Rowell Consulting Services Pty Ltd v Clark - [2006] WASC 95

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: ROWELL CONSULTING SERVICES PTY LTD -v- CLARK [2006] WASC 95

CORAM: TEMPLEMAN J

HEARD: 23 SEPTEMBER 2005

DELIVERED : 23 SEPTEMBER 2005

PUBLISHED : 25 MAY 2006

FILE NO/S: CIV 1588 of 2005

BETWEEN: ROWELL CONSULTING SERVICES PTY LTD (ACN 001 928 758)
Plaintiff
AND
RICHARD MELVILLE CLARK
Defendant

Catchwords:

Land - Agreement to develop strata title lots - Whether sale of various lots should be prevented - Whether caveatable interest or restrictive covenant arise from agreement - Whether a security interest should prevent removal of caveat - Turns on own facts

Legislation:

Transfer of Land Act 1893 (WA), s 138C(2), s 140

Result:

Caveat removed on conditions

Category: B

Representation:

Counsel:

Plaintiff: Mr G M G McIntyre SC
Defendant: Mr D F Beere

Solicitors:

Plaintiff: Stephen Forward
Defendant: Beere May & Meyer

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

Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42

Case(s) also cited:

Eades v Reilly, unreported; SCt of WA; Library No 980675; 20 November 1998
Frigo v Culhaci, unreported; CA SCt of NSW; No 40414 of 1998; 17 July 1998
Hamdan v Widodo [2004] WASC 123
His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15
Jackson v Goldsmith (1950) 81 CLR 446
Sanctuary Park Estate Toodyay Pty Ltd v Griffin Plant Hire Pty Ltd [2003] WASC 174
Third Chandris Shipping Corporation & Ors v Unimarine SA [1979] 2 All ER 9272

TEMPLEMAN J: This is a matter which came before me on a previous occasion in March of this year when I gave a judgment in which I commenced by setting out in summary form the background to the dispute. I do not propose to repeat what I said there but rather to proceed, as it were, from where that judgment left off.
In my judgment I came to the conclusion that the Rowell interests, Rowell Consulting Services, did not have an equitable interest in the relevant land but that it had a contractual entitlement to lodge a caveat, arising under cl 14 of the agreement of 14 March 1996; that being an entitlement in the nature of a security rather than an equitable interest.
There have been two further caveats lodged in which it is sought to establish that the Rowell interests have an equitable interest in the land on other bases than I considered when I heard the matter previously.
The first is that the agreement of 14 March 1996 is a partnership agreement and that as a result, Rowell, as I will call it, has an interest in the land. In my view the agreement is not a partnership agreement. It is an agreement for the appointment of Rowell as a developer, as is said in cl 1, to do all that was necessary to enable the owner to sell strata lots on the property.
It has been said on behalf of Rowell, that the property has been…

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 95
Decision Date: 25 MAY 2006

CaseChat Overview and Summary

In the matter of Rowell Consulting Services Pty Ltd v Clark, the Full Court of the Supreme Court of Western Australia considered whether a caveat entered by Rowell Consulting Services Pty Ltd was valid and should remain in place. The case involved a dispute over an agreement to develop strata title lots, and whether this agreement gave rise to a caveatable interest or a restrictive covenant. Additionally, the court examined whether a security interest should prevent the removal of the caveat. The dispute arose out of an agreement between Rowell Consulting Services Pty Ltd and Clark to develop strata title lots. Rowell had entered a caveat over the lots to protect its interest, but Clark sought to have the caveat removed to allow the sale of the lots. The legal issues in the case included whether the agreement between Rowell and Clark created a caveatable interest or a restrictive covenant, and whether the security interest held by Rowell was sufficient to prevent the removal of the caveat. The court considered the relevant principles and found that the balance of convenience was a factor to be considered in an application under s 138 of the Real Property Act 1893 (WA). The court found that the interest in question was in the nature of a security and that the purpose of the caveat was to restrain the registered proprietor from dealing with the land in a way that would defeat or derogate from the incidents attaching to that proprietary interest. The court also found that the financial position of Clark was parlous and had worsened since the previous hearing. The court concluded that removing the caveat without making other orders would defeat Rowell's security and that Clark's proposal to consent to an absolute caveat being lodged and to pay a portion of the sale proceeds into a joint account was insufficient to justify lifting the caveat. The court therefore upheld the caveat, preventing the sale of the lots until the respective rights of the parties had been determined.

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

The law is set out conveniently in the judgment of Owen J, with whom Malcolm CJ and Walsh J agreed, in Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 50. His Honour said:"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." Pausing there, I would have to say that if I was to discharge the caveat, that would be an unusual course. Going on with the quote:"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." Pausing again: in this case, of course, the interest is in the nature of a security. Going on with the quote:"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." The effect of all that is that if the caveat was to be lifted without any other order being made, that would have the result of defeating Rowell's security. That is a result which I could not contemplate given that there is a serious question to be tried as to the extent of that interest. However, what is said on behalf of Mr Clark is that that would not be the position here for two reasons. One is that if the caveat were to be lifted, Mr Clark would consent to an absolute caveat being lodged on the balance of lot 25 and would consent to three‑quarters of a million dollars out of the proceeds of sale of the property, which is the subject of the contract he wishes to perform, to be paid into a joint account with the solicitors, so as to secure that money. The question I have to consider is whether that would make a sufficient difference to justify the caveat now being lifted. The balance of convenience must take into account a number of factors. One of those, of course, is Mr Clark's financial position. I said on the previous occasion that it was parlous. The evidence is now that his financial position is worse than it was then. I have Mr Clark's affidavit of 2 August filed on 11 August 2005 in which, in par 27, he says that his "current financial position is even worse than it was when I swore the affidavit on 22 February 2005". That is the affidavit on the basis of which I came to the conclusion that his position was parlous.