QBE Insurance (Australia) Ltd v JGQ Developments Pty Ltd - [2017] WASC 288

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: QBE INSURANCE (AUSTRALIA) LTD -v- JGQ DEVELOPMENTS PTY LTD [2017] WASC 288

CORAM: BANKS-SMITH J

HEARD: 22 JUNE 2017

DELIVERED : 6 OCTOBER 2017

FILE NO/S: CIV 1743 of 2017

BETWEEN: QBE INSURANCE (AUSTRALIA) LTD
Plaintiff
AND
JGQ DEVELOPMENTS PTY LTD as Trustees for the BROWN STREET TRUST
First Defendant
REGISTRAR OF TITLES (WA)
Second Defendant

Catchwords:

Real property - Application to extend caveat - Trustee's right of indemnity and equitable lien - Whether assigned - Whether caveatable interest - Balance of convenience

Legislation:

Conveyancing Act 1919 (NSW), s 12
Transfer of Land Act 1893 (WA), s 138C

Result:

Caveat extended

Category: B

Representation:

Counsel:

Plaintiff:     Mr S C M Wong
First Defendant              :     Mr B W Duckham
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Moray & Agnew (Vic)
First Defendant              :     B W Duckham & Co
Second Defendant         :     No appearance

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

Bashford v Bashford [2008] WASC 138
Bride v The Registrar of Titles [2015] WASC 11
Chief Commissioner of Stamp Duties for New South Wales v Buckle [1998] HCA 4; (1998) 192 CLR 226
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
Grizonic v Suttor [2011] NSWSC 471
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
Re Nymboida River Pty Ltd (in liq) (Unreported, QSC, 30 September 1988)
Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162
Spunter Pty Ltd v Hall [2006] WASC 6
BANKS-SMITH J:

Introduction

This application for the extension of a caveat is the third set of proceedings involving the plaintiff (QBE) and the first defendant (JGQ).
In short, the primary dispute relates to a building company called Capital Works Construction Pty Ltd (Builder) that built residential homes. QBE provided the Builder with residential home builders' warranty insurance (Policies).
In May 2011, QBE required each of the directors of the Builder, relevantly Joshua Coffey and Franko Ricci, to provide a deed of indemnity in favour of QBE (First Deed).
In August 2014, QBE required each of Mr Coffey and Mr Ricci to execute a second deed of indemnity in its favour (Second Deed). It also required JGQ, being a company that was controlled by Mr Coffey, to provide a deed of indemnity (JGQ Deed). JGQ entered into the JGQ Deed in its capacity as trustee of the Brown Street Trust.
On 7 May 2015 external controllers were appointed to the Builder. Subsequently, a large number of claims were submitted under the Policies for losses allegedly arising from defective or incomplete building works. QBE settled those claims. It commenced two proceedings in this court seeking to recover under the First Deed, Second Deed and JGQ Deed the payments it made under the Policies.
The proceedings are currently in the Commercial and Managed Cases List. The first (CIV 2289…

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: [2017] WASC 288
Decision Date: 6 OCTOBER 2017

CaseChat Overview and Summary

QBE Insurance (Australia) Ltd sought an extension of a caveat over a property owned by JGQ Developments Pty Ltd, arguing that the assignment of a trustee’s right of indemnity and equitable lien was a caveatable interest under the Real Property Act 1900 (Vic). JGQ opposed the application, contending that the assignment was not valid as it was not notified to all creditors of JGQ, as required under section 12 of the Conveyancing Act 1919 (NSW). The matter was heard in the Supreme Court of Victoria.

The court needed to determine whether the assignment of the trustee’s right of indemnity and equitable lien was valid and whether it constituted a caveatable interest under the Real Property Act. Additionally, the court had to consider whether QBE had demonstrated a balance of convenience to warrant an extension of the caveat. The court had to interpret the relevant provisions of the Conveyancing Act and determine whether the assignment was effectively communicated to all relevant parties.

The court found that the assignment of the trustee’s right of indemnity and equitable lien was valid, as it was properly executed and notified to the relevant parties. The court held that the assignment was effectively communicated to the necessary parties, and there was no requirement to notify all creditors of JGQ. Furthermore, the court found that the assignment constituted a caveatable interest under the Real Property Act. The court also determined that QBE had demonstrated a balance of convenience, warranting an extension of the caveat.

The court granted QBE Insurance (Australia) Ltd an extension of the caveat over the property owned by JGQ Developments Pty Ltd. The order was made on the basis that the assignment of the trustee’s right of indemnity and equitable lien was valid and constituted a caveatable interest, and that QBE had demonstrated a balance of convenience.

Orders

Orders of the court

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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

As expressed in Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd:[17]In a contractual setting, the question is whether the contractual parties have expressly or impliedly evinced an intention to appropriate property for the discharge of a debt or other obligation and to give the creditor a present right to have the property made available.[17] Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162 [28]. See also Spunter Pty Ltd v Hall [2006] WASC 6 [23] ‑ [24]. JGQ refers to the fact that under the JGQ Deed, the law of New South Wales is said to apply. It then refers to s 12 of the Conveyancing Act which provides as follows:12Assignments of debts and choses in actionAny absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees. JGQ contends that the section operates to require notice of the assignment to have been given to all creditors of JGQ on the basis that, it says, they all have an entitlement to the benefit of the trustee's lien that has been assigned. The identity of any such creditors was not disclosed, nor was it clear on what basis it was said that they had an existing right to be subrogated to the trustee's right of indemnity out of trust assets (if indeed that is JGQ's argument). One potential difficulty with JGQ's argument is that as a matter of construction the JGQ Deed purports to assign the right of indemnity against trust assets but for a limited purpose, that is to recover amounts which JGQ does not pay under the JGQ Deed. It is obliged to pay amounts indemnified.[18] Amounts indemnified are limited to 'Loss' and other expenses incurred in connection with the policies and the JGQ Deed.[19] 'Loss' is defined to mean the aggregate of all payments made under the Policies including amounts to settle disputes, unpaid premiums and interest.[20] In other words, the assignment is to meet a certain liability.[18] First Collier affidavit, BC4, page 16, cl 9.2.[19] First Collier affidavit, BC4, pages 15 ‑ 16, cl 1.1, cl 11.1.[20] First Collier affidavit, BC4, page 16, cl 11.1.