| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : TRANS PETROLEUM (AUSTRALIA) PTY LTD -v- BOOMER HOLDINGS PTY LTD & ORS [2003] WADC 217 CORAM : REGISTRAR KINGSLEY HEARD : 21 AUGUST 2003 DELIVERED : 3 OCTOBER 2003 FILE NO/S : CIV 1142 of 2003 BETWEEN : TRANS PETROLEUM (AUSTRALIA) PTY LTD (ACN 074 714 668) Plaintiff
AND
BOOMER HOLDINGS PTY LTD (ACN 009 306 601)
First Defendant
IAN KENYON KING AND ROSEMARY ANNE KING
First and Second Named Second Defendants
PALLE ELI STEENSEN AND BRIDGET MARY STEENSEN
Third and Fourth Named Second Defendants
Catchwords: Practice - Order 14 Rules of the Supreme Court - Unregistered lease - Guarantee under the lease
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Legislation:
Property Law Act, s 77
Real Property Act (Qld), s43
Rules of the Supreme Court, O 14
Transfer of Land Act, s 68(1)
Result: Application refused Representation:
Counsel:
Plaintiff : Mr M W Fatharly
First Defendant : Mr T J Carmady
First and Second Named Second Defendants : Mr T J Carmady
Third and Fourth Named Second Defendants : Mr S Shaw
Solicitors:
Plaintiff : Kott Gunning
First Defendant : Williams & Hughes
First and Second Named Second Defendants : Williams & Hughes
Third and Fourth Named Second Defendants : Dwyer Durack
Case(s) referred to in judgment(s):
Breskvar v Wall (1971) 126 CLR 376
Chan v Cresdon Pty Ltd (1989) 168 CLR 242
Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407
Case(s) also cited:
Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218
Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
De Landgrafft v Brown (1993) 9 SR (WA) 236
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Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
P & A Swift Investments (a firm) v Combined English Stores Group plc [1989] AC 632
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1 REGISTRAR KINGSLEY: The plaintiff brings the summary judgment application against the first defendant and against the second defendants for the sum of $155,456.33 together with interest.
2 The plaintiff's claim against the defendants arises pursuant to an undated but stamped lease made in July 1998 between Summit Properties Pty Ltd as lessor and the first defendant as lessee and second defendants as guarantors. By a Contract for Sale of Land Summit Properties sold the premises to the plaintiff in December 2000. The plaintiff pleads that by operation of s 77 of the Property Law Act the rent and benefits of the lease were assigned from Summit Properties to the plaintiff upon the assignment of the premises. The lease was for a term of 15 years commencing 6 September 1988 and the lease has not been registered. In addition no caveat has been lodged to protect the lease. 3 The plaintiff became the registered proprietor of the premises in March 2001. At that time the lease had three years to run. The first defendant was in actual possession. 4 The plaintiff argues that the plaintiff acquired the property subject to the lease. The plaintiff's argument is that s 68(1) of the Transfer of Land Act provides there is paramountcy of registration of an estate or interest subject to any prior unregistered lease or agreement for lease or for letting for a term not exceeding five years to a tenant in actual possession notwithstanding that the unregistered lease or agreement for lease may not be specifically notified as an encumbrance. Thus the plaintiff argues that as there was a tenant in actual possession and that the term remaining was less than five years then the plaintiff took the land subject to the lease. 5 In my opinion that would be defeating the intent of s 68(1) of the Transfer of Land Act. The clear intent of s 68(1) of that Act is that the whole of the term should not exceed five years. In this case the term was for 15 years. I am of the opinion that this argument is not arguable on the part of the plaintiff. 6 The lease has not been registered on the title. The lease is therefore an equitable lease. However, the equitable lease was unprotected by any caveat. The Torrens system is a system of title by registration. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor (Breskvar v Wall (1971) 126 CLR 376 at 385). Windeyer J in Breskvar at 400 described the Torrens system of title as "cutting off the retrospective or derivative character of the title upon each transfer or transmission, so as that each freeholder is in the
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same position as a grantee direct from the Crown". In Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 at 418 Mason CJ and Dawson and McHugh JJ stated: "This passage supports the view that the effect of the registration of a subsequent dealing bringing about the registration or proprietorship of an estate or interest in land is to extinguish all prior unregistered estates or interests which, but for that registration, would have conflicted with the proprietor's estate or interest or encumber that estate or interest, unless the prior unregistered estate or interest falls within the exceptions to indefeasibility of title mentioned in s 68." 7 Their Honours go on to say: "Once that interest is defeated by registration of a subsequent inconsistent dealing bringing about the registration of a new proprietor, the first interest is extinguished for all purposes and cannot be asserted against any later proprietor." 8 At page 419 their Honours further comment: "The acquisition of the legal title by such a purchaser in those circumstances defeats the prior equitable interest in the sense that the interest is destroyed." 9 The defendants argue that as of March 2001 the lease ceased to be effect and the guarantees under that lease then ceased to bind the second defendants. The plaintiff may well have elected to allow the first defendant to remain in possession upon registration of the plaintiff as registered proprietor. This may well have created a new equitable lease containing all the terms of the previous lease. But equally, after March 2001 all that was created was a tenancy of uncertain duration. On that issue this is a matter of evidence. 10 The guarantee of the second defendants was of the obligations under the first unregistered lease. The second defendants cite Chan v Cresdon Pty Ltd (1989) 168 CLR 242 as authority for the proposition that the guarantee does not operate with regard to any new lease created after March 2001. 11 The plaintiff's counsel argues that Chan v Cresdon (supra) is distinguishable in that under the provisions of the Real Property Act (Qld) no instrument was effectual to pass any estate or interest in land until
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registration. The lease in Chan v Cresdon was in registrable form but had never been registered. In this case there is no reference to registration and it is not possible, in its present form, for the lease to be registered. Thus plaintiff's counsel argues that it is not possible for the lessee to obtain an order for specific performance for registration of this lease. Thus absence of registration does not mean there are no obligations to be performed by the defendants. Whilst that may be true as against the first defendant it is certainly in my opinion arguable as against the second defendants in relation to the guarantee. 12 The plaintiff's counsel argues that Leros Pty Ltd v Terara Pty Ltd (supra) is distinguishable from the present case in that it only relates to an option of purchase or renewal in any such lease or agreement. However, in my opinion the passages cited above have broader application than being limited to an option for renewal of a lease. 13 In my opinion it is arguable that upon registration of the plaintiff in March 2001 the equitable lease was extinguished. That being the case and the guarantors not having entered into any new guarantee with the present plaintiff it is arguable that the guarantors are no longer bound by the guarantee in the lease. 14 Accordingly I dismiss the plaintiff's application. The costs will be costs in the cause. |