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[2023] QSC 20
General information, not legal advice.
Supreme Court of Queensland
2023-02-17
Davis J
Original judgment source is linked above.
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - where the parties executed a call option deed - where the call option deed gave the second defendant an option to purchase land at Yatula - where the plaintiffs purported to rescind the call option deed - where the second defendant purported to exercise the option - where the second defendant lodged a caveat - where the second defendant counterclaimed in existing proceeding claiming specific performance - where the second defendant did not notify the Registrar of Titles of the counterclaim - where the caveat lapsed - where the second defendant seeks leave to lodge a second caveat based on the same interest as the first - where the plaintiffs say the second defendant is not entitled to specific performance of the contract pursuant to the call option deed - where the plaintiffs claim prejudice - whether the prejudice is loss to be suffered from the lodging of the second caveat - whether in exercise of discretion leave to lodge a second caveat should be given
TAXES AND DUTIES - STAMP DUTIES - where the second defendant claimed an interest in land through exercise of rights under a call option deed - where it lodged a caveat in support of that interest - where the caveat lapsed - where the second defendant sought leave to lodge a second caveat - where the call option deed was not stamped - where an undertaking to produce it for stamping was given - where the plaintiffs concede that undertaking makes the document admissible in evidence - whether on a proper construction of s 487 of the Duties Act 2001 the unstamped document can found an interest to support a caveat
Uniform Civil Procedure Rules 1999, r 149, r 150
640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2) [2017] FCA 89; (2017) 247 FCR 519, cited
Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604, cited
Brooks v Brooks [2014] QSC 76; [2015] 1 Qd R 105, cited
Burnitt v Pacific Paradise Resort Pty Ltd [2004] QDC 218, followed
Caxton Street Agencies Pty Ltd v Korkidas [2002] QSC 210, followed
Dougan v Ley [1946] HCA 3; (1946) 71 CLR 142, followed
Field v Gaborit [2002] QSC 466, followed
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, followed
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478, cited
Hoggett v O'Rourke [2002] 1 Qd R 490, not followed
Landlush Pty Ltd v Rutherford [2002] QSC 219; [2003] 1 Qd R 236, followed
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, cited
Mission Development Group Pty Ltd v Rhett Pty Ltd [2004] QSC 359, cited
Oversea-Chinese Banking Corporation Ltd v Becker [2003] QSC 301; [2004] 1 Qd R 409, followed
Re McKean's Caveat [1988] 1 Qd R 524, followed
Shrimpton v The Commonwealth [1945] HCA 4; (1945) 69 CLR 613, followed
Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489, followed
Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315, followed
Vercorp Pty Ltd v Lin [2007] 2 Qd R 180, cited
NH Ferrett KC with SN Derrington for the applicant and second defendant
D de Jersey KC for the respondents/first and second plaintiffs
Francom Legal for the applicant and second defendant
Clayton Utz for the respondent/first and second plaintiffs
[1] The second defendant in the proceedings, Rocky Point Holdings Pty Ltd (Rocky Point) lodged caveat number 721846160 (the first caveat) over land at 38-44 Nyholt Drive, Yatula (the land) owned by TEB Enterprises Pty Ltd (TEB). The first caveat lapsed in circumstances explained below. Rocky Point seeks leave pursuant to s 129 of the Land Title Act 1994 to lodge a further caveat over the land claiming the same interest as was claimed in the first caveat.
[2] Philip Perrott is married to Shelley Perrott. Mr Perrott is the sole director of the first plaintiff, Recycling Developments Pty Ltd (Recycling Developments). Mrs Perrott is the sole director of TEB. Mr Perrott is also the sole director of Perrott's Cartage Pty Ltd (Perrott's Cartage) which is not a party to the present proceedings but was involved in some of the commercial dealings against which the present dispute arose.
[3] Peter Murray is the sole director of both Rocky Point, and the first defendant, Bespoke Recycling Industries Pty Ltd (Bespoke Recycling).
[4] At all material times, Recycling Developments held all necessary approvals to permit it to conduct on the land a business of recycling refuse (the recycling business). It conducted the recycling business on the land pursuant to the approvals until passing management of that activity to Bespoke Recycling in circumstances described below.
[5] Various of the parties entered into three written agreements:
[6] The parties to the Management Licence Agreement are Recycling Developments, Bespoke Recycling and TEB. The parties agreed:
[7] The parties to the Call Option Deed are the four parties to the current proceedings. Rocky Point was granted an option to purchase the land from TEB and Bespoke Recycling was granted an option to purchase the approvals from Recycling Developments.
[8] By the Supply Agreement, Perrott's Cartage would supply waste materials to Bespoke Recycling and then purchase the processed materials. That arrangement was to commence once the land and approvals had been conveyed from TEB and Recycling Developments to Rocky Point and Bespoke Recycling.
[9] Pursuant to the Management Licence Agreement, Bespoke Recycling took possession of the land and began managing the recycling business pursuant to the approvals.
[10] By early 2022, the various parties were in dispute and:
(a) on 10 January 2022, Recycling Developments and TEB purported to terminate the Management Licence Agreement;
(b) Recycling Developments and TEB retook possession of the land and the recycling business;
(c) on 24 February 2022, Recycling Developments and TEB purported to terminate the Call Option Deed. A consequence of a valid termination of the Call Option Deed is that the Supply Agreement will never come into operation;
(d) on 12 April 2022, Bespoke Recycling and Rocky Point purported to exercise their options under the Call Option Deed to acquire the land and the approvals. Recycling Developments and TEB rejected the purported exercise of the options;
(e) the date for settlement of the sale of the land and approvals was (assuming a valid exercise of existing options) 12 July 2022, but that day came and went without the parties taking steps to settle;
(f) on 3 May 2022, the current proceedings were commenced. Recycling Developments and TEB seek declarations that the Management Licence Agreement and the Call Option Deed were validly terminated by them. They also seek payment of money due and they seek damages.
[11] In the meantime, Bespoke Recycling and Rocky Point brought an application against Recycling Developments and TEB claiming an injunction to enjoin Recycling Developments and TEB from acting on the purported termination of the Management Licence Agreement.[1] That application failed.
[12] On 20 July 2022, Rocky Point lodged the first caveat.
[13] On 23 September 2022, a defence and counterclaim was filed and served in the present proceedings. Relevantly, Rocky Point claims specific performance of the Call Option Deed. If that claim is successful, then Rocky Point would acquire title to the land.
[14] While it is common ground that the counterclaim could support the first caveat, no notification of the filing of the counterclaim was given to the Registrar of Titles. Therefore, the first caveat lapsed on 20 October 2022. On 26 October 2022, the solicitors for TEB lodged a form with the Registrar of Title which caused the first caveat to be removed from the title.
[15] After correspondence passed between the respective solicitors, the current application was filed seeking leave to lodge a second caveat.
[16] Part 7, Division 2 of the Land Title Act 1994 concern caveats.
[17] By s 122, various persons may lodge a caveat. Relevantly here, a caveat may be lodged by "a person claiming an interest in a lot".[2] If the Call Option Deed was not validly terminated by Recycling Developments and TEB on 24 February 2022, then Rocky Point, at least from the time it purported to exercise the option, had an interest in land sufficient to support a caveat.
[18] By s 124, a caveat prevents (subject to exceptions that are irrelevant here) further dealings with the land. Section 126 concerns the lapsing of the caveat. Of significance here:
(4) If a caveator does not want a caveat to which this section applies to lapse, the caveator must -
(a) start a proceeding in a court of competent jurisdiction to establish the interest claimed under the caveat -
(i) if the caveatee has served a notice under subsection (2)(a) on the caveator and has complied with subsection (2)(b) - within 14 days after the notice is served on the caveator; or
(ii) otherwise - within 3 months after the lodgement of the caveat; and
(b) notify the registrar, by depositing an instrument, within the 14 days or the 3 months that a proceeding has been started and identify the proceeding.
(5) If the caveator does not comply with subsection (4), the caveat lapses. ..."
[19] Section 126(2)(a) and s 126(4)(a)(i) have no application here. To maintain the first caveat Rocky Point had to commence proceedings and notify the Registrar of Titles of that fact within three months of lodgement of the first caveat.
[20] Rocky Point's counterclaim seeks specific performance of the Call Option Deed. That is "a proceeding in a court of competent jurisdiction to establish the interest claimed [in the land]".[3] However, the first caveat lapsed through failure to notify the Registrar of Titles of the proceedings.[4]
[21] Section 129 relevantly provides:
(1) This section applies if a caveat (the original caveat) is lodged in relation to an interest.
(2) A further caveat with the same caveator can never be lodged in relation to the interest on the same, or substantially the same, grounds as the grounds stated in the original caveat unless the leave of a court of competent jurisdiction to lodge the further caveat has been granted..."
[22] Rocky Point accepts that the interest claimed in the proposed second caveat is the same as that claimed in the first caveat, so leave under s 129(2) is required.
[23] Section 129(2) vests a discretion in the court to authorise the lodgement of a second caveat founded on the same interest as an earlier caveat. There is nothing expressed in s 129(2) which limits that discretion or identifies those considerations which are relevant to its exercise.[5] No judicial discretion is unfettered. Its exercise is confined to the attainment of the objects for which the power has been granted.[6] Ultimately, the identification of the considerations relevant to the exercise of the discretion is a matter of construction of the statute.[7]
[24] Various decisions have identified considerations relevant to the exercise of the discretion. Those decisions cannot limit or alter the scope of the discretion as defined by the objects and intention of the statutory provisions. However, none of the parties have pointed to any discretionary factors beyond those identified in the cases as:
[25] Recycling Developments and TEB, in their written submissions, say:
"28. The plaintiffs accept that it is not possible for the Court at this application to resolve the issues raised in this proceeding as to whether the plaintiffs lawfully terminated the management licence agreement with effect from 10 January 2022 and the call option deed on 24 February 2022."
[26] This is a concession that Rocky Point has shown a serious question to be tried as to the existence of its right to exercise the option on 12 April 2022. It follows that there is also a serious question to be tried as to the lawfulness of the exercise of the option.
[27] However, Recycling Developments and TEB submit that there is ultimately no serious question to be tried because Rocky Point will not obtain specific performance of the Call Option Deed. The existence of a caveatable interest depends upon there being a proprietary interest in the land. That depends on there being a right to specific performance of the Call Option Deed.[13] Further, if it appeared that Rocky Point could not obtain specific performance, and would therefore never obtain title to the land, the balance of convenience would surely favour not granting leave to lodge the proposed second caveat.
[28] Four reasons were advanced by Recycling Developments and TEB as to why Rocky Point can not obtain specific performance of the Call Option Deed:
[29] In addition, Recycling Developments and TEB say that:
(a) Recycling Developments has expended significant money in rectifying breaches by Bespoke Recycling; > > (b) Rectification of damage caused by alleged breaches of the approvals by Bespoke Recycling and Rocky Point was effected by Recycling Developments and TEB by use of borrowed funds; > > (c) the lodging of a second caveat may restrict further borrowings and cause damage; > > (d) Rocky Point is a shelf company and there is no evidence that it could meet any compensation claim;
[30] In Oversea-Chinese Banking Corporation Ltd v Becker,[14] Chesterman J (as his Honour then was) said of the relevant prejudice to be considered on an application for leave to lodge a second caveat:
"[21] The prejudice to be taken into account would be that suffered by the respondents by reason of the fresh caveats. It would not be the prejudice caused by the restraint on dealing with property imposed by the caveat, because that is a detriment contemplated by the Land Title Act and it was a prejudice which the respondents suffered when the first caveats were lodged. The inquiry is into any prejudice suffered during the period between lapse of the first caveat and the application to lodge the second caveat."
[31] There is, in my respectful view, force in that statement of principle by his Honour. A party contracting to sell land does so voluntarily and does so against the scheme of Part 7, Division 2 of the Land Title Act. The Land Title Act provides a right to lodge a caveat and then, by s 130, gives a right to compensation if the caveat is "lodged or continued without reasonable cause".[15] That is the statutory scheme governing compensation and that right is available to a landholder when a caveat lapses. It must logically follow then that, in considering the exercise of discretion under s 129(2), the prejudice to be considered is that potentially caused by the lodging of the proposed second caveat.
[32] Section 487 of the Duties Act 2001 provides:
"487 Receipt of instruments or ELN transaction documents in evidence
(1) Unless an instrument or ELN transaction document[16] is properly stamped, it -
(a) is not available for use in law or equity or for any purpose; and
(b) must not be received in evidence in a legal proceeding, other than a criminal proceeding.
(2) However, a court may receive an instrument or ELN transaction document in evidence if -
(a) after it is received in evidence, the instrument or ELN transaction document is given to the commissioner as required by arrangements approved by the court; or
(b) if the person who produces the instrument or ELN transaction document is not the person liable to pay the duty, the name and address of the person so liable, and the instrument or ELN transaction document, is given to the commissioner as required by arrangements approved by the court.
(3) A court may receive in evidence an unsigned copy of an instrument or ELN transaction document that is imposed with duty or effects or evidences a transaction that is imposed with duty if the court is satisfied -
(a) the instrument or ELN transaction document of which it is a copy is properly stamped; or
(b) the copy is properly stamped under section 494."
[33] Samantha Langan, a solicitor, has carriage of the proceedings for Bespoke Recycling and Rocky Point. She swore to having investigated whether stamp duty on the Call Option Deed was paid through solicitors who had earlier acted for Bespoke Recycling and Rocky Point.[17] She then swore:
"15. I am instructed by Mr Murray, and believe, that he accepts that it appears likely that any applicable stamp duty has not been paid.
[34] Before me, the parties considered paragraph 16 of Ms Langan's affidavit to constitute an undertaking in its terms. On behalf of Recycling Developments and TEB, it was submitted that:
[35] Those submissions are based on the judgment of Holmes J (as her Honour then was) in Hoggett v O'Rourke.[18] There, an application was made to strike out parts of a statement of claim which were reliant upon an unstamped document. There was no undertaking offered to cause the document to be stamped. The point that was taken was that the existence of the document had been admitted in the pleadings and, therefore, it was proved without producing a stamped copy.[19]
[36] Her Honour considered s 4(a) of the Stamp Act 1894, now repealed. That provided:
"4A Restriction on effect of unstamped instruments
(1) An instrument chargeable with stamp duty (whether under this Act or under any prior Act) shall not, except in criminal proceedings, be given in evidence, or be available for any purpose whatever, unless it is duly stamped.
(a) when any such unstamped instrument is tendered as evidence in any court in any proceeding (except criminal proceedings) - the judge, or presiding magistrate, or justice of such court may admit the same in evidence on the party producing the same in evidence or the party's solicitor giving such security or written undertaking as may be prescribed to pay the whole or the deficiency of the stamp duty and any penalty that may be imposed;
(b) when any copy of an instrument chargeable with stamp duty in Queensland is tendered as evidence in any court in any proceeding (except criminal proceedings) - the judge, or presiding magistrate, or justice of such court may admit the same in evidence on the party producing the same in evidence or the party's solicitor giving such security or written undertaking as may be prescribed to produce the original or duplicate thereof and to pay the whole of the deficiency of the stamp duty thereon and any penalty that may be imposed."
[37] Her Honour held that the unstamped contract could not found a cause of action, notwithstanding that the existence and terms of the document had been admitted on the pleadings. Then, by way of dicta, her Honour observed as to the effect of an undertaking to stamp (although one had not been offered):
"[19] The question arises then as to what steps should be taken in relation to the action and the applicants' claim. I do not think that an undertaking to pay stamp duty, at whatever stage offered, would resolve the applicants' difficulties. Section 4A(2) enables the admission in evidence of an unstamped document on such an undertaking, but it does not overcome the fundamental problem that such a document may not be relied on as founding a cause of action. If, of course, stamp duty were paid, the agreement would be available for that purpose."
[38] In Caxton Street Agencies Pty Ltd v Korkidas,[20] her Honour considered the successor to s 4A of the Stamp Act 1894, namely s 487 of the Duties Act and concluded that s 487 was to the same effect. Again, this was dicta, as the relevant document was stamped before judgment.
[39] That the giving of the undertaking might make the document admissible but could not be effective to found a cause of action, is an odd result. The document would not be admissible at all unless it was relevant. It is difficult to see the basis upon which a contractual document would be relevant other than to establish contractual and proprietary rights.
[40] The object and purpose of s 4A(1) of the Stamp Act 1894 and s 487 of the Duties Act is clear. They compel the taking of action to ensure duty is paid and therefore the revenue is protected. That aim is achieved by the giving of the undertaking[21] or the making of arrangements for the document to be produced to the Commissioner of Stamp Duties.[22]
[41] The dicta of Holmes J has not received approval. Judge McGill KC refused to follow her in Burnitt v Pacific Paradise Resort Pty Ltd.[23] Judge McGill reasoned that the word "however" which opens s 487(2) excludes the operation of both prohibitions in s 487(1)(a) and (b).
[42] Markovic J, sitting in the Federal Court of Australia in 640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2),[24] preferred the reasoning of McGill QC DCJ and held that an undertaking overcame both the question of admissibility and the legal effect of the document received into evidence.[25] In Mission Development Group Pty Ltd v Rhett Pty Ltd,[26] Mackenzie J said "Notwithstanding what was said in Caxton and in Hoggett, I respectfully adopt the thrust of the methodology and analysis of McGill QC DCJ in Burnitt ..."[27] His Honour though decided the issue before him on other bases. In Vercorp Pty Ltd v Lin,[28] Douglas J, by way of dicta, expressed preference for the view of McGill QC DCJ in Burnitt v Pacific Paradise Resort Pty Ltd, rather than the views of Holmes J in Hoggett v O'Rourke and Caxton Street Agencies Pty Ltd v Korkidas.
[43] I would follow those decisions rather than the dicta of Holmes J in Hoggett v O'Rourke and Caxton Street Agencies Pty Ltd v Korkidas. In my view, the construction found by McGill QC DCJ is to be preferred having regard to the obvious object and purpose of s 487 of the Duties Act.
[44] On the present application, the distinction ultimately may make no difference. The issue is whether there is a serious question to be tried that Rocky Point has an interest in the land. In the end, there was no objection to the Call Option Deed being admitted into evidence before me. That, at least, proves the existence and terms of the contract. The undertaking demonstrates that, at trial, it is likely that the Call Option Deed will be stamped and available to prove Rocky Point's caveatable interest. Given that those steps have been, and are being taken, the fact that the document is not stamped at present does not render Rocky Point and Bespoke Recycling not ready, willing and able to perform the Call Option Deed.
Alleged failure to seek a transfer of the environmental permits and the fact that no steps were taken to settle on 12 July 2022
[46] That submission was made on the basis of the evidence of Mr Perrott, in his affidavit, that:
(a) the settlement period pursuant to the purported Contract of Sale was 3 months, so if it had been exercised on 12 April 2022, settlement would have been due on 12 July 2022; and
(b) if the defendants had complied with clause 2.5 of the Call Option, they would have sought a transfer of the ERA Permit from Recycling Developments so that it transferred to Bespoke by the time of settlement pursuant to the purported Contract of Sale.
(a) stated that it acted for Rocky Point; > > (b) stated that Rocky Point was ready, willing and able to proceed to settlement; > > (c) proposed a settlement date of 28 July 2022; and > > (d) sought information from TEB in relation to the proposed settlement.
"17. Clause 2.5 of the Call Option Deed provides that the First Plaintiff will provide Rocky Point 'with all assistance reasonably needed for Rocky Point (at its own cost) to have the Approvals transferred to Rocky Point with effect from settlement, to the extent not already in the name of Rocky Point', and that Rocky Point must 'prepare and serve any relevant applications on [the First Plaintiff] a reasonable time prior to settlement of' the contract for the sale of the Property.
(a) at or around the time of exercising the option to purchase the Property in April 2022, Mr Murray caused the relevant environmental permits to be transferred to him, in accordance with clause 2.5 of the Call Option Deed; and > > (b) not long after this occurred, Mr Murray received a telephone call from the government department responsible for administering the environmental permits, during which the government representative said to him words to the effect that: > > > (i) Mr Phillip Perrott had caused the environmental permits to be transferred back to himself; and > > > > (ii) as 'the proprietor', Mr Perrott had sole discretion over who held the environmental permits and there was nothing that could be done."
[48] Clause 2 of the Call Option Deed, of which clause 2.5 forms part, is as follows:
In consideration of the Grantee paying the Owners the Call Option Fee, the Owners grant the Call Options to the Grantee, on the terms set out in this Deed.
(a) On the date of this Deed, the Grantee must pay the Property Owner the Call Option Fee, in the manner that the Property Owner reasonably requires. The Property Owner and the Licence Holder will apportion the Call Option Fee between themselves as they may see fit.
(b) If the Call Options are exercised the Call Option Fee is credited against and treated as the deposit payable under the Property Contract.
(a) The Grantee may exercise its respective Call Options only during the Call Option Period.
(b) To exercise the Call Options, the Grantee must deliver the items below to the Owners' solicitors at that solicitor's address on a Business Day during the Call Option Period:
(i) a completed and executed Call Option Notice; and
(ii) the Property Contract which has been:
(B) dated the date of exercise of the Call Options;
(C) completed by inserting the details of the Purchaser and the Purchaser's solicitor; and
(D) otherwise properly completed in all respects in accordance with this Deed.
(iii) if not previously paid for any reason whatsoever - payment of the Call Option Fee.
(c) The Grantee must exercise both respective Call Options at the same time. Any purposed exercise of only one Call Option by the Grantee is ineffective.
(d) The Property Contract is binding on the Property Owner and the Purchaser from the date of exercise of the Call Options under clause 2.3(b), even if the Owners do not comply with clause 2.4.
Within fourteen (14) days of the Property Owner receiving all items required under clause 2.3(b), the Property Owner must deliver to the Purchaser a copy of the Property Contract counter-signed by the Property Owner.
The Licence Holder will provide the Rocky Point with all assistance reasonably needed for Rocky Point (at its own cost) to have the Approvals transferred to Rocky Point with effect from settlement, to the extent not already in the name of Rocky Point. Rocky Point must prepare and serve any relevant applications on the Licence Holder a reasonable time prior to settlement of the Property Contract."
[49] The transfer of the approvals to Rocky Point is a step clearly for the benefit of Rocky Point. The only expressed obligation upon Rocky Point is to prepare and serve relevant applications on Recycling Developments "a reasonable time prior to settlement of the property contract."[29] The only obligation upon Recycling Developments is to assist Rocky Point to have the approvals transferred to it. Probably, but the point was not fully argued, Rocky Point could settle the acquisition of the land without taking an assignment of the approvals and TEB could not complain.
[50] However, the evidence is that Rocky Point achieved a transfer of the approvals, but Mr Perrott caused them to be transferred back to Recycling Developments. Whatever obligations fell upon the parties under clause 2.5, those obligations are linked to the settlement of the property contract. That was set for 12 July 2022, but Rocky Point's case is that TEB repudiated its obligations and refused to settle. If Rocky Point is right in that contention, then there was no requirement for Rocky Point to attend settlement and tender.[30]
[51] Time is no longer of the essence as TEB repudiated and Rocky Point did not accept the repudiation to rescind. If specific performance is ordered then settlement will occur some time in the future and the various mutual obligations will be performed including those under clause 2.5. Rocky Point must serve an application upon Recycling Developments "a reasonable time prior to settlement ..."[31] The fact that it has not done so by now does not mean that Rocky Point is not ready, willing and able to complete.
Alleged concession that damages are an adequate remedy
[52] By their counterclaim, Bespoke Recycling and Rocky Point allege:
[54] Where relief by way of specific performance is claimed, the pleading of damages in the alternative cannot sensibly be seen as an admission that specific performance is not the only appropriate remedy. Damages are expressed to be claimed in the alternative to the primary claim for relief, namely specific performance, which is a discretionary remedy. Rocky Point asserts that it should have specific performance. The damages plea is not a concession by it, rather just a claim to damages if the court, on exercise of discretion, does not order specific performance.
[55] Further, Recycling Developments and TEB submit that it is incumbent upon Rocky Point to plead why damages would not be a sufficient remedy and it fails to do so. Nothing in r 150 of the Uniform Civil Procedure Rules 1999 (UCPR)[35] requires a plaintiff to plead circumstances which render damages an inadequate remedy. That then leaves r 149,[36] which provides that a pleading must "contain a statement of all material facts on which the party relies"[37] and to "state specifically any matter that if not stated specifically may take another party by surprise".[38]
[56] Because each piece of land is unique, it is generally the case that damages for breach of a contract of sale will not be an adequate remedy.[39]
[57] Whether it is incumbent upon Rocky Point and Bespoke Recycling to plead facts demonstrating that damages are not an adequate remedy, or whether it is incumbent upon Recycling Developments and TEB to plead facts to establish that damages are an adequate remedy, need not be decided on this application. The fact is that Rocky Point has pleaded facts which, if proved, establish a caveatable interest and it has claimed relief by way of specific performance. That is sufficient, in my view, to show a caveatable interest.
[58] Mr Perrott, in his affidavit, explains how, when Recycling Developments and TEB retook possession of the land and the business, there was an unprocessed waste stockpile which had to be dealt with.
[59] Waste is received at the business which receives fees for receiving it. Material which is received becomes the unprocessed stockpile. Material that can be recycled is processed and then sold. The business receives that income. Material which cannot be recycled is sent to landfill. The cost of that is borne by the business.
[60] Environmental concerns arise if the stockpile becomes too large. In particular, dust emanates from the stockpile and those emissions must be managed. The larger the stockpile, the more significant becomes the dust issue.
[61] When the business was handed over to Bespoke Recycling and Rocky Point, the unprocessed stockpile was about 6.4 tonnes. When Recycling Developments retook possession, it was over 32 tonnes. There has been dispute about ownership and responsibility for the stockpile, but the result is that Recycling Developments has been left to deal with it.
[62] Between 8 July 2022 and 31 October 2022, Recycling Developments expended over $2.2 million on equipment to reduce the stockpile. It has also become apparent that much of the material in the stockpile cannot be recycled and is therefore a burden, not an asset of the business. Mr Perrott estimates the cost of removing the material is between $2.5 million and $5 million.
[63] None of these expenses are causatively related to the existence of the first caveat and there will be no additional cost caused by the lodging of a second caveat. However, any financial pressures upon Recycling Developments and TEB are an existing and continuing fact. The impact of the lodging of a second caveat upon the ability of Recycling Developments and TEB to deal with those pressures is prejudice, which is relevant to the exercise of discretion to allow a second caveat to be lodged.
[64] An obvious course of action is to sell the land and the business. Various potential purchasers have approached Mr Perrott expressing a desire to acquire the land and business, including some interest for a price above $20 million.
[65] The interest in the business and the land was not generated by any advertising. It seems that potential buyers simply learnt of the termination of the Management Licence Agreement and then approached Mr Perrott. That indicates that the business and the land are likely quite marketable and saleable. There is nothing to suggest that such interest will wane or that the assets would not be saleable once the current litigation is finalised.
[66] While the unprocessed stockpile is problematic, there is no suggestion that the expense associated with it will cause the business to fail. Mr Perrott's concern as to the financial impact upon the business is restricted to his borrowing capacity. He swears:
"80. I explain below the almost $2.25m in equipment purchases that Recycling Developments has made since 1 July 2022 to reduce the Unprocessed Stockpile that was left on the Site by Bespoke, as well as the structural changes I have made to my family's group of companies since that time. Most of those purchases were done with financing from lenders. I believe that if a second caveat is lodged on the Site, I will need to report that to those lenders, which will make it more difficult for me to obtain financing in the future, or reasonable terms on any credit review which will occur next year."
[67] Mr Perrott was not cross-examined in relation to this paragraph and I accept it on face value. No doubt Mr Perrott has been careful not to overstate the impact of a second caveat upon the decisions of the lenders. He does not attempt to predict what the lenders may do, but just expresses concerns that obtaining financing in the future may be more difficult. While that may be accepted, there is nothing to suggest that loans might be recalled, or further funding refused or that terms offered would be substantially less favourable than if no second caveat was lodged.
[68] Mr de Jersey KC submits that Rocky Point and Bespoke Recycling are not of significant financial substance and it is likely they would be unable to meet any compensation claim. That may be so. Mr Ferrett KC accepts that is a relevant consideration. However, the potential loss is primarily caused by the alleged mismanagement of the stockpile rather that the existence of any second caveat.
Explanation for why the first caveat lapsed. Explanation for the delay in bringing the application for leave to lodge a second caveat
[69] These two issues are interrelated and ought to be considered together.
[70] Ms Langan, in her affidavit of 27 January 2023, swore:
"19. Francom's matter file records that, on or about 20 July 2022, Francom caused a caveat to be lodged against the Property on behalf of Rocky Point. A true and complete copy of this caveat is at Exhibit SJL-1 to my previous affidavit, sworn on 15 December 2022.
[71] Mr El Khoury is a solicitor and a partner in the firm, Francom Legal, which acts for Bespoke Recycling and Rocky Point. It employs Ms Langan and did employ Ms Manousaridis.
[72] Timothy George is a solicitor employed by Clayton Utz, the solicitors for Recycling Developments and TEB. Mr George received an email from Ms Manousaridis on 13 October 2022. That was automatically generated and read:
"Please be advised I no longer work for Francom Legal. For any matter related issues please contact Elias El Khoury on [redacted]."
[73] It was not until 20 October 2022 that the caveat lapsed. Therefore, there is a gap, so Mr de Jersey KC submits, and that is unexplained. There is no evidence from Mr El Khoury explaining what instructions were current in the lead-up to 20 October 2022 and no evidence from Mr Murray whereby he expressly swears that his solicitors held instructions to take steps to maintain the caveat. On 14 November 2022, a winding-up application was filed against Bespoke Recycling by an alleged creditor, Remondis Australia Pty Ltd.
[74] Francom Legal were notified of the lapsing of the caveat on about 26 October 2022. No indication of an intention to lodge a further caveat emerged until 7 December 2022 when Mr El Khoury wrote to Clayton Utz enquiring as to whether TEB would consent to a second caveat.
[75] The circumstances prompting this application is described in Mr Murray's affidavit as follows:
[76] The evidence explaining the failure to notify the Registrar of Titles of the counterclaim seeking specific performance is very thin. Evidence on such an issue should be direct and precise. The assertion of "administrative oversight" by Ms Manousaridis is vague and ambiguous. There is no evidence that Ms Manousaridis was asked to provide direct evidence of the circumstances which led to the Registrar of Titles not being notified of the counterclaim. Even if Ms Manousaridis was not cooperative, surely Mr El Khoury could provide some better explanation of the circumstances.
[77] Mr Murray provides no evidence explaining the delay between 26 October 2022, when it became apparent that the first caveat had lapsed, and 7 December 2022, when Francom Legal wrote to Clayton Utz. Mr Murray's evidence about receiving an email from Mr Brett Winning may explain why action was taken on 7 December 2022. It does not explain why action was not taken between 26 October 2022 and 7 December 2022.
[78] Mr de Jersey KC submits that the shortcomings in the evidence are significant, especially in light of the winding-up application filed against Bespoke Recycling. He submits that demonstrates financial pressures which could have influenced fluctuating attitudes by Rocky Point and Bespoke Recycling to the pursuit of specific performance of the contract resulting from the exercise of the option.
[79] However, Mr de Jersey KC did not seek to cross-examine either Mr Murray or Mr El Khoury. There is unchallenged evidence that:
[80] From those facts I draw the inferences that:
[81] The Call Option Deed gives Rocky Point an equitable interest in the land. It is conceded by Recycling Developments and TEB that there are triable issues surrounding the circumstances of their termination of the Call Option Deed and they cannot assert on an application such as this that Rocky Point has no arguable case.
[82] In my view, Recycling Developments and TEB have not established that specific performance would not be ordered if Rocky Point established that TEB was not entitled to terminate the Call Option Deed.
[83] Denial of leave to lodge a second caveat is likely to result in TEB selling the land and Rocky Point's interest being lost.
[84] Any loss suffered by Recycling Developments and TEB is referrable more to alleged breaches of contract than any inability to deal with the land pending trial of the claim.
[85] The evidence of the circumstances which resulted in the first caveat lapsing is less than satisfactory, as is the evidence as to why this application was not made until about six weeks after the first caveat lapsed. However, the evidence is sufficient for me to find as I do, on the balance of probabilities, that Rocky Point always intended to maintain the caveat and enforce its claim for specific performance and the first caveat only lapsed because errors, the specifics of which cannot be identified, occurred within the office of its solicitors and those errors resulted in the Registrar of Titles not being notified of the counterclaim.
[86] In all the circumstances, I consider it appropriate to maintain the status quo by giving Rocky Point leave to lodge a second caveat claiming the same interest as claimed in the first caveat.
[87] Rocky Point has been successful in the application but the application was only necessary because Rocky Point, through its solicitors, allowed the first caveat to lapse. Costs questions could be difficult. At the hearing before me, the parties were content for me to make directions for the exchange of written submissions on costs. That is appropriate.
[1] Proceedings BS660/22; hearing before Williams J, 13, 14 and 19 January 2022.
[5] Oversea-Chinese Banking Corporation Ltd v Becker [2003] QSC 301; [2004] 1 Qd R 409 at [17].
[6] Shrimpton v The Commonwealth [1945] HCA 4; (1945) 69 CLR 613 at 629-630 and Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 per Kirby and Callinan JJ in dissent on other points at [69] and [70].
[7] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39.
[8] Oversea-Chinese Banking Corporation Ltd v Becker [2003] QSC 301; [2004] 1 Qd R 409 at [18].
[9] Re McKean's Caveat [1988] 1 Qd R 524 and Landlush Pty Ltd v Rutherford [2002] QSC 219; [2003] 1 Qd R 236 at [18] and Field v Gaborit [2002] QSC 466 at p 7.
[10] Landlush Pty Ltd v Rutherford [2002] QSC 219; [2003] 1 Qd R 236 at [18] and Field v Gaborit [2002] QSC 466 at p 7.
[11] Landlush Pty Ltd v Rutherford [2002] QSC 219; [2003] 1 Qd R 236 at [18] and Field v Gaborit [2002] QSC 466 at p 7.
[12] Oversea-Chinese Banking Corporation Ltd v Becker [2003] QSC 301; [2004] 1 Qd R 409 at [18], Landlush Pty Ltd v Rutherford [2002] QSC 219; [2003] 1 Qd R 236 at [18]- [19] and Field v Gaborit [2002] QSC 466 at p 7.
[13] Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604 at 612; Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 at 537 and Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 at 333.
[15] See generally Brooks v Brooks [2014] 1 Qd R 105.
[16] A reference to electronic documents.
[17] Her affidavit sworn 21 January 2023.
[30] Foran v Wight [1989] HCA 51; (1989) 168 CLR 385.
[32] Counterclaim, paragraphs 19-33 and 35.
[39] Dougan v Ley [1946] HCA 3; (1946) 71 CLR 142 at 150.
Rocky Point Holdings Pty Ltd
TEB Enterprises Pty Ltd [2023] QSC 20
(2017) 247 FCR 519
(1988) 164 CLR 604
(1946) 71 CLR 142
(1989) 168 CLR 385
(2002) 209 CLR 478
(1986) 162 CLR 24
(1945) 69 CLR 613
(1988) 165 CLR 489
(2003) 217 CLR 315