aware of the equitable lien claimed by the plaintiff. Thus the delay by the plaintiff has brought about the situation that Mr Hunt has acquired his interest without being aware of the competing claimed interest allegedly prior in time. In these circumstances, if the plaintiff did have an equitable lien as claimed, it would have great difficulty in establishing that that interest has priority over the equitable interest of Mr Hunt. Furthermore, and even if there was a serious issue to be tried as to the plaintiff's claimed interest, the balance of convenience would clearly favour Mr Hunt. For all of the above reasons, I am not satisfied that the caveatable interest claimed by the plaintiff has or may have substance. It follows that the present application must be dismissed.