Re: Aust. Builders' Corp P/L & Turner

[1996] QSC 262

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  O.S. No.9380 of 1996

Before the Hon. Mr Justice Mackenzie

[re:  Aust. Builders' Corp P/L & Turner]

IN THE MATTER of an Application pursuant to

section 127(1) of the Land Titles Act 1994

- and -

IN THE MATTER of a Caveat lodged by
  AUSTRALIAN BUILDERS' CORPORATION PTY  LTD
  (ACN 064 883 012) and EDWARD REX TURNER

- and -

IN THE MATTER of an Application for a
  declaration that the said Caveat has lapsed

CATCHWORDS:           CAVEAT - application to set aside a caveat - whether the caveators have a caveatable interest - whether the caveat is too wide in its application - whether the caveat should be set aside.

Counsel:R.C. Morton for the applicants.

R. Leneham (solicitor) for the respondents.

Solicitors:Nicholsons for the applicants.

Leneham & Kennedy for the respondents.

Hearing date:          26 November, 1996

JUDGMENT - MACKENZIE J.

Judgment Delivered 19 December, 1996

This is an application to set aside a caveat.  The grounds of claim in the caveat are as follows:-

"Pursuant to contract of sale dated 27/6/1995 between Kenneth Roy Quinton (of whom Air Travel International Pty Ltd (ACN 010632 505) is nominee and agent) and Edward Rex Turner (on his own behalf and on behalf of Australian Builders Corporation Pty Ltd (ACN 064 883 012), and further pursuant to a contract of sale between Garden City Christian Church Property Holdings Ltd (ACN 050 729 747) and Air Travel International Pty Ltd (ACN 010 632 505)."

The caveat prohibits registration of all instruments except a transfer from Garden City Christian Church Property Holdings Ltd to Air Travel International Pty Ltd.  The latter company and Camelot Apartments Limited have common directors, Mr Kenneth Quinton and Mr Anthony Powell.  The corporate caveator, Australian Builders Corporation Pty Ltd has as a director the other caveator, Edward Rex Turner ("Rex Turner").

As the background to the matter appears from the material before me Rex Turner became aware of the possibility of developing certain land which is now the three lots described in the caveat.  After some discussions with the potential vendors, Garden City Christian Church Property Holdings Ltd, he arranged for a proposal to be advanced by Mr Quinton because, for reasons which are unexplained, he could not get on with certain church personnel.  On Rex Turner's version of events he was primarily involved in preparing the proposal which went under the hand of Mr Quinton on behalf of Camelot Apartments Limited.  By 22 June 1995 a letter had been sent by Mr Quinton and Mr Powell on the letterhead of Camelot Apartments Ltd to Garden City Christian Church saying that they were ready to proceed subject to resolution of certain matters.  Then on 27 June 1995 a meeting was held between Mr Quinton, Mr Powell and Rex Turner.  The status of a document produced in connection with that meeting is critical to the respondent's claim.  There are differing versions of what happened.  Rex Turner claims that the terms in the document were verbally accepted by Messrs Quinton and Powell but they deny that they agreed to the arrangement in it.  This is the document which forms the first basis of the claim for a caveatable interest.   There is a serious question to be tried in regard to this issue.   It is common ground that subsequently Mr Christopher Turner, the brother of Rex Turner, did work in connection with obtaining the necessary approvals for sub-division and town planning consent.  There is a serious question to be tried about the circumstances in which Christopher Turner was engaged to do the work.  In particular Mr Quinton and Mr Powell deny that they were in any way involved in the arrangement which they allege was solely between the Turners.  Rex Turner on the other hand claims that the appointment of his brother was pursuant to arrangements made between Messrs Quinton and Powell and him to have Christopher Turner do the work. 
          If that were all there was to the case it would have to go to trial.  However three arguments were raised against the proposition that there was any caveatable interest.  The first is that the contract relied on cannot be enforced because of the uncertainty about who the parties were and what should be conveyed to Mr Turner or any entity associated with him if a contract were found to exist.   The area of land to be conveyed according to the agreement is 2,400 square metres.  The land to which that agreement would be referable is not, following sub-division, of those dimensions or substantially of them.  The second argument is that the agreement is void under the Land Sales Act 1984. The submission is that because the land was not sub-divided at the time when the agreement was made, it contravenes s.8. The third argument is that it is alleged that s.59 of the Property Law Act 1974 has not been complied with. The memorandum is not signed by Mr Quinton or Mr Powell personally or on behalf of the corporate entities with which they were involved. The respondent submits that while it is conceded that s.59 has not been satisfied, there has been part performance. Section 6(d) of the Property Law Act provides that nothing in s.59 affects the law relating to part performance.
          Alternatively, it was submitted that the caveat was too wide.  The underlying submissions were that by caveating in respect of the whole of the fee simple, the caveat exceeded any interest to which the respondent was entitled, and in seeking to prevent any dealings but the excepted transfer being registered, the caveat did not have regard to the understanding that a loan would be obtained to finance the project, requiring a mortgage to be registered.
          It is convenient to deal with the statute based arguments first.  With respect to the Property Law Act it is conceded that there is no memorandum in writing as required by s.59. However it was submitted that there had been acts of part performance and that because s.6 provides that s.59 does not affect the doctrine of part performance the absence of a memorandum in writing was of no consequence. It was submitted that there was evidence that Christopher Turner was involved in the preparation of the applications necessary for the project to proceed. The applicants disputed whether anything done by Christopher Turner was done, and if so to what extent, as a result of a retainer pursuant to the agreement alleged or whether it was done without the involvement of Mr Quinton, Mr Powell or their companies. It was accepted that part performance must be unequivocally referable to the class of agreement alleged (McBride v. Sandiland (1918) 25 CLR 69, 78-9).
The nature of the conflict on this issue raises a serious question of fact to be tried which cannot be resolved on the conflicting claims in the material before me. The principle that a Statute of Frauds provision cannot be used as an instrument of fraud and an alleged estoppel were raised. It was submitted that it would be unjust to permit the caveatees to rely on s.59 of the Property Law Act and that the caveators had altered their position in reliance upon the caveatees promises made on 27 June 1995 and their subsequent acquiescence in work being done by the caveators.  These issues cannot be resolved until antecedent questions of fact concerning the existence of the agreement and the capacity in which any work which the court of trial finds to have been done was performed have been resolved.  It is unnecessary to explore these issues further.  I am satisfied that there are serious questions to be tried on the issue of part performance of the agreement if an agreement is found to exist. 
          With respect to the Land Sales Act the respondent submitted that the agreement was void because it was an agreement to buy and sell "relevant land" where a sub-divisional  plan of survey had not been approved by the local authority before the event that marked the entry upon the purchase.  (s.8(1))   It was submitted that the agreement was therefore void.  (s.8(2))   
          It is alleged by Rex Turner that the payment of $400,000, the transfer of 2,400 square metres of land and the transfer of a 40 per cent interest in the child care centre was to be his remuneration for his part in the project, including construction of the child care centre.  There is a serious question to be tried whether there is an agreement that has that character.  The characterisation of the agreement will affect whether or not there is an arrangement which contravenes the Land Sales Act.  I am not persuaded that an arrangement under a joint venture which involves the transfer to a participant of a yet to be sub-divided portion of land comprised in the lands to be dealt with by the joint venture is necessarily proscribed by the Act.  Where the particular transaction in this case falls will be determined by the characterisation of any agreement found at the trial and in particular whether Rex Turner's version of how the agreement should be interpreted is accepted.  In my view there are serious questions to be tried in respect of this issue.           I turn now to the other arguments.  The argument that the agreement could not be specifically performed because it is uncertain, even if Rex Turner's version of the formulation of an agreement and its characterisation are accepted, is based on two propositions.  The first is that there is nothing in the document which is said to form the basis of the agreement or any other evidence to identify the parties referred to in the document with Air Travel International Pty Ltd or Camelot Apartments Limited.  The second is that there is nothing to identify the land apparently referred to in that document with the caveated lots. 
          As to the first argument there is no suggestion that the terms in the document "Rex Turner & Associates" and "Ken Quinton and Associates" relate to specific entities.  It is an arguable question what they mean.  However one possibility is that as the document is apparently drafted in lay terms they are intended to extend to nominees of the named individuals.  There is a question to be determined at trial on the evidence led there.  I am not satisfied that the necessary link between Australian Builders' Corporation Pty Ltd and Camelot Apartments Limited or Air Travel International Pty Ltd will not be made out. 
          As to the second argument the caveat refers to lots 1 to 3 on Registered Plan 900500.  Lot 1 is land retained by the church and is no longer subject to the caveat.  Lot 2 is 1,839 square metres in area and lot 3 is 3,690 square metres.  On the rough plan which forms part of the document relied on as the agreement, in addition to the church block (which according to its dimensions and including what is described as common property, is about 4,400 square metres) there are two other parcels.  These parcels, marked A (and also marked KQ) and B (also marked RT) are described as being 2,000 square metres and 2,400 square metres respectively.  In the text of the document one provision is "KQ to sell 2,400 square metre block excluding common aera (sic) to RT for $1.00".  The reference to the common area appears to relate to the hatched area or areas on the plan.  Lot B is surrounded on two sides by what is described as "BCC parkland 1,030 square metres".  Part of lot A is abutted on one side by the "BCC parkland" and in part by what is described as "common property for drive and parking".
          The external dimensions of the whole of the land on the registered plan closely approximate those on the rough sketch.  The depth of the church block (lot 1) is slightly larger than on the rough sketch and the dimensions of lots 2 and 3 are different in both aspects because, instead of areas being sub-divided from them for parking and similar purposes, easements over them have been provided for.  The effect is that lots 2 and 3 extend over the whole width of the land, and the depth of lot 3 extends to the back boundary of the land rather than being abutted along its back boundary by a strip of land excised from it as BCC parkland.  The result is that at 1,839 square metres, the middle lot (A or 2) is somewhat smaller than the rough sketch describes and the rearmost lot (B or 3) is somewhat larger even allowing for the inclusion of some or all of the land described as "BCC parkland" in it.  Precise reconciliation of the areas as between the rough sketch and the registered plan cannot be achieved on the material available.  It is therefore true to say that the land apparently identified in the rough sketch cannot be identified with caveated lots.  Whether this was due to an imperfect understanding of how the sub-division was to be achieved or due to a change in method of implementation, the concept embodied in the rough sketch had changed by the time the sub-division was approved.  The areas referred to in the document relied on as the agreement have changed in the registered plan.
          The document containing the alleged agreement refers to Mr Quinton purchasing 4,400 square metres and "1,692 square metres common area from GCCC".  The total area is 6,092 square metres.  The total area of lots 2 and 3 are sub-divided is 5,429 square metres.  The relief sought in the action is specific performance of a contract of sale dated 27 June 1995, or alternatively, damages in lieu of specific performance, or alternatively, a declaration that the land was held in trust.  Where there is a lack of identity between the land referred to in the contract and what now exists as a result of the approved sub-division it is difficult to see how the terms of the contract, particularly those relating to the transfer of 2,400 square metres, could be specifically performed.  If the provision for transfer of a 40 per cent interest in the child care centre is ultimately interpreted as entitling the respondent to an interest in land on which the child care centre is built, there is still a conflict between the terms of the agreement as to the area of land to be acquired and what was actually acquired even though the area which was to house the child care centre has to be calculated mathematically to reach that result.  The middle lot on the registered plan is smaller than the land shown on the rough plan.  It is therefore questionable to what extent specific performance could be obtained in that regard. 
          The question whether, if the land was acquired pursuant to the joint venture agreement, it is held on trust for the caveator or caveators is a separate issue.  The outcome on this issue will be dependant on a finding whether there was a joint venture agreement and whether, notwithstanding that what was acquired was different in area from what was contemplated in the agreement, the circumstances are such that some kind of a trust is to be spelt out of the circumstances of the matter.  In my view there is a serious question to be tried on this issue.   Because a possible outcome is that the land subject to the caveat is held on trust for the caveator or caveators there is a possibility that an equitable interest in the land or at least part of it has been created which, subject to the balance of convenience favouring the respondents, should be protected by the continuation of the caveat. 
          On the question of balance of convenience the respondent's submissions recognised that one of the elements in the agreement is the construction of a child care centre.  The respondent's submissions recognised that if finance, which was contemplated by the document relied on as the agreement, cannot be obtained and secured against the land, in all probability the necessary improvements cannot be constructed.  If the caveators fail to establish an interest in the land they will be in all probability liable for any financial consequences which flow from the delay to the project.  It was submitted that options available to the court to achieve a balance of interest was to require an undertaking as to damages from the respondents and to require the respondents to amend the caveat to allow registration of documents enabling the development to proceed subject to safeguards.  In my view such a concession would be appropriate.  I make the following orders:-

1.Upon the respondents giving the usual undertaking as to damages I order that the application to remove the caveat be dismissed.

2.Upon an applicant or the applicants entering into an agreement to borrow a sum not exceeding the sum of $600,000 and upon providing to the caveators sufficient proof that such an agreement has been made and that it is a term or condition of the agreement that the lands subject to the caveat be encumbered for the purpose of securing the loan and upon the said applicant or applicants undertaking to apply the sum borrowed to improvement of the lands subject to the caveat and to no other purpose without the prior consent in writing of the caveators, the caveators shall within 21 days of sufficient proof of the aforesaid agreement and the said term or condition being provided to them amend the caveat to enable registration of documents necessary for the agreement to borrow to proceed. 

3.The costs of and incidental to the application are reserved.