Supreme Court of WA|2004-03-05|Before: Miere J

Professional Services of Australia Pty Ltd v Mila Properties Pty Ltd & Anor [2004] WASC 30 (5 March 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD -v- MILA PROPERTIES PTY LTD & ANOR [2004] WASC 30

BETWEEN : PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD (ACN 082 879 641)

Caveat - Application to amend caveat - Power of court to amend caveat pursuant to s 138 of the Transfer of Land Act - Power of court to extend caveat pursuant to s 138C of the Transfer of Land Act - Whether the court has the power to amend caveat to claim a different estate or interest

Caveat - Leave to file fresh caveat - Power of court to grant leave - Serious question to be tried - Existence of arguable case - Questions of fact - Questions of law

Caveat - Construction of written agreement - Rectification - Rectification for common mistake - Erroneously recorded prior agreement - Erroneously recorded common intention

Caveat - Contractual right to lodge caveat - Contractual right to lodge caveat and implied grant of interest in the land

Bonini & Anor v Western Australian Real Estate Custodian Ltd & Anor [2001] WASC 258

Brooks v Quartz Holdings Pty Ltd (1989) V Conv R 54-328

Commonwealth Bank of Australia v Garon Pty Ltd & Ors [1999] WASC 170

Cruz v Osborne [1999] WASC 8

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

Delma Investments Pty Ltd v Shillito [1971] VicRp 54; [1971] VR 442

Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129

Eades & Ors v Reilly & Anor, unreported; SCt of WA; Library No 980675; 20 November 1998

Elliot v Blanshard (1970) 17 FLR 7

Eng Mee Yong v Letchumanan [1980] AC 331

Evandale Estates Pty Ltd v Keck [1963] VicRp 88; [1963] VR 647

Giacci Bros Pty Ltd v Tyrrell, unreported; SCt of WA; Library No 980106; 18 February 1998

Goldfields Homes Pty Ltd v Jones & Anor [2000] WASC 139

Halse v Embling, unreported; FCt SCt of WA; Library No 970734; 22 December 1997

His Grace Metropolitan Petar & Ors v Macedonian United Society of Western Australia Inc & Ors [2003] WASC 15

Hughan v Gray & Anor [2002] WASC 164

Jandric v Jandric & Anor [1999] WASC 22

Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419

Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22; (1992) 174 CLR 407

M L Johnson & Sons Pty Ltd v Ostrek Pty Ltd (1992) V Conv R 54-441

Midland Brick Company Pty Ltd v Welsh & Anor [2002] WASC 248

Midwarren Estates Pty Ltd v Retek [1975] VicRp 56; [1975] VR 575

Milne Feeds Pty Ltd v Bride (1993) 10 WAR 542

Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd & Anor [2001] WASC 104

Sanctuary Park Estate Toodyay Pty Ltd v Griffin Plant Hire Pty Ltd [2003] WASC 174

Simons v David Benge Motors Pty Ltd [1974] VicRp 69; [1974] VR 585

Sullivan v McMahon & Anor [1999] WASC 84

The Official Trustee in Bankruptcy as trustee for the Property of David Maxwell James, A Bankrupt v James & Anor [2001] WASC 66

Wilkin v Scardina [2003] WASC 144

1 LE MIERE J: The plaintiff has applied by notice of originating motion dated 6 November 2003 for orders concerning caveat I309342 lodged by the plaintiff over the property known as and situated at Lot 970 Anchorage Drive, Mindarie, and being the whole of the land comprised in Certificate of Title Volume 2546, folios 948 to 951 inclusive. The plaintiff seeks orders amending the caveat, extending the operation of the caveat or such other relief as the Court shall see fit.

2 Martin Paul Banning is the sole director of the plaintiff company. John Andrew Miller is the sole director of the first defendant. The second defendant, the Registrar of Titles, has taken no part in these proceedings.

3 The caveat the subject of these proceedings was dated 27 November 2002. The plaintiff is the caveator. The first defendant is the registered proprietor of the land in respect of which the caveat has been lodged. The caveat is an absolute caveat.

4 On the caveat form the caveator claims an estate or interest by virtue that "the caveator is secured as a guarantor for money borrowed by the registered proprietor from the ANZ Bank and Lot 970 Anchorage Drive, Mindarie, is security for the caveator until the loan is repaid".

5 There is no dispute that the plaintiff was entitled to lodge the caveat. Nor is there any dispute that but for the agreement to which I will shortly refer the caveat cannot be maintained. That is because the money borrowed by the first defendant from the ANZ Bank has been repaid, and therefore the estate or interest claimed in the caveat has ceased to exist.

6 The plaintiff seeks to amend the caveat to claim an estate or interest as equitable chargee pursuant to a written agreement made in and during 2001 between the plaintiff and Mr Banning on the one part and the first defendant and Mr Miller on the other part. The plaintiff then seeks an order that the operation of the caveat so amended be extended. I will first make reference to the agreement that is the subject of the amendment sought to the caveat.

7 In 2001 Mr Banning and Mr Miller, as representatives of the plaintiff and the first defendant respectively, agreed to develop as a joint venture a block of land situated at the corner of Blencowe Street and Cambridge Street, West Leederville. The development involved the construction and subsequent sale of three one-bedroom units and two two-bedroom units. The expected profits were to be split equally between the plaintiff and the defendant. The first defendant purchased the Blencowe Street land in October 2000 and was registered as the proprietor of the land on 9 February 2001.

8 In about November or December 2001 Mr Miller met with Mr Banning and discussed certain claims made by Asoc Kumar and Renu Kumar (together "Kumar") against Mr Miller and Topmall Pty Ltd, a company controlled by Mr Miller. Mr Miller said that Kumar was prepared to settle these claims on certain terms which included, amongst others, that the first defendant would complete the construction of one of the two-bedroom units on that part of the Blencowe Street property known at the time as proposed strata unit 5 and transfer it to Kumar free of charge. Mr Miller asked Mr Banning if he would agree on behalf of the plaintiff to the proposed transfer of the strata title unit to Kumar and stated that if Mr Banning so agreed, Mr Miller and the first defendant would guarantee that neither the plaintiff nor Mr Banning would suffer any losses from the project. It is common ground that those matters were agreed.

9 It was also agreed that the plaintiff should be entitled to lodge a caveat to protect its interests. Mr Banning has deposed that it was agreed that Mr Miller and the first defendant would allow the plaintiff to secure itself against any loss by the lodgement of a caveat over the interests of the first defendant in any realty registered in the name of the first defendant. However, Mr Miller says that the agreement was that the plaintiff could lodge a caveat over the Blencowe Street land as security for the payment of the moneys on completion of the sale of the units, and further, that it was contemplated by the agreement that the plaintiff would withdraw the caveat in exchange for the payment of the moneys. It is common ground that Mr Banning prepared a handwritten agreement (the written agreement) which was signed at the meeting by Mr Banning and Mr Miller on behalf of the plaintiff and the first defendant respectively.

10 Mr Miller deposes that his discussions with Mr Banning at the meeting, both before and after he signed the written agreement, related solely to the Blencowe Street land and the project to develop that land. He says they did not discuss the Mindarie land or any of the other properties owned by the first defendant. He denies that there was any discussion at all concerning the right of the plaintiff to lodge a caveat over the interests of the first defendant in any land registered in the name of Mila Properties Pty Ltd.

11 The written agreement is a short document. I will set it out in full:

"It is hereby agreed that Martin Banning and Professional Services of Australia Pty Ltd will agree to allow John Miller and/or his company to transfer one of the two-bedroom units situated on the corner of Blencowe and Cambridge Streets, West Leederville, valued at $295,000 to Asoc Kumar or his nominated company free of charge to settle a legal dispute between John Miller and/or his company and Asoc Kumar and/or his company providing that John Miller and Mila Properties Pty Ltd jointly and severally guarantee that Martin Banning and Professional Services of Australia Pty Ltd will not lose any money out of the joint project and that John Millar and/or Mila Properties will pay Martin Banning and/or Professional Services of Australia Pty Ltd all moneys they put into the project on demand once the project is finished. John Miller and Mila Properties Pty Ltd hereby give Professional Services of Australia the right to caveat the interests of Mila Properties Pty Ltd as well."

12 The written agreement is signed by John Miller and Martin Banning.

13 As I have said, it is common ground that the operation of the caveat cannot be extended unless the caveat is amended so as to claim an interest or estate arising from the written agreement.

14 Section 138 of the Transfer of Land Act 1893 provides that the registered proprietor may summon the caveator to attend before the Supreme Court or a Judge in chambers to show cause why the caveat should not be removed and on such an application the Court may make such order as to the Court may seem fit. The preponderance of authority favours the view that on the return of a summons to show cause why a caveat should not be removed under s 138 the power "to make such order in the premises ... that to such Judge may seem fit" includes a power to order that the caveat be amended: Porter v MacDonald & Registrar of Titles [1984] WAR 271 at 275.

15 However, this is not an application for the removal of a caveat under s 138. This is an application brought under s 138C for an order extending the operation of the caveat. Subsection 138C(2) provides that on the hearing of an application under subsection 138C(1) the Court -

"(a) if satisfied that the caveator's claim has or may have substance -

(i) may make an order extending the operation of the caveat for such period as is specified in the order;

(ii) may make an order extending the operation of the caveat until the further order of the Court; or

(iii) may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;

(b) if not satisfied that the caveator's claim has or may have substance, shall dismiss the application; and

(c) may make such ancillary orders in relation to the application as it thinks fit."

16 Subsection 138C(2) does not vest in the Court a discretion to make "such order as it thinks fit". There is no such provision in s 138C. In New Zealand Mortgage Guarantee Co Ltd v Pye [1979] 2 NZLR 188 at 198 and Nichols Constructions Pty Ltd v Henry [1995] ANZ Conv 192 at 194, it was held that legislation similar to s 138C conferred no power to amend a caveat to claim a different estate.

17 The power conferred by s 138C(1)(a)(iii) is conditioned by the requirement that the Court be satisfied that the caveator's claim has or may have substance. In my view "the caveator's claim" refers to the estate or interest claimed in the caveat. If the caveator's claim in the caveat has no substance then the Court does not have power under s 138C(1)(a)(iii) to amend the caveat to claim a different estate. The plaintiff's claim in the caveat has no substance. The interest that justified the lodging of the caveat no longer exists.

18 In my opinion, the Court does not have power under s 138C to amend the caveat in the manner sought by the plaintiff.

19 If I had concluded that the Court had power to amend the caveat I would not have exercised that power in this case. The plaintiff seeks to amend the caveat by substituting for the estate or interest claimed in the existing caveat an entirely different estate or interest arising from a different instrument and a different transaction and set of circumstances.

20 Section 138D of the Act provides that if a s 138A caveat, which the caveat in question is, has lapsed under s 138B(2), which the caveat in question will if the Court does not make an order extending its operation, then the caveator cannot lodge with the Registrar any further s 138A caveat in respect of the same land unless, amongst other things, the Court has made an order giving leave for the lodgement of a further caveat.

21 The first defendant concedes that the Court has power under s 138D(1)(e) to make an order giving the plaintiff leave to lodge a further caveat in respect of the Mindarie land. However, the first defendant says that the Court should not exercise its discretion to grant leave.

22 In my opinion the Court should refuse leave to lodge a new caveat if upon a subsequent application being made to remove the caveat the Court would remove the caveat, or if upon a subsequent application being made by the plaintiff to extend the operation of the new caveat the Court would dismiss that application.

23 The principles applied by the Court when considering applications to extend a caveat closely resemble the principles applied by the Court when considering the removal of a caveat.

24 The Court takes the approach that the parties should be given full opportunity to determine their rights by action, particularly if facts are genuinely in dispute. Accordingly, the Court will not generally determine disputed facts upon an application to extend a caveat.

25 Nevertheless, the caveator must place some material evidence before the Court.

26 In recent cases involving applications to extend a caveat, the Court has held that the caveator must show a serious question to be tried or an arguable case for maintaining the caveat. Usually this means that the caveat must show a serious question to be tried, or an arguable case that as at the date of the application for extension the caveator has a caveatable interest. Section 138C(2) requires the Court to consider whether it is satisfied that the caveator's claim has or may have substance. By the second alternative, it seems to me that the Court considers whether the evidence satisfies it that there is an arguable case that at the final hearing of the relevant proceedings the caveator may succeed in convincing the Court that the claim made in the caveat is established. Where the caveator's claim is based on matters of fact, the Court will apply the same rules as it does in interlocutory injunction proceedings when considering whether there is an arguable case. In cases where the claim depends on questions of law, the Court will normally decide the question of law, but it may consider it appropriate not to do so where the question of law may depend on the factual matrix and facts have not yet been established, or where there is insufficient time to be able to properly consider the point of law which arises.

27 The principal issue between the parties concerns the interpretation of the sentence "John Miller and Mila Properties Pty Ltd hereby give Professional Services of Australia the right to caveat the interests of Mila Properties Pty Ltd as well". The plaintiff says that "the interests of Mila Properties Pty Ltd" means the interest of Mila Properties Pty Ltd in any land of which it is the registered proprietor. The first defendant says that "the interests of Mila Properties Pty Ltd" refers to the interest of Mila Properties Pty Ltd in the Blencowe Street property.

28 In my view, the plaintiff's interpretation is not maintainable. The written agreement is concerned with the Blencowe Street property. In consideration for Mr Banning and the plaintiff allowing Mr Miller and the first defendant to transfer one of the two-bedroom units on the Blencowe Street property to Kumar, Mr Miller and Mila Properties guaranteed that Mr Banning and the plaintiff would not lose any money out of the joint project. The joint project is clearly a reference to the joint venture to develop the Blencowe Street property. Further, Mr Miller and Mila Properties agreed to pay Mr Banning and/or the plaintiff all moneys they put into the project on demand once the project was finished. In those circumstances, I am of the opinion that viewed objectively the interests of Mila Properties refers to the interests of Mila Properties in the Blencowe Street property.

29 There is another reason to support that conclusion. In his affidavit of 28 November 2003, Mr Miller deposes that the first defendant holds the Mindarie land as trustee for the Mindarie Property Trust. In his affidavit of 5 February 2004 Mr Banning deposed that he was aware from his dealings with Mr Miller in relation to the Blencowe Street project that the first defendant acted as trustee for the Blencowe Property Trust. Counsel for the plaintiff submitted that Mr Miller made the written agreement on behalf of Mila Properties Pty Ltd in its capacity as trustee of the Blencowe Property Trust, the Mindarie Property Trust and any other entity that was the beneficial owner of property of which the first defendant was registered proprietor. In my view, that is a strained construction of the written agreement and does not give rise to a serious question to be tried.

30 I am of the opinion that on the proper construction of the written agreement it confers no right on the plaintiff to caveat the interest of the first defendant in any land, (aside from the Blencowe Street land), of which the first defendant is the registered proprietor.

31 In oral argument the plaintiff raised the possibility of rectification of the written agreement to reflect the agreement that is imputed to the parties that the plaintiff may lodge a caveat over the interest of the first defendant in any land of which it was the registered proprietor.

32 Rectification is not referred to in the affidavits filed on behalf of the plaintiff, nor in the plaintiff's outline of submissions.

33 Rectification for common mistake can be employed in two circumstances. The first is where a prior agreement is reached and the parties then inaccurately record that agreement in a written document. The second is where the parties have formed a common intention not amounting to a concluded bargain and they have then drawn up a contract to give effect to that intention but it fails to do so because of some shortcoming in the drafting. Mr Banning does not depose in his affidavits that there was a prior agreement reached before the written agreement was signed. In his affidavit sworn 6 November 2003 Mr Banning deposes that he told Mr Miller that he was prepared to agree to the transfer of the unit to Kumar on the condition that Mr Miller and the first defendant signed an agreement on specified terms.

34 If the common mistake is sought to be established not by reference to the terms of a previously concluded agreement, but by reference to the intention of the parties mistakenly expressed in the final instrument, that intention must be concurrent in all respects. The Court must be satisfied by positive proof of a common and continuing intention. It will not act upon evidence merely of the unilateral intention of one party. Nevertheless, it seems that it is possible to adduce evidence of the parties' intentions to show that they had a common intention and it is also possible to use both pre-contractual and post-contractual statements from which can be inferred the requisite common intention: see Cheshire & Fifoot's "Law of Contract", 7th Australian ed at [12.32].

35 Mr Miller denies that there was any agreement on the terms alleged by the plaintiff. The conduct of the parties subsequent to the making of the written agreement offers no support to the plaintiff's position. The plaintiff lodged no caveat over the Mindarie property in reliance upon the written agreement.

36 In his affidavit of 6 November 2003 Mr Banning deposes that he told Mr Miller one of his terms for agreeing to the transfer of the unit to Kumar was that Mr Miller and the first defendant "would allow the plaintiff to further secure itself against any such loss by the lodgement of a caveat over the interests of the first defendant in respect to the first defendant's interests in any realty registered in the name of the first defendant, including the Land". "The Land" is not defined but the expression is used in paragraph 4 of Mr Banning's affidavit to refer to the Blencowe Street property. The first defendant had no beneficial interest in the Mindarie land. Mr Banning does not depose that there was any express reference to the Mindarie land nor that there was any express reference to the interests of the Mindarie Property Trust or any other trust on whose behalf the first defendant held any land as registered proprietor. In those circumstances I am not satisfied that the evidence discloses a serious question to be tried on the issue of rectification.

37 In written submissions dated 18 February 2004, filed pursuant to leave given at the hearing of this matter, the plaintiff contends that "the Agreement" was partly oral and partly in writing. That contention was not made in the affidavits filed by the plaintiff, nor in the plaintiff's outline of submissions before the hearing, nor in counsel's oral submissions at the hearing. The plaintiff's notice of motion seeks orders amending the caveat. The relevant amendment sought is to specify that the plaintiff claims an estate or interest in respect to the land "pursuant to a written agreement made in and during 2001 between the caveator and Martin Paul Banning, on the one part, and the registered proprietor and John Andrew Miller, on the other part". In my view, the evidence before the Court does not make out a serious question to be tried that the Agreement between the plaintiff and the first defendant was partly written and partly oral.

38 The first defendant submits that a purely contractual right to lodge a caveat does not give rise to a caveatable interest. The first defendant refers to Graham v Chappell (1993) 9 WAR 157. It was formerly thought that a purely contractual right could not be elevated to a caveatable interest merely because the parties to the contract agree that a caveat may be lodged. This view may now be too narrow. In Troncone v Aliperti (1994) 6 BPR 13,291, the New South Wales Court of Appeal held that a clause in an agreement granting creditors the right to lodge a caveat carried with it by implication the grant of an interest in the land sufficient to support the caveat. However, it is unnecessary for me to further consider the matter because I have reached the conclusion that, on the proper construction of the written agreement, no rights were conferred upon the plaintiff in relation to the Mindarie land or the interests of the first defendant in that land. Accordingly, I do not give leave to the plaintiff to lodge a new caveat in respect of the Mindarie land.

39 For the reasons stated, I dismiss the plaintiff's application.

Professional Services of Australia Pty Ltd v Mila Properties Pty Ltd & Anor [2004] WASC 30

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Judgment (81 paragraphs)

Professional Services of Australia Pty Ltd v Mila Properties Pty Ltd & Anor [2004] WASC 30 (5 March 2004)

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Legislation Cited (1)

Cases Cited (6)