Thorpe v Sizer Developments Pty Ltd & Anor - [2006] WASC 151

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: THORPE -v- SIZER DEVELOPMENTS PTY LTD & ANOR [2006] WASC 151

CORAM: JENKINS J

HEARD: 12 & 20 JUNE 2006

DELIVERED : 28 JULY 2006

FILE NO/S: CIV 1265 of 2006

BETWEEN: ANDREW CECIL THORPE
Plaintiff
AND
SIZER DEVELOPMENTS PTY LTD (ACN 098 209 673)
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Conveyancing - Caveats - Extension of caveat - Deed of charge - Charging interest in land with payment of legal costs - Deed of charge authorising lodging of caveat to protect interest in land - Plaintiff unable to presently enforce debt for legal costs - Balance of convenience

Conveyancing - Caveats - Extension of caveat - Charge securing repayment of monies - Whether any monies still owed - Balance of convenience

Conveyance - Caveats - Extension of caveat - Statutory charge pursuant to Legal Practitioners Act 1893 (WA) (Repealed), s 73 - Whether suspended legal practitioner has statutory charge which may be protected by a caveat - Balance of convenience

Legislation:

Legal Practice Act 2003 (WA)
Legal Practitioners Act 1893, (WA) (Repealed), s 73

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

Result:

Caveat extended on conditions

Category: B

Representation:

Counsel:

Plaintiff:     Mr S J Lemonis
First Defendant             :     Mr J R Birman
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Fairweather & Lemonis
First Defendant             :     Birman & Ride
Second Defendant         :     No appearance

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

Aaronisle v Thorpe & Anor [2005] WASC 87
Avco Financial Services Ltd v White [1977] VR 561
Composite Buyers Ltd v Soong (1995) 38 NSWLR 286
Custom Credit Corp 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
Re Charge Card Services Ltd [1987] Ch 150

Case(s) also cited:

Allcard v Skinner (1887) 56 LJ Ch 1052
CJ Redman Construction Pty Ltd v Tarnap Pty Ltd (2006) NSW ConvR 56-154
Commonwealth v Verwayen (1990) 170 CLR 394
Custom Credit Corporation Ltd v Chellaston Pty Ltd & Anor, unreported; SCt of WA (Anderson J); Library No 930340; 10 June 1993
Eng Mee Yong v Letchumanan [1980] AC 331
Matthews v Doctrieve Corp Pty Ltd (2003) 59 IPR 155
Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890
Quek v Beggs (1990) 5 BPR 11,761
Re P's Bill of Costs (1982) 45 ALR 513
Shaddick v Dunsford Investments Pty Ltd (1993) 6 BPR 13,295
Thompson v Palmer (1933) 49 CLR 507
Troncone v Aliperti (1994) 6 BPR 13,291
Westpoint Corporation Pty Ltd v The Registrar of Titles & Anor [2004] WASC 189

JENKINS J: Pursuant to the Transfer of Land Act 1893 (WA) ("the Act), s 138C the plaintiff applies, by originating summons dated 22 March 2006, for orders extending a caveat.
On 21 October 2005 the plaintiff lodged caveat no J480761 ("the caveat") over the first defendant's land. The land is described as lots 13, 21, 38 and 40 on strata plan 43803. Each lot is the whole of the land comprised in certificates of title volume 2581 and folios 933, 941, 958 and 960 respectively ("the caveated land"). However, for the reasons detailed below the plaintiff, has now withdrawn the caveat over all the caveated land other than lot 40.
The caveatable interest or estate claimed by the plaintiff in the caveat is as "chargee" which interest or estate is said to arise out of the matters set out in three statutory declarations made by the caveator in 2005. The statutory declarations were lodged with the caveat.
The first defendant denies that the plaintiff has a caveatable interest in the caveated land and also submits that the balance of interest favours the removal of the caveat. The first defendant required the second defendant to serve a notice on the plaintiff pursuant to the Act, s 138B. The notice was received by the plaintiff in early March 2006. The plaintiff then commenced these proceedings. The second defendant abides the decision of the Court.
Orders of the Court have been made extending the caveat pending the determination of the plaintiff's application for an extension of it. At the conclusion of the hearing of the application I indicated that I would reserve my decision and that the caveat should continue until my decision had been delivered. At that point the first defendant's counsel advised me that the first defendant was prepared to put money into trust to secure the plaintiff's alleged interest, so that the caveat may be lifted and the sale of the caveated land to third parties may proceed. I indicated that if that occurred then the subject matter of the dispute would no longer exist as the caveat would no longer be lodged. The court adjourned to enable the parties to confer. When the court reconvened counsel advised me that they had agreed that each party would undertake to do certain things pending my decision. A note of the undertakings has since been filed. The note of undertaking records:
"1.The Plaintiff undertakes that upon the First Defendant paying the sum of $353,000 into the Fairweather & Lemonis Trust Account, the Plaintiff will partially withdraw the caveats over Lots 13, 21 and 38 on Strata Plan 43803.
2.The Plaintiff and the First Defendant undertake that the sum of $353,000 is to be held in trust pending the outcome of the Plaintiff's application in these proceedings. Subject to any further order, the Plaintiff undertakes that if the application fails, the sum of $353,000 plus any interest accrued on that sum is to be repaid to the First Defendant.
3.The Plaintiff and the First Defendant undertake that if the application succeeds, the sum of $353,000 will be held in Trust pending further Court order or agreement between the Plaintiff and Aaronisle Pty Ltd.
4.If the application succeeds, the Plaintiff will withdraw the caveat on Lot 40, but will not do so before the application is determined."
Thus, the position is that the caveat remains lodged over lot 40 and if the plaintiff's application is successful even the caveat to that extent will be removed. The parties have come to a practical resolution of this matter bar that they cannot agree whether the plaintiff has a caveatable interest in the caveated land. Whilst the parties are to be congratulated for doing this, as I pointed out to the parties, their undertakings may alter the balance of convenience.
After I reserved my decision I received a letter from the plaintiff dated 22 June 2006 in which he advised that he now acts in person in this matter. He stated that it has occurred to him that there is a matter which I should have been made aware of which would affect the question of the balance of convenience. Further, he said that he wished to seek leave to file a responsive affidavit to an affidavit sworn by Mr Gray on behalf of the first defendant. The plaintiff also indicated that he wished to make further responsive submissions. My Associate advised the parties in writing that the matter would not be re‑listed unless the undisclosed matter was made known to the first defendant and conferral took place between the parties as to whether it was necessary for it to be brought to my attention. Secondly, the plaintiff was advised that I had already ruled on the issue of Mr Gray's late affidavit to the effect that I would admit it into evidence and that if I intended to take a part of it into account contrary to the plaintiff's interests then, and only then, would I allow the plaintiff to file material in reply. Thirdly, my Associate advised the plaintiff that I did not need to hear either he or his counsel further in reply.
On 6 July the plaintiff wrote and advised me that he had conferred with the first defendant's counsel and he intended to put the undisclosed matter before me. He did not provide me with information concerning the results of the conferral. He repeated his intention to make further submissions in reply and his intention to seek to have the matter re‑listed for that purpose.
On 24 July the plaintiff filed further responsive submissions, a certificate of conferral and his affidavit of 24 July 2006.
I am not satisfied that it is in the interests of justice for me to give the plaintiff leave to make further responsive submissions in addition to the full and proper submissions made by his counsel at the hearing of the application.
The plaintiff's affidavit deals with two matters. The first is the plaintiff's draft counterclaim, details of which I refer to later in these reasons. Paragraphs 2 – 8 deal with the counterclaim. In my view it is not in the interests of justice for me to give the plaintiff leave to adduce the evidence in pars 2 – 7 of his affidavit. The paragraphs are of marginal relevance to this application. Further, to the extent that they refer to action or inaction on the part of the first defendant's counsel, receipt of the material is only likely to lead to unwarranted delay as if I was going to take it into account, in fairness, I would have to give the first defendant the opportunity to respond to it.
Paragraph 8 is of relevance to this application but it contains information that is a matter of court record in the action in which the counterclaim is filed. Therefore it is not clear to me why the parties could not simply of advised me by letter of the information in par 8. Nevertheless, because it is relevant, I am prepared to give the plaintiff leave to adduce the evidence contained in par 8.
The second matter dealt with in the affidavit is a caveat lodged by the plaintiff over the caveated land after he lodged the caveat. Paragraphs 9 – 12 of the plaintiff's affidavit deal with the subsequent caveat. I was aware of the subsequent caveat but not the details of it. The plaintiff has not explained why he did not provide the details of it prior to the hearing.
I accept that it is relevant for me to be aware of all the plaintiff's dealings with the caveated land. Consequently, I am prepared to grant the plaintiff leave to adduce the evidence contained in pars 9 and 12 in his affidavit. In my opinion the material in pars 10 and 11 is not relevant to the submissions made to me at the hearing. I am not prepared to allow the plaintiff to raise fresh matters at this late stage of the proceedings.
Thus, I give leave to the plaintiff to file his affidavit of 24 July 2006 and strike out pars 2 – 7, 10 and 11. As my decision in respect to the affidavit does not prejudice the first defendant it is unnecessary for me to further delay the delivery of my reasons by giving the first defendant the opportunity to be heard in respect to the affidavit.

Factual background

Part of the factual background of this application is in dispute between the parties. Where the dispute is relevant I will refer to the positions of the parties. However, it is not appropriate that in determining an application of this kind I attempt to resolve differences in the affidavit material.
The plaintiff was admitted as a practitioner of this honourable Court on 21 December 1984. On 20 September 2004 he was suspended from practice by the Legal Practitioners Disciplinary Tribunal pending a referral to the Full Court with a recommendation that he be struck off the Roll of Practitioners. The plaintiff has appealed the Tribunal's findings as well as the decision to refer the matter to the Full Court.
The first defendant is the registered proprietor of the caveated land. It holds the land on trust for the Aaronisle Trust of which Aaronisle Pty Ltd (ACN 072 385 543) ("Aaronisle") is the principal beneficiary. The first defendant carries on business as a property developer. Aaronisle is also a property developer.
Sometime in 2000, Aaronisle engaged the plaintiff to provide legal services. There is a dispute between the parties as to when that first occurred. I need not detail that dispute.
In March 2000 Aaronisle entered into a contract to buy a parcel of vacant land in Northbridge ("the Northbridge land"). It did not have the capital to enable it to complete the purchase or to develop the Northbridge land.
After negotiations between Aaronisle and Bonera Investments Pty Ltd ("Bonera") it was agreed that at settlement Aaronisle would transfer the Northbridge land to Bonera on trust for Aaronisle and that Bonera would provide funds for Aaronisle to complete the contract to buy the Northbridge land. There were related transactions. As a consequence of the arrangements with Aaronisle, Bonera became the registered proprietor of the Northbridge land in February 2001. Mr Clark Gray ("Gray"), the sole director of Aaronisle, deposes that the plaintiff acted for Aaronisle in respect of its arrangements with Bonera and other parties involved in the related transactions.
The plaintiff denies negotiating the agreement between Aaronisle and Bonera or advising Aaronisle in respect to the arrangements with the third party companies. He admits that he drew up some documents to formalise agreements Gray said he had reached with various parties.
In 2001 and 2002 disputes arose between the parties to the Northbridge land agreement. The plaintiff represented Aaronisle in a number of the legal proceedings which followed.
At the same time Gray was attempting to secure capital for the development of the Northbridge land. In April 2002 Aaronisle and the first defendant executed a document by which they agreed, amongst other things, that they would enter into a trust deed stating that the first defendant would become the registered proprietor of the Northbridge land, both companies were to be the beneficial owners of the Northbridge land, the first defendant would pay out certain monies and the first defendant would fund the development of the Northbridge land. Thus, Bonera would not have an interest in the Northbridge land. It was also agreed that the net profit from the completed development would be allocated equally between Aaronisle and the first defendant.
The plaintiff was paid for legal work he did for Aaronisle in 2000 and 2001. He was not paid for any of the legal work he did for Aaronisle thereafter and says that he was told by Gray that Aaronisle would not be able to immediately pay for ongoing legal fees. On 25 March 2002 the plaintiff says that he sent a letter to Gray about his unpaid legal costs and the basis on which he was prepared to continue to act for Gray and Aaronisle. A copy of the letter is annexed to the plaintiff's affidavit of 2 June 2006. In part it stated that in order to continue to act for Gray until the end of his projects, which, by the terms of the letter, included the Northbridge land project, he needed to be secured for his costs by a charge or charges against each of the projects. He informed Gray that he would shortly provide for Gray's consideration drafts of charges for registration over the "Scarborough and Northbridge projects". The letter advised Gray that he had the right to seek independent legal advice from a solicitor of his choice and that he should do so if he had any doubts about the matter.
Gray says that on 28 May 2002 the plaintiff presented him with a deed of charge and demanded that he execute it in his capacity as Aaronisle's director, which he did ("the 28 May deed of charge"). The plaintiff disputes that the 28 May deed of charge came to be signed in these circumstances. He says that he first drew up a charge over land at Scarborough which was being developed by Gray. The plaintiff says that he lodged a caveat over the land the subject of the Scarborough project. This caveat was partially withdrawn to enable the sale of two units to proceed. The plaintiff was paid $20,000 in partial payment of an account for legal fees in the sum of $22,165.
He says he then drew up the 28 May deed of charge and told Gray that he had the right to obtain independent legal advice before he signed it. He deposes that Gray said that neither he nor Aaronisle required independent legal advice and that Gray then executed the charge.
The 28 May deed of charge states:
"DEED OF CHARGE
THIS DEED is made the 28th day of MAY 2002 by AARONISLE PTY LTD ACN 072 385 543 of Level 1, 12 Kings Park Road, West Perth, Western Australia ('The Company') WHEREAS The company has instructed Andrew Cecil Thorpe ('Thorpe') to act on its behalf in respect of legal matters; AND WHEREAS Thorpe has provided legal services to The Company from time to time; AND WHEREAS The Company wishes to continue to instruct Thorpe; AND WHEREAS Thorpe has agreed to continue to so act conditional upon The company charging its interest on the lands at 258‑264 Newcastle Street being more particularly described as:
(i)Part of each of lots 8 and 10 on plan 22 and being the whole of the land in Certificate of Tittle [sic] Volume 283 Folio 102A;
(ii)Part of each of lots 8 and 9 on Plan 22 and being the whole of the land in Certificate of Title Volume 411 Folio 130A;
(iii)Lot 1213 on diagram 6388 and being the whole of the land in Certificate of Title Volume 1204 Folio 95; and
(iv)Part of lot 8 on Plan 22 and being the whole of the 1 and [sic] in Certificate of Title Volume 847 Folio 200.
('the land')
With payment of Thorpe's legal costs.
In consideration of Thorpe continuing to act for The Company, The Company hereby charges its interest in the land with payment of past and future legal costs and authorises the lodging of the Caveat to protect Thorpe's interest in the land.
EXECUTED as a Deed this 28th day of May 2002."
The 28 May deed of charge is signed by Gray "for and on behalf of [Aaronisle]".
According to the plaintiff's affidavits and a statutory declaration lodged in support of the caveat, the lots described in the 28 May deed of charge comprise the Northbridge land, part of which is now the caveated land. He says, and the first defendant does not dispute, that the Northbridge land was amalgamated into one lot and then in or about 13 December 2004 strata plan 43803 was registered whereby the Northbridge land was divided into 40 strata lots comprised in certificates of title volume 2581 folios 921 - 960.
Gray alleges that the plaintiff advised Aaronisle in respect to, and negotiated on behalf of Aaronisle, a deed and joint venture documents to give effect to the heads of agreement document with the first defendant. The plaintiff denies giving advice to Aaronisle in respect to the deed or advising Aaronisle to execute the deed. The deed, executed by Aaronisle, the first defendant, Gray, Bonera and others on or about 29 November 2002 contains cl 5.1 which states, in effect, that, save for as specified in the deed, the parties covenant and agree not to lodge or to cause to be lodged any dealing over, against or affecting the Northbridge land. Clause 5.2 states, in effect, that Aaronisle and Gray covenant that there are no other parties who are entitled to assert any interest or claim in respect to the Northbridge land. One dispute between the plaintiff and Aaronisle and Gray arises because the circumstances in which the caveat came to be lodged may mean that Aaronisle and Gray have breached these clauses. Aaronisle and Gray allege that the plaintiff should not have advised them to execute the deed when he knew it contained such terms.
The relationship between the plaintiff and Gray was not exclusively one of solicitor and client. The plaintiff deposes that in December 2002, Gray borrowed $45,000 from him on condition that Gray pay him $5,000 interest per month. The debt was expected to be repaid in approximately one month. The plaintiff says that as part of this arrangement Gray assigned the first $50,000 of $55,000 payable to Gray by the first defendant to Exchequer Australia Pty Ltd, a company that the plaintiff describes as "his". I note that whilst the plaintiff and Gray describe this as a loan between the plaintiff and Gray, the unstamped assignment that the plaintiff has adduced in evidence states that the loan was made by Exchequer. Gray denies that he agreed to pay interest of $5,000 per month on this loan. The loan was not repaid until May 2003 when the first defendant paid $50,000 to the plaintiff.

The plaintiff says that on numerous occasions commencing in December 2002 and for the next year or so Mr Gray said to him on behalf of Aaronisle that all monies owed to the plaintiff by Gray personally and by Aaronisle would be paid from the proceeds of Aaronisle's interests in the Northbridge land project. The plaintiff says he relied upon this representation when lending money to Gray and Aaronisle.
The issue of interest owing on this loan is still to be resolved between the parties. It is relevant to this matter because the plaintiff says that monies paid to him were allocated by him to pay the interest on this advance; whereas Gray says that this debt was repaid and that other monies paid to the plaintiff ought to have been allocated to repay other debts owing by him and Aaronisle to the plaintiff. This is not a dispute I can resolve on this application.
In February 2003 Aaronisle, Gray, the plaintiff and another person, called Gerardus Vile ("Vile") executed a joint venture agreement in respect to the development of land in Maylands ("the Maylands project"). The land the subject of the Maylands project was partly owned by Aaronisle and another part was owned by Vile. The recitals to the joint venture agreement state that the plaintiff had advanced money for the purchase of seven of the 16 lots (lots 1, 6, 8, 11, 12, 14 and 15) which comprised the project land. The joint venture agreement in part records that:
1.in consideration of the plaintiff advancing the monies and foregoing his legal fees in relation to the purchase and settlement of the land the plaintiff would be paid the net proceeds from the sale of those seven lots;
2.the plaintiff would advance to Aaronisle and Vile up to $100,000 for the renovation and refurbishment of the improvements on the land;
3.the plaintiff was to take the net proceeds of the seven lots after settlement; and
4.the plaintiff was to be paid such other money as he had expended pursuant to the deed from the sale of the remaining lots.
Gray alleges that there were other terms to the agreement.
In pursuance of the agreement the plaintiff made various payments. To complicate matters further, the plaintiff lent Gray more money to meet Gray's personal expenses. Gray deposes that the plaintiff agreed to pay his personal expenses in exchange for Gray agreeing to the plaintiff taking the interest in the Maylands project and that there were no discussions about interest payable on the loans. The plaintiff deposes that after December 2002 Gray asked to borrow money from him on a regular basis and told him that monies were coming from the first defendant through the Northbridge land project in the near future and he would pay what he owed from these monies with interest at the plaintiff's credit card interest rate.
The plaintiff says that in late 2003 Gray requested the plaintiff to pay an account from American Express and the plaintiff agreed to do so subject to Gray executing a charge which the plaintiff apparently then drew up by hand. The plaintiff says that he told Gray that he would have to charge interest at his credit card rate and that Gray agreed. He says that he also reminded Gray that he had the right to obtain independent legal advice about the charge but Gray told him that he did not need it and then executed the charge ("the November 2003 charge"). The November 2003 charge states:
"I Clark Gray in my own capacity and as a director of Aaronisle and Lomond Propertie Pty Ltd hereby charge all real estate in my name and the names of the companies above* with repayment of monies to be advanced by Andrew Thorpe today in the sum of $76,151.48 and any further advances.
*or in which I or they have an equitable interest[.]"
Throughout 2004 and the first half of 2005 the plaintiff paid Gray's personal expenses and made payments pursuant to the Maylands project joint venture agreement. In his statutory declaration lodged in support of the caveat the plaintiff alleges that, including the $76,151.48, he advanced approximately $93,000.00 which was secured by the November 2003 deed. At various times Gray partly repaid some monies to the plaintiff and the plaintiff also received monies pursuant to the joint venture agreement. In October 2003 the plaintiff provided Gray with a schedule of all monies he said that he had expended on the Maylands project and advanced to Gray and Aaronisle. The schedule did not include a claim for interest. In April 2005 the plaintiff provided another copy of the schedule and a schedule of further monies advanced. According to the plaintiff, Gray and Aaronisle did not immediately take issue with the schedules. Recently the first defendant has taken issue in respect to some of the items in the schedules. Some of the matters raised by Gray and Aaronisle have been conceded by the plaintiff and some have not. It appears that none of the parties kept thorough records of what was paid and the purpose for which payments were made. Whilst the parties submitted to me that there is now essential agreement as to how much has been paid and repaid there is still a dispute as to the allocation of payments and the interest owing. The plaintiff says that Gray owes him over $300,000 including interest and over $150,000 excluding interest. He says that even on the first defendant's best case, Gray still owes him over $60,000 which is secured by the November 2003 charge. The first defendant says that Gray and Aaronisle do not owe the plaintiff any money.
The Maylands project was sold by May 2004. However, at that time the Northbridge land development was still proceeding and the plaintiff had not been paid his legal fees or all the amounts advanced to Gray.
On 25 February 2005 the plaintiff gave Gray eight lump sum bills of costs, six of which were addressed to Aaronisle and two of which were addressed to Aaronisle and Gray. They totalled $241,847.04. They were dated December or April 2003.
It seems that on or about 10 March 2005 the plaintiff lodged a caveat over part of the Northbridge land. He claimed an estate or interest as chargee by virtue of matters set out in his statutory declaration made 10 March 2005. That caveat appears to have been withdrawn whilst the second defendant was deciding whether to accept it for registration.
On 18 April 2005 the plaintiff lodged caveat no J252197 over part of the Northbridge land. This caveat was supported by the plaintiff's statutory declarations made on 10 March 2005 and 18 April 2005.
The statutory declaration of 10 March 2005 declared that the plaintiff's interest arose by virtue of the 28 May deed of charge and the fact that the first defendant held the Northbridge land on trust for Aaronisle. The plaintiff declared that a number of the lots had been sold but that the lots the subject of the caveat remained registered in the name of the first defendant as trustee for Aaronisle.
The 18 April 2005 statutory declaration declared that in addition to the matters set out in the 10 March statutory declaration the plaintiff had obtained a statutory charge over the land pursuant to the operation of the provisions of the Legal Practitioners Act 1893 (WA) (repealed) ("the Legal Practitioners Act"), s 73 and by virtue of District and Supreme Court actions that he commenced which had the effect of recovering and preserving the subject land.
On 7 April 2005 Aaronisle issued proceedings in this Court seeking the removal of caveat no J252197, an injunction against the plaintiff lodging any further caveats over the Northbridge land and an order that the plaintiff account for all monies he has had or received and paid on Aaronisle's behalf ("CIV 1388 of 2005"). The proceedings are still on foot but Aaronisle has not actively prosecuted them, apparently, for two reasons.
The first reason is that Aaronisle applied for similar interlocutory relief and on 20 May 2005, Commissioner McKerracher dismissed the application; Aaronisle v Thorpe & Anor [2005] WASC 87. In respect to Aaronisle's submissions that the 28 May deed of charge was void for uncertainty, that the 28 May deed of charge did not give rise to a caveatable interest, that the plaintiff was estopped from relying upon the 28 May deed of charge because he failed to advise Aaronisle not to sign the deed with the first defendant and that the plaintiff breached his fiduciary duty in allegedly not advising Gray and Aaronisle to obtain independent legal advice before Gray signed the deed of charge, the Commissioner found that Aaronisle had arguable cases but they were either weak or could not be considered to be strong. In respect to Aaronisle's application for a summary order for an account the Commissioner refused to order such an accounting in respect to the Maylands project and the loans to Gray because there was an issue between the parties as to whether the plaintiff had already accounted by way of the provision of the schedules that I have previously referred to. In respect to the outstanding legal fees the Commissioner held that as the lump sum bills of costs had been lodged with the court for taxation there was no point in ordering an account. As to the balance of convenience the Commissioner was not persuaded that the plaintiff's actions were preventing the sale of the Northbridge land as he had lifted his caveat over some lots to enable settlements to proceed and continued to offer to do so as long as his interests were protected.
The second reason relates to the failed proceedings for the taxation of the bills of costs. On 9 November 2005 the plaintiff filed an itemization of one of the lump sum bills of costs he had presented to Aaronisle. The taxation of that account came before Registrar Powell on 11 November 2005. The Registrar declined to proceed with the taxation. He reasoned that as the plaintiff was suspended from practice at the time he rendered the bill he was not a legal practitioner as defined in the Legal Practice Act 2003 (WA) ("the Legal Practice Act"). As only legal practitioners can render bills under that Act, Registrar Powell decided that the plaintiff could not render a bill whilst he was suspended from practice. Therefore he had no power to tax the bill. His reasoning applies all the bills the plaintiff purportedly rendered in February 2005.
On this reasoning, which is not challenged in this application, and if the Legal Practitioners Act, s 230 is applicable, the plaintiff is presently unable to sue for his outstanding legal costs by utilising the provisions of the Legal Practice Act. Section 230 requires a legal practitioner to serve a bill before suing on it. If the plaintiff is not a legal practitioner, as defined by the Act, then he cannot serve a bill. He hopes to overcome his dilemma by one of several means. His first hope is to have his suspension from practice quashed on appeal. His second hope is to persuade the Full Court to make his suspension or any disqualification it orders subject to him being able to serve his bills and sue on them. The third option is to attempt to sue for his costs as an ordinary debt or a claim on a quantum meruit on the basis that if the plaintiff is not a legal practitioner, as defined by the Legal Practice Act, he is not bound by s 230.
The plaintiff's solicitors have recently prepared a counterclaim in CIV 1388 of 2005 for payment of his legal fees, repayment of advances to Aaronisle, for declarations of validity of the 28 May and November 2003 charges and for a declaration that, pursuant to the Legal Practitioners Act, the plaintiff has an interest in the caveated land to secure payment of his bills of costs. It was filed and served after the hearing of this application, pursuant to leave given on 14 July 2006.
In 2005 negotiations continued between the parties in respect to the Northbridge land. At various times in 2005, the plaintiff withdrew caveat no J252197 over some caveated lots to enable the sales of those lots to proceed. This was on the basis that all the proceeds from the sale of those lots would go to the mortgagee and the expenses of sale.
The plaintiff says that on 20 October 2005 he came to an agreement with the first defendant that he would withdraw his caveat over all lots to enable a new mortgage to be registered and the first defendant would lodge a caveat for the plaintiff over four remaining lots, being the caveated land. He says that he accepted an offer to this effect made by the first defendant's solicitors by letter dated 20 October 2005. In part the letter says that the first defendant will ensure that the plaintiff's "priority" in respect to the four lots is only preceded by the new first registered mortgage and that after the repayment in full of the new mortgage and its discharge the sum of $250,000 would be paid into the first defendant's solicitor's trust account to be held there until the plaintiff authorised its release or upon presentation of a court order in the plaintiff's favour.
Pursuant to this agreement, on 21 October 2005 the plaintiff withdrew caveat no J252197 and lodged the caveat the subject of this application. It states that it is supported by the two statutory declarations of 10 March 2005 and 18 April 2005 as well as the plaintiff's statutory declaration made 21 October 2005. The latter statutory declaration states that the caveat is a replacement for caveat no J252197. It states that the plaintiff claims a further interest in the land as follows:
"I claim a further interest in the land by virtue of the sole director of Aaronisle Pty Ltd, Clark Gray representing to me on behalf of Aaronisle that all monies owed to me by him personally and by Aaronisle would be paid from proceeds of Aaronisle's interest in the Caledonia Northbridge development – and me making further payments to Aaronisle in reliance upon that representation – and further by virtue of a charge against the land granted by Aaronisle Pty Ltd in or about December 2003 in consideration for a loan of approximately $93,000."
It is not in dispute that the charge referred to in the statutory declaration is the November 2003 charge. The plaintiff also relies upon his statutory declaration where it says:
"This caveat is in replacement for caveat J252197 which is being removed by agreement with the registered proprietors, Sizer Developments Pty Ltd, to enable re‑financing to be effected and is in respect of only part of the land previously caveated."
The plaintiff says that the agreement gave him an equitable interest in the caveated land.
The plaintiff says that on 13 January 2006 the first defendant's solicitors offered to pay him $62,500 if he were to withdraw the caveat over lot 13, one of the four caveated lots. The plaintiff says that he agreed to do so but then the first defendant withdrew the offer and instead offered to pay the $62,500 into trust. The plaintiff apparently attempted to pursue the details of this offer but negotiations broke down.
The plaintiff deposes that he has since lodged a further caveat over the caveated land claiming an interest arising from the first defendant's obligations to him pursuant to the 20 October agreement. I have not seen the subsequent caveat. However, the plaintiff's affidavit sworn 24 July refers to it as caveat no J687125 and deposes that it too has been withdrawn from lots 13, 21 and 38 but that it remains lodged over lot 40.
On 3 March 2006 the second defendant sent the plaintiff a notice pursuant to the Act, s 138B advising him that at the expiration of 21 days of service of the notice the caveat would lapse unless before that date the plaintiff obtained an order of this court to extend the operation of the caveat. This application was then filed by the plaintiff.

Principles governing the extension of caveats

The Act, s 137 provides that a person claiming any estate or interest in land may lodge a caveat forbidding the registration of any dealing affecting the claimed estate or interest. The purpose of a caveat is to act as a statutory injunction to the Registrar of Titles to prevent registration of dealings with the land until notice has been given to the caveator. This enables the caveator to pursue such remedies as he or she may have against any person lodging a dealing for registration: J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 at 552 per Barwick CJ.
The Act, s 138B provides that the proprietor of land in respect of which a caveat has been lodged may apply for the caveator to be served with a notice to the effect that unless the caveator applies to extend the operation of the caveat it will lapse within 21 days. The Act, s 138C provides that on the hearing of an application for the extension of a caveat this Court, if satisfied that the caveator's claim has or may have substance, may, amongst other things, make an order extending the operation of the caveat.
The onus is on the caveator to satisfy the court at the hearing of an application for an extension of a caveat that the caveator's claim has or may have substance. This has been interpreted as an onus to satisfy the court that there is a serious question to be tried as to whether a caveatable interest exists. The caveator must also satisfy the court that the balance of convenience favours the retention of the caveat. However, if there is a serious question to be tried it will be an unusual case where the balance of convenience favours removal of the caveat: Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 50.
The plaintiff claims to have an equitable interest in the caveated land as a chargee. An equitable charge is created where property stands charged with the payment of a debt. It is distinguishable from an equitable mortgage because no estate or interest is conveyed or agreed to be conveyed, at law or in equity: Baker, P and Langan, P Snell's Equity 29th ed Sweet & Maxwell, London, 1990 at 443.
There is no doubt that an equitable charge creates a proprietary interest which is able to be protected by a caveat: Re Charge Card Services Ltd [1987] Ch 150; Avco Financial Services Ltd v White [1977] VR 561; Composite Buyers Ltd v Soong (1995) 38 NSWLR 286. However, a contractual right does not confer an equitable interest.
In Sykes, E and Walker, S The Law of Securities The Law Book Company Ltd, 1993 at 196 the authors say:
"The only actual requirements of the equitable charge seem to be, first, intention; secondly, if over land, the presence of writing; thirdly, the existence of definite ascertainable property, even though future, over which it is contemplated that the charge shall exist; and lastly, in a few exceptional cases the presence of consideration; consideration would not save a purely oral agreement."

The plaintiff's case

The plaintiff submits that he has a caveatable interest in the caveated land by reason of a number of different matters. Each depends upon the legal assertion that the first defendant holds the land on trust for Aaronisle. It was not disputed by the first defendant that if Aaronisle had charged its alleged interest in the land in favour of the plaintiff then that gave rise to a caveatable interest in the land.
The plaintiff says that there is a serious issue to be tried as to whether he has an equitable interest in the caveated land by virtue of the following matters:
1.The 28 May deed of charge which he says secures his past and future legal fees which the plaintiff estimates at approximately $258,000;
2.The Legal Practitioners Act, s 73;
3.The November 2003 charge which he says secures approximately $93,000 advanced by him to Gray;
4.Gray's representation to him in December 2002 and following which he says secures over $300,000 owing to him by Gray and Aaronisle; and
5.The 20 October 2005 agreement which he says, by authorising him to lodge a caveat over the land, created a caveatable interest in it.

The first defendant's case

The first defendant's written submissions raised a number of serious allegations against the plaintiff the purpose of which were to support submissions that the 28 May deed of charge and November 2003 charge are unenforceable because of any or all of the following;
1.A presumption of undue influence as the plaintiff was Aaronisle's solicitor at the time the deeds were signed;
2.An estoppel; and
3.The plaintiff's representations prior to the execution of the deed and joint venture agreement between Aaronisle, the first defendant and others that he had withdrawn his caveat over the land and thus did not claim an equitable interest in it pursuant to the 28 May deed of charge, the first defendant’s reliance on those representations and the first defendant thereby suffering damage.
Although not abandoning these allegations, the first defendant did not pursue them as grounds for submitting that there was not a serious issue to be tried between the parties. This was a wise approach as in order to be successful on any of these grounds the first defendant would have had to persuade me to depart from the views of the Commissioner in Aaronisle v Thorpe & Anor (supra). This is something that I would have been loathe to do, even if I was persuaded that there was no issue estoppel arising from the Commissioner's decision. Further, consideration of the disputes over factual matters which ground these allegations together with the complexity of the legal issues involved in them inevitably leads to a conclusion that there are serious issues to be tried between the parties in respect to them.
Instead the first defendant focussed on the following matters in order to persuade me that there was not a serious issue to be tried between the parties:
1.In respect to the 28 May deed of charge there are and can be no monies owing under the charge whilst the plaintiff is suspended from practice;
2.Similarly, only a legal practitioner can claim a statutory charge under the Legal Practitioners Act, s 73 and whilst the plaintiff is suspended he does not come within the definition of a legal practitioner; and
3.In respect to the November 2003 deed, all monies there under have been repaid.
4.The December 2002 representation did not create an equitable interest in the land and, in any event, all money has been repaid.
The first defendant further submits that the balance of convenience favours the removal of the caveat due to the plaintiff's contumelious delay in pursuing his claims and the prejudice to the first defendant in being unable to settle the contracts for sale of the caveated land. I will address each of these submissions in turn.

Suspension from practice

The first defendant's submissions assume that the deed of charge is effective. Further the first defendant does not dispute that the plaintiff performed legal work for Aaronisle for which he has not been paid. Nevertheless it says that the 28 May deed of charge only secures payment of the plaintiff's past and future legal costs. It submits that the plaintiff's costs are "limited to whatever costs (if any) [the plaintiff] at law is entitled to recover from Aaronisle …". It says that the plaintiff is not entitled to recover legal costs from Aaronisle because only a legal practitioner is entitled to be paid legal costs, the plaintiff was not a legal practitioner at the time he delivered the bills of costs to Aaronisle, that position has not changed and the quantum of his legal costs is therefore nil.
The plaintiff acknowledges that he cannot currently utilise the Legal Practice Act to assist him to enforce his claim to be paid for legal work that he has performed on behalf of Aaronisle. However, he submits that there is good reason to believe that that situation is temporary because he will succeed in his appeal against the Legal Practitioner's Disciplinary Tribunal's decision to suspend him and refer the matter to the Full Court. Alternatively, the plaintiff will seek to persuade the Full Court not to act on the referral or if it does to fashion its orders so as to enable him to serve his bills of costs for legal work done whilst he was a legal practitioner as defined by the statute and to sue on them. I am told that the matters before the Court of Appeal and the Full Court will not be heard until late this year.
During the hearing of this application I asked the plaintiff's counsel why the plaintiff had not sought to enforce his bills of costs by way of the general law or why he had not at the very least sought declaratory relief to the effect that he has an equitable interest in the land until the bills of costs are paid. I was advised that as Aaronisle's action against the plaintiff sought an account of what it owed the plaintiff, the plaintiff believed the matter would be resolved in CIV 1388 of 2005. I was also told, somewhat ambiguously, that there had also been reluctance to do that in light of the applications to the Full Court and the Court of Appeal. However, as mentioned earlier, the plaintiff has now filed a counterclaim in CIV 1388 of 2005 seeking these remedies.
The first defendant says that if the plaintiff is entitled to a quantum meruit in lieu of payment of his bills, his delay in pursuing such a claim is such that the balance of convenience is against extending the caveat on this basis and in any event it is doubtful that the 28 May deed of charge secures such a contingent entitlement.
In my opinion there is a serious issue to be tried between the parties as to whether the 28 May deed of charge created an equitable interest in the caveated land in favour of the plaintiff to secure payment to him of monies for legal work done by him for Aaronisle. There is also a serious issue to be tried between the parties as to whether that interest exists even though the plaintiff is presently suspended from practice. In coming to this view I have taken into account that the plaintiff may be able to serve his bills under the Legal Practice Act in the future or may presently be able to enforce payment under the general law, including by way of a claim on a quantum meruit. The answers to the issues depend upon the construction of the deed as well as a consideration of the law relating to the means, if any, by which a suspended legal practitioner may recover payment of monies for legal work done when he or she was not suspended. The answers to these questions in my opinion can only be resolved at trial. The question of the plaintiff's delay in attempting to recover these costs or have his alleged interest declared is a matter I will consider separately in respect to the balance of convenience.

Legal Practitioners Act, s 73

The Legal Practitioners Act (WA), s 73 (Repealed) stated:
"73. Practitioner's costs to be a first charge on the property recovered or preserved
In every case in which a practitioner shall be employed to prosecute or defend any suit, matter, or proceeding in any court of justice whatsoever, such practitioner shall be entitled to a first charge upon the property recovered or preserved, and such practitioner shall have a prior right to payment out of the same for the taxed costs, charges, and expenses as between solicitor and client of or in reference to such suit, matter, or proceeding; and the Court before which such suit, matter, or proceeding has been heard or is pending, or a Judge thereof in Chambers, may make ex parte such order or orders for taxation of and for raising and paying such costs, charges, and expenses out of the said property as to such court or Judge shall appear just and proper."
This provision was in force when the plaintiff allegedly did the legal work which he says gives rise to the charge.
The first defendant submits that there is a lack of evidence to support the plaintiff's assertion that he commenced court actions which had the effect of recovering and preserving the land and, in any event, only a legal practitioner is entitled to such a charge. Further it submits that the plaintiff has failed to enforce his costs.
In addition to his assertion in the statutory declaration in support of the caveat, the plaintiff deposes that one of the actions in which he acted for Aaronisle included an application for an injunction against a third party for removal of its caveat claiming an interest in the Northbridge land and another piece of litigation included an application for an injunction to prevent a mortgagee sale of the Northbridge land by a bank. Whilst I acknowledge that this material was not included in the caveat or the statutory declaration lodged in support of it, in my opinion there are sufficient details in those documents to identify the interest claimed and how it is said to arise. Thus, there is a serious issue to be tried between the parties as to this issue also.
I acknowledge that in addition to the question as to whether the legal work performed by the plaintiff for Aaronisle had the effect of recovering and preserving the land there will also be issues arising from the plaintiff's present status as a suspended legal practitioner. However, in my view that is an issue that must be decided after full argument at trial.
The plaintiff's failure to enforce the costs goes to the balance of convenience which I will consider later in these reasons.

Aaronisle's and Gray's alleged debts owed to the plaintiff

A considerable amount of time was spent at the hearing of this application by the first defendant attempting to satisfy me that all monies lent by the plaintiff to Aaronisle and Gray had been repaid. Similarly, the plaintiff spent some time attempting to convince me that they had not been. The onus is on the plaintiff to establish that there is a serious issue to be tried. It is not in dispute that the plaintiff lent substantial sums of money to Gray and Aaronisle. However, a number of matters are in dispute. For example, whether interest was payable, if so, at what rate and, taking into account the answers to those questions, whether the debt has been fully repaid. Even if it has not been fully repaid there is a question as to whether the debt that remains outstanding is secured by the November 2003 deed or the December 2002 representation.
After considering all the submissions made to me I am of the view that there is a serious issue to be tried between the parties as to whether the plaintiff has an equitable interest in the caveated land by virtue of the November 2003 deed. In arriving at this view I am mindful of the apparent strength of some of the first defendant's submissions in respect, for example, to the fixing of interest which is neither mentioned in the November 2003 charge, nor was it originally claimed by the plaintiff in his schedule presented to Gray. Nevertheless the plaintiff deposes that a rate of interest was agreed to by the parties. The plaintiff's claim can only be determined after that issue has been resolved as well as the issue as to whether the November 2003 deed secures interest. The issues must be resolved at trial where credibility issues can also be determined.
In my opinion there is not a serious issue to be tried between the parties as to whether the December 2002 representation or its repetition on other occasions, created a charge over the caveated land. The representation was not in writing and the words of the representation do not expressly or by implication display an intention to create an equitable charge as opposed to a contractual right.

The 20 October 2005 agreement

The plaintiff's counsel said to me that this was an alternative claim if I found against the plaintiff in respect to the other bases for the caveat. As I have not done so it is unnecessary for me to consider this claim.

Balance of convenience

This is a highly unusual case in that actions affecting the balance of convenience have occurred by agreement between the parties after the conclusion of the hearing of the application.
The main issue the first defendant relied upon in respect to the balance of convenience is the plaintiff's failure to prosecute his claims for money allegedly owed to him by Gray and Aaronisle. I agree with the first defendant's submissions in this respect. The plaintiff was slow in presenting his bills of costs to Aaronisle and Gray. Since the Registrar's decision he has done nothing, apart from the recent filing of the counterclaim, to pursue any remedy against his former clients. Similarly, in respect to the recovery of the other alleged debt from Aaronisle and Gray, the plaintiff was very slow to fully particularise his claim against Aaronisle and Gray and then to initiate legal proceedings to recover the alleged debt.
The first defendant's initial position at the hearing was that the caveat was preventing it from settling contracts for the sale of the caveated land and this was causing it considerable prejudice in that it was unable to use the settlement proceeds to pay its debts. It was thus incurring further interest costs. Further it was in breach of the contracts for sale and was thus exposed to the possibility that the purchasers would withdraw from the sales or take other action against the first defendant.
The first defendant's counsel was unable to tell me why the first defendant had entered into contracts for the sale of the caveated land when it knew that the plaintiff claimed to have an equitable interest in the land and had lodged a caveat over the land. The answer may be that first defendant believed that it would be able to negotiate with the plaintiff a situation where the caveat was withdrawn so as to enable settlement of the contracts as had happened with the sales of previously caveated lots. However, the fact remains that the first defendant entered into the contracts knowing of the plaintiff's claims.
The first defendant submitted that once settlement of the caveated lots occurred and another development bore fruit it would have sufficient resources to meet any judgment ordered against it. It also filed a late affidavit by Gray in which he deposes that the first defendant will have such funds.
If the situation had remained as it was at the hearing of the application I would have been prepared to extend the caveat on conditions that required the plaintiff to institute proceedings, or counterclaim in CIV 1388 of 2005 to seek the remedies he is now seeking in the counterclaim. Taking into account his delay to date I would have required him to prosecute these proceedings in a timely manner.
However, that situation has not prevailed. The plaintiff has withdrawn his caveat in respect of all but one lot and the first defendant has deposited money into trust pending the outcome of this application. There is now a rather unusual agreement between the parties so that whether or not that money stays in trust depends upon the outcome of the application. Further, as I have noted if the application is successful the plaintiff has agreed to withdraw the caveat.
If the money was to stay in trust the application would not succeed because the balance of convenience would not then favour the extension of the caveat. The existence of the trust fund would provide adequate security for the monies allegedly owed by Aaronisle and Gray to the plaintiff and the first defendant would be able to finalise the Northbridge land project. However, it is a circular argument because if the application does not succeed the money will not stay in trust.
In the circumstances I am prepared to order that the caveat be extended unless the sum of $353,000 remains in trust as per the undertakings in par 3 of the undertaking filed herein. Further, the extension of the caveat is on condition that the plaintiff expeditiously pursues the claims in the counterclaim, his appeal and, if the appeal is unsuccessful, the determination of the referral to the Full Court. It may be appropriate that I impose a condition that the plaintiff be required to apply to expedite CIV 1388 of 2005. Before I make final orders I will hear the parties on the issue of appropriate conditions.