Walthamstow Pty Ltd v Saliba

[2010] WASC 131

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   WALTHAMSTOW PTY LTD -v- SALIBA [2010] WASC 131

CORAM:   HALL J

HEARD:   19 MAY 2010

DELIVERED          :   19 MAY 2010

FILE NO/S:   CIV 1650 of 2010

BETWEEN:   WALTHAMSTOW PTY LTD

Plaintiff

AND

CARMEL CHARLES SALIBA
First Defendant

THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Caveat - Caveatable interest - Abridgement of time - Injunction to prevent further caveats

Legislation:

Transfer of Land Act 1893 (WA), s 138

Result:

Application to remove caveat granted
Injunction granted on limited basis

Category:    B

Representation:

Counsel:

Plaintiff:     Mr A J Musikanth

First Defendant             :     In person

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Taylor Smart

First Defendant             :     In person

Second Defendant         :     No appearance

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

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

Gangemi v Gangemi [2009] WASC 268

Milne Feeds Pty Ltd v Bride (Unreported, WASC, Library No 960247, 7 May 1996)

Patmore v Upton [2004] TASSC 77

HALL J:  (This judgment was delivered extemporaneously and edited from the transcript)

1. This is an application pursuant to s 138(2) of the Transfer of Land Act 1893 (WA) seeking the removal of a caveat on the land situated at 4 Carman Way Bassendean, that I will hereinafter refer to as 'the premises'. The plaintiff also seeks an injunction preventing the first defendant from lodging further caveats over specified properties. The second defendant is the Registrar of Titles, who has written to the court indicating he will abide by any orders made.

Urgency - Abridgement of time 

1. The originating summons was filed at the registry on 7 May 2010.  The rules provide that there should be 10 days between service and hearing, but the court has power to abridge that time if the circumstances justify.  Together with the originating summons, there was filed a certificate of urgency and an affidavit of Mr Steven Masel dated 7 May 2010.  The certificate certified that the matter was of such a nature that it was required to be heard urgently and that if service could not be effected within 10 clear days an abridgement of time would be sought.

2. The urgent nature of the matter is evident from the affidavit of Mr Masel.  The property in question is subject to a contract of sale which has already passed settlement date.  A clause in the contract permits settlement to be extended where delay is due to no fault of the vendor.  The plaintiff, as mortgagee in possession, is the vendor.  The extension period is no more than 90 days.  That time will expire on 25 May 2010.

3. Accordingly, the plaintiff is likely to be prejudiced by lapse of the contract if these proceedings cannot be heard and determined prior to 25 May 2010.  According to an affidavit of Mr Saul Davies sworn 12 May 2010, who is the solicitor for the plaintiff, at the time of filing the originating summons he sought a hearing date that was prior to 25 May 2010, but would still allow for 10 days for service.  This was only a small window of time and, for whatever reason, the registry was unable to give such a date.

4. However, an urgent listing date was available on 14 May 2010 and that date was endorsed on the originating summons.  The originating summons, affidavit of Mr Masel of 7 May 2010 and the certificate of urgency were then served on Mr Saliba, the first defendant, at 9.00 am on 11 May 2010.  Those documents were sufficient for Mr Saliba to understand the nature of the application and the basis for it. 

5. The time for hearing was originally 10.30 am on 14 May 2010, but this was changed administratively to 2.15 pm on the same day.  At about midday on 11 May 2010, Mr Davies telephoned Mr Saliba and advised him of this change.  Mr Saliba appeared at 2.15 pm on 14 May 2010 and sought an adjournment.  He complained that he had not been given 10 days and that he needed time to arrange legal representation.  He said he had made some efforts to obtain a lawyer but had been unsuccessful. 

6. Without objection from the plaintiff, I allowed an adjournment to today, 19 May 2010, at 2.15 pm.  I stressed to Mr Saliba the importance of availing himself of this opportunity and he said that he thought he could obtain a lawyer in that time frame.  I also ordered that any affidavits on behalf of the first defendant were to be filed and served by close of business, being 4.00 pm, on 18 May 2010.  No such affidavits were filed. 

7. Today Mr Saliba has again appeared without a lawyer.  He says he has made efforts but been unable to obtain one.  He has sought a further adjournment.  True it is that 10 days has not elapsed since service was effected on 11 May 2010, but eight days have.  Furthermore, the issue is one of substance, not mere procedure.  The fact is that the court has power to abridge time in cases of urgency.

8. Bearing in mind that Mr Saliba was served on the morning of 11 May 2010 and has, in my view, had adequate opportunity to read, understand and file any response or to adduce any further evidence, that the matter has already been listed once and adjourned and Mr Saliba clearly understood at that time the urgency of the matter.  Given that the matter is urgent and prejudice will occur if the matter is delayed and that there is no clear indication that, if given further time, Mr Saliba would obtain representation, I am satisfied that an abridgement is appropriate and I also refuse a further adjournment.

9. Given that Mr Saliba is unrepresented, I gave him considerable indulgence in presenting his case.  That included giving evidence on oath, notwithstanding no affidavit had been filed.  I understand that he has brought out all relevant facts which he believes relate to the caveat.

Background history 

1. I turn then to the merits of this matter.  The first defendant, Mr Saliba, is the registered proprietor of the premises.  The plaintiff holds a registered mortgage over the premises which secures an amount of $1.2 million.  That amount was lent by the plaintiff to Mr Saliba on terms that required repayment of the principal sum by 10 February 2009.  There was also a requirement to pay interest monthly.

2. In the event of default the plaintiff was entitled to make immediate demand for the repayment of the principal and any interest outstanding.  If default continued for seven days the plaintiff was entitled to exercise a power to sell the premises.  The mortgage was registered on 7 April 2008.  The mortgage also related to 15 other parcels of land owned by Mr Saliba.

3. An affidavit of a director of the plaintiff, Mr Steven Alick Masel, who I have referred to earlier, has been filed in these proceedings.  In that affidavit Mr Masel attests that the first defendant fell into arrears with interest payments due under the mortgage.  In consequence, Mr Masel wrote to Mr Saliba on 23 July 2008, agreeing to defer taking recovery action on the arrears existing at that date for a period of three months. 

4. In consideration for this forbearance Mr Saliba agreed to pay an additional three months' interest in specified circumstances.  In the months that followed, Mr Saliba continued to fall into arrears.  On 14 October 2008, Mr Masel wrote to Mr Saliba confirming an agreement to extend the loan for 12 months to 11 February 2010.  On 20 October 2008, Mr Masel wrote agreeing to defer taking recovery action in relation to the arrears then existing until 1 December 2008 on condition that an additional 1 per cent interest was paid on all moneys owing.  Mr Saliba countersigned both letters on 27 October 2008, signifying his agreement.

5. By May 2009, Mr Saliba had again fallen significantly into arrears.  On 30 May 2009, Mr Masel served Mr Saliba with a default notice, calling on him to repay the principal sum together with arrears, interest and legal costs within seven days.  The default was not remedied and pursuant to the mortgage the plaintiff took possession of five of the secured parcels of land, including the premises.

6. Three of those properties were sold.  One of them was a property known as 80 Crawford Street, Cannington.  Mr Saliba lodged a caveat in respect of that property.  The plaintiff made application for it to be removed and an order for removal was made by the Chief Justice on 5 October 2009.

7. On 16 December 2009, Mr Masel signed a contract for sale of the premises to Mr John Charles Saliba, the son of the first defendant.  That contract was subject to finance approval within 28 days.  That time expired.  The son also spoke to Mr Masel and said that he did not wish to proceed with the purchase.  The contract was terminated on or about 18 January 2010.

8. A new contract was then entered into with different purchasers on 19 January 2010.  Settlement of that contract was due on 24 February 2010.  However, on 17 February 2010, Mr Saliba lodged the caveat that is the subject of these proceedings.  That caveat has prevented settlement proceeding.

9. As previously mentioned, a clause in the new contract permits settlement to be extended by up to 90 days.  That period would expire on 25 May 2010.  Mr Masel attests that if the caveat is not removed prior to 25 May 2010, the contract will become liable to be terminated.  Mr Masel deposes that as at 11 April 2010, the outstanding interest owed by the first defendant under the mortgage amounted to $535,691.93 and that additional interest had continued to accrue since that date at a daily rate of $832.35.

The caveat - is there a caveatable interest?

1. The caveat in question was supported by two statutory declarations dated 17 February and 2 March 2010.  They are handwritten and somewhat difficult to make sense of.

2. As best can be made out, the first statutory declaration asserts that the first defendant had at some unidentified time paid $30,000 to the plaintiff towards the interest owing.  He then states that he made an offer to Mr Masel to make further payments but that this offer was declined.  He says that he has a right to negotiate with the mortgagee and that Mr Masel agreed to draw a new mortgage to cover the outstanding interest.  This is quite contrary to the affidavit evidence of Mr Masel.

3. The second statutory declaration asserts that the first defendant's son was going to purchase the premises but that finance was not approved.  The claim that $30,000 was paid towards arrears is then repeated.  It is then stated that the first defendant had obtained finance approval to pay out the mortgage, that he paid Mr Masel a further $10,000 and that Mr Masel said he would let him know.  He then learned that the premises had been sold to another person and that he contacted Mr Masel seeking to know how much he had to pay in arrears to avoid the premises being sold to someone else.  The statutory declaration concludes by asserting that the first defendant had a right to pay the mortgage before the premises were sold.

4. There is some inconsistency between the statutory declarations.  Insofar as the first could be interpreted as suggesting that Mr Masel had agreed to forego default action in return for a further mortgage, that interpretation is not available when the second statutory declaration is taken into account.

5. The first defendant does not claim that he was ever in a position to tender a bank cheque that would pay out all the outstanding obligations, including principal, arrears and costs owing to the plaintiff.  The most that could be said about the statutory declarations is that the first defendant believed that he had some right to negotiate payment of arrears and, in the meantime, prevent the plaintiff from exercising its rights under the mortgage.  Not only is this an incorrect understanding of the operation of the mortgage but it creates no interest in the land that could provide the first defendant with a caveatable interest.

6. In evidence today Mr Saliba has given a similar account of his dealings with Mr Masel.  He said that in December 2009 he had met with Mr Masel and offered to pay $30,000 in reduction of arrears if Mr Masel accepted an offer to purchase the premises from Mr Saliba's son.  A letter apparently signed by Mr Masel was produced that confirmed that such an agreement was reached.  That letter also states that in the event of the sale to the son falling through, $25,000 would be treated as a payment of interest owing and the $5,000 deposit on the contract would also be retained for this purpose, which appears to make the $30,000 which Mr Saliba was referring to.

7. What seems clear from this is that this was a separate agreement relating to the sale of the premises.  It does not appear to compromise the power of the mortgagee to continue with its power of sale.  Indeed, it assumes the existence of that power.  There is nothing to suggest that this arrangement completely satisfied the arrears or remedied the default in the mortgage.

8. The contract with the son fell through due to a failure to obtain finance.  Mr Saliba said in evidence that he and his son had strong emotional attachments to the property and that he then sought other ways to try to keep it.  This included seeking alternative finance.  Emails in this regard appear to confirm that Mr Saliba had a mortgage broker who was pursuing a loan from a finance company but no loan had been approved by 20 January this year and indeed, a new sale contract had been entered into by the plaintiff on the day prior, 19 January 2010.

9. Mr Saliba says he kept Mr Masel informed regarding his efforts and that the loan was ultimately approved.  There is nothing to confirm this.  In any event, as mentioned, there is no evidence that Mr Saliba has ever been in a position to tender funds to Mr Masel or the plaintiff that would meet all principal and interest owing.  There was reference by Mr Saliba to him making an offer to Mr Masel of $10,000 which was intended to be a part-payment of the arrears that were owing.  Whatever the specific terms of this offer were, they were clearly refused by Mr Masel, even on the evidence of Mr Saliba.

10. Mr Saliba's emotional attachment to the premises appears to be very strongly based.  I accept that he has made strenuous efforts to try and retain the property.  However, those endeavours have not compromised or in any way affected the plaintiff's powers under the mortgage.  Mr Saliba may well have sincerely hoped that the plaintiff would give him more time or would offer him some indulgence but the plaintiff was under no legal obligation to do so and was entirely within its rights to proceed with a mortgagee sale.

11. There was a suggestion that the property was being sold by the plaintiff at significantly less than its true value.  No expert evidence that would enable me to make any finding in that regard exists.  In any event, it is a suggestion that is considerably undermined by the fact that the sale price under the current contract is some $26,000 more than the offer made by Mr Saliba's son in December of 2009.  Accordingly, the evidence given today also does not establish, in my view, any caveatable interest.

12. I note that there is in any event an open question of whether it is possible for a registered proprietor to lodge a caveat over his own land in order to prevent a dealing by a mortgagee:  Patmore v Upton [2004] TASSC 77. But it is not necessary to determine that issue on the facts of this case.

13. In proceedings under s 138 of the Transfer of Land Act the onus rests on the caveator to demonstrate that there is a serious question to be tried as to whether there is a valid caveatable interest: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42. A registered proprietor is not entitled to lodge a caveat merely because he is the registered proprietor. There must be some interest over and above that status before it can be said that there is a registrable interest: Patmore v Upton.

14. Notwithstanding the shortness of time with which these proceedings have been brought on, Mr Saliba has had since 17 February 2010 to lodge statutory declarations to support his caveat.  He has availed himself of that opportunity and those statutory declarations disclose no arguable basis for claiming a caveatable interest, nor indeed does his evidence given here today.  Accordingly, I am of the view that an order for removal of the caveat must be made.  I am also satisfied that sufficiently urgent circumstances exist to make that order now and in doing so abridge time for service of the originating summons.

Injunction

1. I then turn to the question of an injunction.  The court has jurisdiction to grant an injunction restraining a party from conduct which is lawful, on the ground that it is necessary, in the interests of justice, to protect a particular litigant from a multiplicity of actions and to order the business of the court; Milne Feeds Pty Ltd v Bride (Unreported, WASC, Library No 960247, 7 May 1996) (Murray J) [17] and Gangemi v Gangemi [2009] WASC 268.

2. The plaintiff seeks an injunction restraining the first defendant from lodging a caveat over any of the properties listed in annexure A to the originating summons.  Those 13 properties are also mortgaged in favour of the plaintiff pursuant to the same mortgage as referred to in these proceedings.  The plaintiff submits that there is a real risk that the first defendant, Mr Saliba, will lodge further caveats.  The grounds for that concern appear to be that two caveats were previously lodged over the 80 Crawford Street, Cannington property and were removed by order of the Chief Justice.

3. I note that in Gangemi a similar issue arose and Murphy J was persuaded to grant an injunction of the type sought when it became apparent, as a result of things said at the hearing, that there was a real risk that the defendant in those proceedings would lodge further caveats on the same grounds as those which had been found to be without merit.

4. The difficulty in this case is that there has been no express statement by the first defendant, Mr Saliba, that he intends to lodge further caveats on the same basis; in fact, to the contrary.  He has denied any intention to do so.  Furthermore, it is difficult for me to draw any inference from the Cannington caveats, as they appear to have been based on different grounds.

5. I would be prepared to grant an injunction in regard to the premises the subject of these proceedings; that is, the premises that are the first named in annexure A, but not the others, given that I am not satisfied that there is evidence forthcoming that the risk of caveats being lodged in respect of other properties is established by the evidence that is available.

6. In terms of the limited injunction that I am prepared to order, the balance of convenience appears to me to clearly favour the plaintiff.  It appears clear that the first defendant is heavily burdened with debt.  He is unlikely to be able to meet any claim for damages or the costs relating to applications that might be made to remove further caveats on 4 Carman Way.  Thus the justice of the case requires an injunction in relation to those premises.