SHANE AGELIS DEVELOPMENTS PTY LTD v GULF TRANSPORT CO PTY LTD [2025] SASC 78

Applicant: SHANE AGELIS DEVELOPMENTS PTY LTD Counsel: MR A DAL CIN - Solicitor: ECKERMANN LAWYERS Respondent: GULF TRANSPORT CO PTY LTD Counsel: MR D LEEN - Solicitor: HWL EBSWORTH LAWYERS Hearing Date/s: 04/10/2024 File No/s: CIV-24-006296 B SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. SHANE AGELIS DEVELOPMENTS PTY LTD v GULF TRANSPORT CO PTY LTD [2025] SASC 78 Judgment of the Honourable Auxiliary Associate Justice Flourentzou 27 May 2025 REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - WHO MAY LODGE AND WHAT INTEREST SUFFICIENT - PARTY WHO HAD LODGED EARLIER CAVEAT REAL PROPERTY - TORRENS TITLE - UNREGISTERED INTERESTS - EQUITABLE ESTATES AND INTERESTS - PRIORITY BETWEEN EQUITABLE INTERESTS - GENERALLY MORTGAGES - ACCOUNTS - OTHER MATTERS Melissa Jayne Smith and Nicholas John Smith (“the Smiths”) were the registered proprietors of a property at Glenelg North (“the Property”). The Smiths borrowed funds from the ANZ Bank secured by a registered mortgage against the Property (“the ANZ Mortgage”). The Smiths also borrowed funds from Gulf Transport Co Pty Ltd (“the Respondent”). The Smiths and the Respondent executed a mortgage but it was not registered against the Property (“the Unregistered Mortgage”) but the Respondent entered a caveat (“the Caveat”) to protect its interest in the Property as mortgagee. The Smiths engaged Shane Agelis Developments Pty Ltd (“the Applicant”) to undertake building work on the Property. The relationship between the Applicant and the Smiths broke down. The Applicant registered a lien against the Property under the Worker’s Liens Act 1893 (SA) (“the Lien”). The Smiths were later declared bankrupt and the Respondent redeemed the ANZ Mortgage. The Applicant submits that as a holder of a registered lien, it has a right to redeem the ANZ Mortgage pursuant to s 131 of the Real Property Act 1886 (SA) or under the general law. If it is determined that the Applicant has a right to redeem the ANZ Mortgage, then the Applicant seeks an order that -- 1 of 14 -- the Respondent is to account to the Applicant for what is required to discharge and redeem the ANZ Mortgage. That position is opposed by the Respondent. The Applicant also asserts that its Lien ranks in priority to the Unregistered Mortgage. The Respondent submits that the Unregistered Mortgage is protected by the Caveat that ranks in priority to the Lien. Held: 1. The Applicant does not have a right to redeem the ANZ Mortgage pursuant to s 131 of the Real Property Act 1886 (SA) or the general law. 2. The Unregistered Mortgage is protected by the Caveat that ranks in priority to the Lien. 3. The Originating Application is dismissed. Uniform Civil Rules 2020 (SA); Worker’s Liens Act 1893 (SA) ss 9, 9A, 10, 12 and 20; Real Property Act 1886 (SA) ss 128B and 131, referred to. Excel Finance Corporation Ltd v Commonwealth Bank of Australia (1988) 48 SASR 225; Cronin & Ors v State Bank of South Australia & Ors Unreported, Supreme Court of South Australia, 13 May 1994, BC9400836; The Corporation of the City of Marion v Nash [2022] SASC 29; Re Trademark Homes (Aust) Pty Ltd & Anor (1996) 67 SASR 107; In Re RGP Constructions Pty Ltd (In Liq); Ewing v Hallett Brick Industries Ltd (1982) 31 SASR 170; Cladding & Roofing Contractors Pty Ltd v Candetti Constructions Pty Ltd [2013] SASC 102; Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd [2007] SASC 417, considered. -- 2 of 14 -- SHANE AGELIS DEVELOPMENTS PTY LTD v GULF TRANSPORT CO PTY LTD [2025] SASC 78 1 Melissa Jayne Smith and Nicholas John Smith (collectively referred to as the “the Smiths”) were the registered proprietors of a property located at 22 Richardson Avenue, Glenelg North 5045 (“the Property”).1 On 6 June 2017, a mortgage was secured against the Property in favour of the Australia & New Zealand Banking Group Ltd (“the ANZ Mortgage”).2 2 On or about 14 February 2018, Gulf Transport Co Pty Ltd (ACN 069 410 117) (“the Respondent”) entered into a loan agreement with the Smiths (“the Loan Agreement”).3 The main elements of the Loan Agreement were as follows: • The Respondent agreed to loan the Smiths the sum of $688,150.00, being the principal amount. • The Smiths agreed to repay the Respondent the principal amount plus interest and costs. • The Loan Agreement would be secured by a mortgage registered against the Property in favour of the Respondent. • The funds were to be used towards the development of the Property. • If the Smiths failed to pay on the due date, that would constitute a default of the Loan Agreement, and the Respondent may then give notice to declare that the principal amount was due and payable immediately or on the expiry of such period as may be specified in the notice. 3 It appears that a memorandum of mortgage was prepared and executed by the Smiths and the Respondent, but it was not registered at the Lands Titles Office (“the Unregistered Mortgage”).4 4 However, on 1 February 2023, the Respondent lodged a caveat against the Property claiming “An estate or interest in the land as mortgagee under a memorandum of mortgage dated 31 October 2022 between the caveator and the caveatee.” (“the Caveat”).5 1 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), exhibit “STA-2”. 2 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), exhibit “STA-6”. 3 Affidavit of James Ewart Cooper sworn on 25 July 2024 (FDN 5), exhibit “JEC2”. 4 Affidavit of James Ewart Cooper sworn on 25 July 2024 (FDN 5), exhibit “JEC5”. 5 Affidavit of James Ewart Cooper sworn on 25 July 2024 (FDN 5), exhibit “JEC4”. -- 3 of 14 -- [2025] SASC 78 Flourentzou AAsJ 2 5 At some point the Smiths engaged Shane Agelis Developments Pty Ltd (ACN 129 991 028) (“the Applicant”) to carry out building works on the Property but their relationship broke down. 6 Therefore, on 22 February 2023, the Applicant lodged a worker’s lien pursuant to the Worker’s Liens Act 1893 (SA) (“the WLA”) over the Property in respect of monies claimed to be owed to the Applicant by the Smiths (“the Lien”).6 7 The Applicant then commenced proceedings in this Court against the Smiths and on 4 October 2023, Judge Dart entered default judgment in favour of the Applicant in the amount of $230,401.10.7 That amount comprised of: • $176,922.78 being the amount claimed by the statement of claim; • $2,808.00 for the Court filing fee; • $2,920.17 the lump sum on default judgment as prescribed by the Uniform Civil Rules 2020 r 3(4) in Part 2 of Schedule 6; and • $47,750.15 by way of interest. 8 On the same occasion, order 3 was made by Judge Dart varying the Lien in the following terms: 3. The worker’s lien registered over the land comprised in Certificate of Title Volume 6254 Folio 411 on 22 February 2023 Instrument No 13979636 is varied by deleting the amount claimed of $197,191.54 and substituting the amount of $176,922.78 in lieu thereof. 9 The amount of $176,922.78 is not in dispute between the parties and counsel for the Applicant acknowledged that any additional amount claimed by the Applicant could only be recovered by lodging a proof of debt in the Smiths’ bankruptcy. 10 On 31 October 2023, the Smiths were declared bankrupt and a trustee in bankruptcy was appointed on their behalf.8 As of the date of when bankruptcy was entered, the following dealings were registered on the Property’s Certificate of Title in the following order: Details Dealing Number Completion Date The ANZ Mortgage 12738431 6 June 2017 The Respondent’s Caveat 13968449 7 February 2023 6 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), exhibit “STA-6”. 7 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), exhibit “STA-3”. 8 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), exhibit “STA-5”. -- 4 of 14 -- [2025] SASC 78 Flourentzou AAsJ 3 The Applicant’s Lien 13979636 22 February 2023 Warrant of sale secured to Francom Legal Pty Ltd 14028367 10 May 2023 Two caveats entered by the Trustee in bankruptcy on behalf of the Smiths 14227285; and 14227286 7 March 2024 11 On 7 March 2024, the ANZ Mortgage was transferred to the Respondent in exchange for the sum of $784,235.82.9 The Respondent then proceeded to secure possession of the Property and undertook building works in accordance with the terms of the ANZ Mortgage to prepare the Property for sale.10 12 The Property was sold on 2 April 2025. Counsel for the Respondent has confirmed that the Respondent has quarantined the amount of $176,922.78 pending the outcome of the proceedings.11 13 On 16 April 2024, the Applicant obtained a warrant of sale of the Property12 but has been unable to execute the warrant because the Respondent has been in possession of the Property pursuant to the ANZ Mortgage. 14 On 10 July 2024, the Applicant commenced the proceedings seeking a determination of the following questions: 1. Whether the Applicant, as the holder of the Lien registered over the Property has a right under s 131 of the Real Property Act 1886 (SA) (“RPA”) to redeem the ANZ Mortgage registered over the Property, which was subsequently transferred to the Respondent. 2. If the answer to the first question is “Yes”, then, whether the Court should order the Respondent to account to the Applicant for what is required to discharge the ANZ Mortgage to enable the Applicant to redeem it. 3. Whether the Lien has priority over the Unregistered Mortgage held by the Respondent, which pre-dates the registration of the Lien. 15 If the Court determines that the Applicant is entitled to redeem the ANZ Mortgage pursuant to s 131 of the RPA, the Applicant proposes to consider any accounting the Respondent is ordered to make before making an informed decision on whether to redeem the ANZ Mortgage. 9 Affidavit of James Ewart Cooper sworn on 25 July 2024 (FDN 5), exhibit “JEC12”. 10 Affidavit of James Ewart Cooper sworn on 25 July 2024 (FDN 5), paragraphs 13 and 26 – 27. 11 Respondent’s supplementary submissions filed on 14 April 2025 (FDN 11). 12 Affidavit of Shane Theo Agelis affirmed on 9 July 2024 (FDN 2), paragraphs 16 – 17. -- 5 of 14 -- [2025] SASC 78 Flourentzou AAsJ 4 Is the Applicant entitled to redeem the ANZ Mortgage? 16 Counsel for the Applicant submitted that the holder of a security interest has a right to redeem a security interest that is higher in priority.13 Counsel referred to the decision of Excel Finance Corporation Ltd v Commonwealth Bank of Australia.14 In Excel the plaintiff held a registered second mortgage over land. The defendant held the first and third registered mortgage. The plaintiff tendered to the defendant the sum due to the defendant on the first mortgage and required the defendant to transfer the first mortgage to the plaintiff in accordance with s 131 of the RPA. The defendant rejected the tender and refused to transfer its interest to the plaintiff. Acting Justice Lunn found in favour of the plaintiff and observed:15 My researches cause me to rule that the plaintiff's contention is correct. Under the general law a second mortgagee had the right to require the first mortgagee to convey the mortgaged property to him upon payment of the amount outstanding on the first mortgage: Smith v Green (1844) 1 CoIl 555; 63 ER 541. Section 131 of the Real Property Act 1886 merely reproduces this right under the general law and makes it applicable to mortgages under the Real Property Act. This right relates to a transfer of the mortgage, and not the mortgaged property. In England prior to the Conveyancing Act 1881 (UK) a mortgagee on being paid out could refuse to transfer the mortgaged property to a nominee of the mortgagor, and only could be required to reconvey the mortgaged property to the person then holding the equity of redemption: James v Biou (1819) 3 Swans 234; 36 ER 844 at 845;Colyer v Colyer (1863) 3 De GJ & S 676; 46 ER 799. The effect of the English Conveyancing Act was to allow the holder of the equity of redemption to require the mortgagee upon being paid out to transfer to a nominated third party: Halsbury's Laws of England (3rd ed), vol 27 p 261 footnote (t); Halsbury's Laws of England (3rd ed), vol 27 pp 492-493. However, this statutory right to allow a mortgagor to nominate the transferee from the mortgagor was subject to an express statutory restriction that it would not apply where the mortgagee was in possession. This was apparently because even if a mortgagee in possession did transfer the mortgaged property, he remained liable to account to the holder of the equity of redemption: Halsbury's Laws above at 493. This provision in the English Conveyancing Act became s 95 of the Law of Property Act 1925 (UK) and with the additional references to registered land became s 45 of the Law of Property Act (SA). From a consideration of this history of s 45 and the general law of mortgages it is clear that the right of a second mortgagee to pay out a prior mortgagee was quite independent of the statutory right of a mortgagor to require an assignment to a third party upon being paid out. It is therefore clear that the restriction on the statutory right relating to mortgagees in possession has no application to the much older general law right that a subsequent mortgagee can require a transfer of an earlier mortgage upon paying it out. Mr Lander QC did not suggest, and I cannot find any authority, that either this general law right, or s 131 of the Real Property Act, have ever been subject to a restriction that the right cannot be exercised against a mortgagee in possession. If any difficulty is encountered about the proper amount payable to discharge the earlier mortgage, it would appear that the normal remedies of account are sufficient to deal with the problem. 13 Excel Finance Corporation Ltd v Commonwealth Bank of Australia (1988) 48 SASR 225 and Cronin & Ors v State Bank of South Australia & Ors, unreported, Supreme Court of South Australia, 13 May 1994, BC9400836 at p 17. 14 (1988) 48 SASR 225. 15 (1988) 48 SASR 225 at 227. -- 6 of 14 -- [2025] SASC 78 Flourentzou AAsJ 5 17 It will be noted that the general law to which Lunn AJ refers is that relating to the right of a second mortgagee. The point made by Lunn AJ was that the right of a second mortgagee to pay out a first mortgagee subsisted even when the first mortgagee was in possession. His Honour contrasted that right with the inability of a mortgagor to require a mortgagee to transfer the mortgaged property to a third person when the mortgagee was in possession. 18 Section 131 of the RPA extends the general law rights of redemption to encumbrances, and states: 131—Subsequent mortgagees or encumbrancees, may redeem prior mortgages etc In case the money secured by any mortgage or encumbrance shall be due, and the mortgagee or encumbrancee shall require payment of the same, it shall be lawful for any other mortgagee or encumbrancee of the same land to tender and pay to the mortgagee or encumbrancee requiring such payment, the money due upon his security, and the mortgagee or encumbrancee making such payment shall be entitled to a transfer of the estate and interest of the mortgagee or encumbrancee requiring such payment. 19 An encumbrance is not defined by the RPA but s 128B of the RPA states: 128B—Encumbrance of land (1) If land is to be charged with, or made security for, the payment of an annuity, rent- charge or sum of money in favour of a person, an encumbrance in the appropriate form must be executed by the registered proprietor and the person. (2) This section only applies to land intended to be charged or made security under this Act by the registration of an encumbrance 20 Judge Dart cited the above section in his decision of The Corporation of the City of Marion v Nash.16 His Honour said at [8]: The drafting of that section indicates that what is being dealt with is an agreement between the registered proprietor of land and some other person. The section is not dealing with charges created by statute. It is not relevant to the present matter. The reference to encumbrances in s 192 is a reference to an encumbrance created pursuant to s 128B. 21 A lien pursuant to the WLA is a statutory lien and not one founded on an agreement. Therefore, in the context of this matter, it is necessary to then consider s 12 of the WLA, which states: 12—Notice to be deemed caveat A notice lodged in respect of land under the provisions of the Real Property Act shall be deemed to be a caveat for the purposes of section 191 of that Act, and the provisions of the Real Property Act relating to caveats shall, so far as applicable and so far as consistent with this Act, apply to every such notice. 16 [2022] SASC 29. -- 7 of 14 -- [2025] SASC 78 Flourentzou AAsJ 6 22 The WLA makes it clear that for the purposes of the RPA, a lien is deemed to be a caveat and not an encumbrance. It follows that the Applicant cannot rely upon s 131 of the RPA to assert its right to redeem the ANZ Mortgage pursuant to the RPA. 23 This is confirmed in the decision of Re Trademark Homes (Aust) Pty Ltd & Anor,17 in which Justice Lander considered the nature of a lien and undertook a comprehensive review of the WLA. 24 His Honour observed as to s 20 of the WLA that:18 Section 20 makes it clear that a lien is not a mortgage or an encumbrance, or indeed, a pledge, because it treats such persons who hold those rights separately. Also s 20 provides that anyone of those persons, whether their interest is in priority to, or subject to, the lien, is able to pay the lien holder out, and immediately upon doing so, the amount which that person has paid out to the lien holder becomes subject to the same security as existed in the interest already notified on the title. That is to say that if a mortgagee in priority to a lien holder paid the lien holder out, thereafter it could not be doubted that the amount that was previously owed to the lien holder would be subject to the security given to the mortgagee. So also if the mortgagee has an interest subsequent to the lien holders, then if the mortgagee pays out the lien holder, the amount of the lien becomes part of the secured sum owing to that subsequent mortgagee. That is all, in my opinion, again consistent with an understanding in the Act that the lien not only creates an interest in the land which is capable of registration, but also an interest which is secured against the land and is capable of being realised by the mechanism under s 25 of the Act, to which I shall later refer. 25 Therefore, I am satisfied that a lien is not an encumbrance for the purposes of applying s 131 of the RPA. 26 However, counsel for the Applicant also submitted that a lien establishes a legal security interest and, therefore, the Applicant is still entitled to rely upon the general law as stated by Lunn AJ in Excel to enforce its right to redeem the ANZ Mortgage. Counsel for the Applicant asserted that a contractor with a statutory lien can enforce the sale of land. Thus, counsel for the Applicant contended, that is in the very nature of the security interest. 27 In support of that submission, counsel for the Applicant referred to page 116 in Re Trademark Homes (Aust) Pty Ltd & Anor in which Lander J stated the following: The liquidator argued that s 25 indicated that the only rights given to a lien holder were those given to an ordinary creditor, namely, a right to obtain a writ of the court for the sale of the property. Again, for the reasons that I have already expressed, I do not accept that argument. Section 25, in fact, provides for powers different from those available to ordinary creditors. The s 25 machinery is available to a person who has established a right to a lien and has established the extent of that lien. Section 25 is then available for the purpose of 17 (1996) 67 SASR 107. 18 (1996) 67 SASR 107 at 114. -- 8 of 14 -- [2025] SASC 78 Flourentzou AAsJ 7 enforcing that lien by sale of the property. It is, in my opinion, in relation to land, the equivalent of s 41, to which I have earlier referred. The procedure under s 25 is consistent with one of the underlying purposes of the Act, namely, to allow a lien holder to have not only security for the debt owed to that lien holder or to the lien holder's contractor, but also the right to sell the particular property in satisfaction of that debt. It is not simply an order to execute against the goods or land of a person in general, but it is a right to sell the land, which was the subject of the work or the materials supplied in satisfaction of the outstanding obligation. That is, itself, consistent with the other provisions of the Act in giving to a lien holder security over the land for payment of the outstanding obligation. In my opinion, the whole scheme of the Act suggests to me that a person who is able to register a lien and in due course prove an entitlement to a sum of money under either s 4 or s 5 of the Act, is entitled to claim that the lien secures that sum of money against the land of the owner or occupier. If the moneys remain unpaid, the lien holder is, in my opinion, entitled to sell the land and apply the proceeds against the amount of the wages or contract price outstanding. 28 Justice Lander then said at page 120: In my opinion, the High Court decision in Stapleton and the Full Court decision in Albert Del Fabbro v Wilckens & Burnside make it clear that the Act creates a statutory charge which entitles the worker to a lien or charge and gives the worker security for that lien or statutory charge. In those circumstances, it appears to me that a lien holder is entitled to claim, as a charge against the property and as against the moneys realised on the property as if the lien holder was a secured creditor. In my opinion, therefore, the lien holders in this case are entitled to the proceeds of the money from the proceeds of the sale of the property upon which their liens were registered. 29 Counsel for the Applicant contended that if the Lien is not an encumbrance for the purpose of applying s 131 of the RPA, then the Applicant is entitled to rely upon the inherent power of the Court and the general law to exercise its right to redeem the ANZ Mortgage. 30 However, counsel for the Respondent relied upon the decision of In Re RGP Constructions Pty Ltd (In Liq); Ewing v Hallett Brick Industries Ltd19and submitted that the rights available to a lien holder are not akin to the rights which are available to an ordinary secured creditor. 31 In RGP Constructions, Hallett supplied bricks to a contractor, RGP. RGP was building on land owned by Pulteney Management Pty Ltd (“Pulteney Management”). Hallett served a notice of demand on RGP pursuant to the Workmen’s Liens Act, 1893-1964, registered a worker’s lien under the provisions of that Act and instituted proceedings against RGP and Pulteney Management to enforce its lien. RGP then paid certain amounts to Hallett in reduction of the indebtedness. Subsequently, RGP was wound up and the appointed liquidator claimed a declaration that the amounts that had been paid to Hallett constituted 19 (1982) 31 SASR 170. -- 9 of 14 -- [2025] SASC 78 Flourentzou AAsJ 8 undue preference payments under s 293 of the Companies Act, 1962-1980. The Court held that although Hallett had a lien on the land for the bricks furnished, it had no right of charge under the provision of s 7 of the Workmen’s Liens Act, 1893- 1964 and was not a secured creditor of RGP. 32 Counsel for the Respondent referred to pages 173-176 of the decision in RGP Constructions. The relevant passages in support of the Respondent’s argument that I could identify from those pages were the following: Speaking in general terms, the policy of the Workmen's Liens Act is to create rights of lien or charge, and to provide for the enforcement of claims of lien or charge, by action for a declaration of entitlement thereto, on the part of a person who does work or procures work to be done on the land of another, or on some chattel of his, or who supplies materials in connexion with the work done by that person upon or in respect of that land or chattel. To the extent provided by the statute, a person who does work, or who supplies materials in connection with the work done by him, or who merely furnishes materials for the work, may have a lien upon such land or chattel; or he may have a charge on moneys payable in respect of the work done or materials supplied by him in connection with work that he has done for the purposes of the contract. But the statute makes an essential difference between a lien and a charge. Leaving aside the right of a workman to a lien on chattels, a lien attaches to the land, whereas a charge gives security over money. The right of the lien-holder attaches to the land on which the work is done, or in respect of which materials are furnished. The right of a charge-holder attaches to money payable to the contractor with whom he has contracted. As Bright J. said in Albert Del Fabbro Pty. Ltd. v. Wilckens & Burnside Pty. Ltd. (Receiver and Manager Appointed) and Arndale (Marion) Pty. Ltd.: “The statutory lien and the statutory charge cannot be treated as affording a single remedy. They are two remedies, and in some cases only one, in other cases only the other, is available. Each is provided with its own machinery for enforcement.” … In any case, even if it were open to the appellant to claim a charge under s. 7(2) of the Act- which plainly was not the case-no proceedings were taken to enforce the charge as required by s. 7(3). But when proceedings are taken under s. 7 (3) to enforce a charge, the court has full discretion over the fund which is the subject of the charge; the fund is to be held until the proceedings to realize the charge have been brought to finality. Section 8 of the Act provides "for priority andpro-rata payment of liens and charges, and this negatives any idea that a workman, contractor or sub-contractor can reap any advantage by prompt payment subsequent to the registration of a lien [or after the charge has attached]" (Metropolitan Brick Company v. Hayward and Another, per Cleland J. at p. 476). It is not for the charge- holder to enforce, or to accept, payment, otherwise than under and in accordance with the provisions of the statute. In my view, the clear intention of the Act is to distinguish between liens and charges; each affords a different remedy and has its own method of enforcement. I am unable to see that a lien-holder can arrogate to himself the rights of a charge-holder, unless he also holds the statutory security of a charge given by s. 7 (2) of the Act. In any case, it is manifest that the statutory charge is operative as regards moneys payable, or becoming payable, by the owner to the head contractor; or as regards moneys payable by the head contractor to the head sub-contractor, and so on. In the present case, there is no evidence as to the source of the fund from which the payments were made by the company to the appellant. -- 10 of 14 -- [2025] SASC 78 Flourentzou AAsJ 9 Having regard to the real intention of the legislature to create separate rights of lien and charge in the manner provided by the statute, I cannot accede to the argument for the appellant that as an ancillary part of the attaching of a lien to land. there is an effective charge, in favour of the lienor, upon the debt due by the lienee to the lienor. Nor do I think there is any validity in the argument that by payment by the head contractor to a lienor, whether he be a "sub-contractor" or a supplier of materials, the debt which gives rise to the lien is thereby satisfied or reduced, as the case may be, with the effect that the assets of the lienee are pro tanto increased for the benefit of the general body of creditors or of any other person having the right to enforce a claim of lien or charge. The acceptance of any such notion would, in my opinion, run counter to the plain intention of the statute. … 33 Counsel for the Respondent contended that the decision of RGP Constructions was further supported by the decision of Justice Vanstone in Cladding & Roofing Contractors Pty Ltd v Candetti Constructions Pty Ltd.20 Her Honour succinctly summarised the facts in Cladding at [4]–[7], where her Honour said: The facts may be briefly stated. Cladding is the plaintiff in the original action. Cladding was subcontracted by Candetti Constructions Pty Ltd (Candetti) to perform roofing work on a shopping centre development at Blakeview. Candetti had contracted with Fabcot Pty Ltd (Fabcot), the landholder, to build the centre. Candetti failed to pay Cladding the contract price of $305,800. Cladding then registered a lien over Fabcot’s land pursuant to the Worker’s Liens Act 1893 (SA) and took proceedings in the District Court seeking monetary judgment against Candetti and enforcement of the lien against Fabcot. On 9 December 2011 Candetti was placed in administration pursuant to s 436A Corporations Act 2001. On 24 April 2012 the administration period ceased and Candetti became subject to a Deed of Company Arrangement. On 14 August 2012 Fabcot paid into court the sum of $305,800. A Notice of Cessation of Lien was registered on about 24 August 2012. By such payment Fabcot relieved itself “and the property from liability with regard to the lien” and “in respect of the costs of further proceedings”: s 26(1) Worker’s Liens Act. The contest between the parties is as follows. Cladding argues that registration of the lien created a security interest in its favour and that this interest was not extinguished by the payment into court by Fabcot. It argues that this security interest was not merely in relation to the land but, in the circumstances pertaining here, which response to the debt owed by the contractor, Candetti, to the subcontractor, Cladding. Therefore, payment into court left untouched the claim against Candetti, now secured by the monies deposited in court. 34 Her Honour then concluded at [13]: In my opinion the decision in RGP Constructions effectively dictates the result in the case at hand. The principle is that a worker’s lien attaches to the land on which work is done or materials furnished. It does not give the lien holder any charge or other security interest in respect of monies owed for the work or materials. 35 I reject the Applicant’s submissions that the general law should be applied. The WLA operates as a code and the rights and obligations it confers are to be 20 [2013] SASC 102. -- 11 of 14 -- [2025] SASC 78 Flourentzou AAsJ 10 found within the Act, and not the general law. Section 20 of the WLA is an integral part of that code, it states: 20—Mortgagee may pay wages or contract price and may recover wages or contract price paid by him Where a lien under this Act attaches to the estate or interest in land of any owner or occupier or to any goods any person interested in such land or goods as mortgagee, incumbrancee, or pledgee, whether his interest is or is not subject to such lien, may pay the wages or contract price in respect of which the lien exists, together with all costs, charges, and expenses of and incidental thereto, and shall, on demand, be entitled to recover the same from the mortgagor, encumbrancer, or pledgor, together with interest thereon, at the rate of eight per centum per annum, calculated from the date of payment, and the moneys so paid with interest as aforesaid, shall be a charge on the estate or interest or the goods as if originally portion of the moneys secured by the mortgage, incumbrance, or pledge. 36 Section 20 is exhaustive and prescribes the conditions in which a person may pay out a lien holder. However, s 20 and the WLA does not confer any entitlement on a lienor to pay out a mortgagee. 37 The Full Court came to the same conclusion in Badge Constructions (SA) Pty Ltd v Rule Chambers Pty Ltd21 when considering s 10 of the WLA. At [60] and [95], the Full Court said: In Marriott Industries Pty Ltd v Mercantile Credits Ltd this Court expressed the view that section 10 of the Worker’s Liens Act constitutes a code which must be complied with before any lien claim is available to a lienor, in the sense of being enforceable. It necessarily follows that it was a pre-condition for the enforcement of a lien by a contractor against the owner that a valid demand be made to support the lien, as envisaged by section 10(2). That notice of demand could only validly be served in respect of any contract price then payable by the owner to the contractor – in the sense in which that word is employed in section 10. … The proper construction and application of ss 5, 6 and 10 has caused much difficulty. See for example Metropolitan Brick Company v Hayward; Albert Del Fabro Pty Ltd v Wilckens and Burnside Pty Ltd and Arndale (Marion) Pty Ltd; W Curl & Sons (Reg’d) v Buck Industries Pty Ltd and Dillingham Constructions Pty Ltd; and Daniels v Sabemo (SA) Pty Ltd. Sections 5, 6 and 10 have been considered by the Full Court most recently in Longreef Pty Ltd v Leighton Contractors (SA) Pty Ltd and Marriott Industries Pty Ltd v Mercantile Credits Limited. The decisions in Longreef and Marriott Industries were delivered by the same Full Court and on the same day. Olsson J (with whom Mohr J agreed in both decisions) held that s 10 constitutes an exclusive code identifying the circumstances in which an enforceable lien is available to a lienor. … (citations omitted) 38 Accordingly, I am not satisfied that the Applicant can rely upon s 131 of the RPA or the general law to redeem the ANZ Mortgage. Indeed, there is no legal or practical way in which the Applicant can meaningfully do so following the 21 [2007] SASC 417. -- 12 of 14 -- [2025] SASC 78 Flourentzou AAsJ 11 assignment of the ANZ Mortgage to the Respondent and the sale of the Property. Even if the Applicant were right and it had an entitlement to redeem the ANZ Mortgage, it never did so. The only remaining question is whether it enjoys any priority to the proceeds of sale. Does the Lien rank in priority over the Respondent’s Unregistered Mortgage? 39 Counsel for the Applicant accepts that the ANZ Mortgage ranks in priority over the Applicant’s Lien. However, counsel for the Applicant asserted that the Lien has priority over the Respondent’s Unregistered Mortgage. Counsel for the Applicant argued that the lodgement of the Caveat in respect of the Respondent’s Unregistered Mortgage does not give the Respondent any new rights. Therefore, counsel for the Applicant submitted that the lodgement of the Caveat does not create a registered interest. 40 Counsel for the Respondent argued that any argument regarding priority is premature. However, the Respondent maintains that the Unregistered Mortgage ranks in priority to the Lien because the Unregistered Mortgage is supported by the Caveat that was lodged on 1 February 2023. 41 Sections 9 and 9A of the WLA states: 9—Lien subject to registered, but not to unregistered, mortgage etc A lien under this Part of Act shall be subject to every dealing, assurance, mortgage, encumbrance, or charge on the estate or interest in the land of the owner or occupier, or on the goods the subject of the lien, registered before the registration of such lien, but shall take priority of any dealing, assurance, mortgage, encumbrance, or charge not so registered. 9A—Unregistered interests No unregistered estate or interest shall prevail against a registered lien. 42 Section 9 makes it clear that a lien will not take priority over any dealing, assurance, mortgage, encumbrance, or charge not so registered. 43 Upon further research, it appears that s 9A of the current Act was inserted into the WLA out of an abundance of caution three years after the WLA came into force. Section 9A was not discussed at the Second Reading of the proposed amendments. However, at the Committee stage, the then Attorney-General inserted a new clause to the proposed bill and said:22 The ATTORNEY-GENERAL said the Act of 1893 intended to provide that no person should be done out of his wages by means of an unregistered deed, but the matter was not put clearly, and in order to make the question clear he moved to add the following new clause : - “No unregistered estate or interest shall prevail against a registered deed” 22 South Australia, Parliamentary Debates, House of Assembly, 5 November 1896, 686. -- 13 of 14 -- [2025] SASC 78 Flourentzou AAsJ 12 44 The Caveat is at least a dealing and may also be an encumbrance that has been registered on the title in accordance with s 9 of the WLA. 45 Therefore, the Lien cannot prevail over the Caveat, which protects the Respondent’s Unregistered Mortgage. 46 Furthermore, s 12 of the WLA makes it clear that a lien is deemed to be a caveat for the purposes of the RPA. Therefore, the Lien, which is deemed to be a caveat under the RPA, cannot take priority over the Respondent’s Caveat, which protects the Unregistered Mortgage. Indeed, as a caveat, the interest protected by the Lien is subject to the interest protected by the mortgagee’s interest protected by the Respondent’s Caveat. 47 Therefore, I am not satisfied that the Applicant’s Lien ranks in priority to the Respondent’s Unregistered Mortgage. 48 Accordingly for the above reasons, I dismiss the Applicant’s Originating Application. 49 The Respondent has been wholly successful. Therefore, my preliminary view on costs is that the Applicant should pay the Respondent’s costs on a standard cost basis. 50 Any party who wishes to be heard to the contrary of the making of a costs order should file written submissions of no more than three pages within seven days of receipt of these reasons. In the absence of any such submissions, I will make a costs order in accordance with my preliminary view. -- 14 of 14 --