Big River Group Pty Ltd v KDJ Constructions Pty Ltd & Anor [2021] QDC 122

DISTRICT COURT OF QUEENSLAND CITATION: Big River Group Pty Ltd v KDJ Constructions Pty Ltd & Anor [2021] QDC 122 PARTIES: BIG RIVER GROUP PTY LTD (plaintiff) v KDJ CONSTRUCTIONS PTY LTD (First defendant) and SHANE DOUGLAS PARES (second defendant) FILE NO: 2655 of 2020 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 25 June 2021 DELIVERED AT: Brisbane HEARING DATE: 8 June 2021 JUDGE: Sheridan DCJ ORDER: 1. The first defendant and second defendant pay to the plaintiff the sum of $23,056.80 for claim plus $5,543.05 for interest up to the date of judgment and the plaintiff’s costs of and incidental to this proceeding on an indemnity basis to be assessed, if not agreed. 2. As against the second defendant, declarations that: (a) by a written guarantee and indemnity granted by the second defendant to the plaintiff on or about 7 July 2019 (the Guarantee), the second defendant granted an equitable charge to the plaintiff in respect of his interest in the estate in fee simple in the land described as Lot 174 on Survey Plan 110557, being the whole of the land contained in Title Reference 50242628 (the Land); (b) the equitable charge charges the second defendant’s interest in the Land with the payment of all moneys due and owing by the second defendant to the plaintiff on any account whatsoever (including claims for interest and costs on a solicitor and own -- 1 of 8 -- 2 client basis) associated with the credit facility held in the name of the first defendant, all of which sums are due and owing by the second defendant to the plaintiff under the Guarantee; and (c) the sum of $28,595.85 for claim and interest and the plaintiff’s costs of and incidental to the proceedings on an indemnity basis is owing by the second defendant to the plaintiff and the Land be charged with payment of that sum. 3. The application is otherwise adjourned to a date to be fixed. CATCHWORDS: REAL PROPERTY – PARTITION OF LAND – STATUTORY TRUST FOR SALE OR PARTITION – TRUSTEES – where plaintiff seeks an order for default judgment – where order sought for the sale of interest in land and appointment of trustees – where an equitable charge is created over the Land for the amounts owing by defendant – where no evidence as to extent of the entitlement of defendant as joint tenant – where joint tenant not personally served – whether power to order a sale under s 99 or s 38 of the Property Law Act 1974 (Qld) extends to a sale of a part interest in a property – whether order for sale can be made LEGISLATION: Property Law Act 1974 (Qld), s 38, s 99 Uniform Civil Procedure Rules 1999 (Qld), r 278, r 288 CASES: Hanson Construction Materials Pty Ltd v Davey & Anor [2010] QCA 246, cited Palk v Mortgage Services Funding plc [1993] Ch 330, cited Phillips & Anor t/a D & M Plant Hire v Hogg [2001] QSC 390, cited Worrell v Issitch [2001] 1 Qd R 570, cited SOLICITORS: Kalkman KF, solicitor, Patane Lawyers [1] The plaintiff seeks an order for judgment by default. An order was also sought for the sale of the second defendant’s interest in land described as Lot 174 on Survey Plan 110557, being the whole of the land contained in Title Reference 50242628 (the Land) pursuant to s 38 or alternatively s 99(2) of the Property Law Act 1974 (Qld) (the Act) and for certain consequential orders and declarations. -- 2 of 8 -- 3 [2] The proceedings were commenced by claim filed 17 September 2020 supported by a statement of claim. The claim against the first defendant arises from a Credit Agreement (the Agreement) entered between the first defendant and the plaintiff on or about 7 July 2019 for the supply of goods by the plaintiff to the defendant on credit. The claim is for an amount of $23,056.80 being for moneys owing for goods sold and delivered to the first defendant at its request and on the account established pursuant to terms of the Agreement. The claim includes an amount of $2,873.73 as interest already accrued on the amount outstanding together with continuing interest and costs on an indemnity basis in accordance with the terms of the Agreement. [3] The claim against the second defendant is pursuant to the terms of a written guarantee and indemnity (the Guarantee) granted by the second defendant, as director of the first defendant, to the plaintiff in consideration of the plaintiff entering into the Agreement with the first defendant. Pursuant to the terms of the Guarantee, the second defendant charged all of their right title and interest in any real property that the second defendant owned at present or in the future. The monies owing pursuant to the Agreement are sought against the second defendant pursuant to the terms of the Guarantee together with the costs of lodgement of the caveat over the Land. [4] The first and second defendants have filed no defence in the proceedings. [5] The first and second defendants entered into settlement negotiations which resulted in an agreement between the first and second defendants and the plaintiff pursuant to which the second defendant agreed to make payments to the plaintiff. It was a term of the agreement that if any of the payments were not made, the plaintiff would be “at liberty to exercise any of its rights under any agreement and/or to take steps to recover the full amount outstanding to it.” Neither the first nor second defendant made any payment to the plaintiff in accordance with the agreement. [6] The second defendant sent an email to the plaintiff on the day of the hearing of the application for default judgment and for the making of other consequential orders. The email stated, “I agree to the orders with the forbearing of the enforcement of these orders to be negotiated after the judgement.” The email was sent in response to an email from the plaintiff on the morning of the hearing attaching a copy of the draft orders which their client was seeking. The draft order sought judgment for the -- 3 of 8 -- 4 plaintiff against the defendants in the amount of $23,056.80 for claim plus interest plus costs on an indemnity basis. In respect of the sale of the second defendant’s interest in the Land, the draft order provided: “3. There be a sale of the second defendant’s interest in the Land pursuant to Section 38 of the Property Law Act 1974 (Qld). 4. That James Marc Imray and Kaily Lyn Chua (“Trustees”) be appointed to conduct the sale of the Land and be appointed pursuant to Section 38 of the Property Law Act 1974 (Qld) or alternatively pursuant to section 99(7) of the Property Law Act 1974 (Qld) to convey the Land upon the sale and that the Land vest in the Trustees for the purpose of that sale. 5. That the second defendant deliver vacant possession of the Land to the Trustees within 14 days of a written demand served by pre-paid ordinary post. 6. That the Trustees sell the Land in a way they consider appropriate. 7. That the Trustees be entitled to incur and charge reasonable fees for their time and outlays in conducting the sale of the Land and that those fees and outlays be deemed part of the costs of the sale of the Land. 8. That the Trustees be entitled to pay the plaintiff from the proceeds of the sale of the Land after any amount due to the registered mortgagee, funds sufficient to discharge the sum owed to the plaintiff being $23,056.80 for claim plus interest and costs.” [7] Notice of this application was given to the joint tenant of the Land, Jacqueline Pares, and the Commonwealth Bank of Australia, as the holder of the mortgage on the Land by sending by pre-paid post a copy of the application. The application contained, as the orders sought, orders in precisely the same terms as detailed in paragraph [6] above. [8] Jacqueline Pares, as the joint tenant, did not appear on the application, nor file any material. An affidavit of service was filed which deposed to the application having been sent by pre-paid post to Jacqueline Pares to 6 Teak Street Rothwell, the same address as used for the second defendant, being the address used by the second defendant in making the Credit Application. Jacqueline Pares was not personally served. In circumstances where the application seeks orders for the sale of the whole of the Land, Jacqueline Pares as a joint tenant of the Land should have been personally served, or the court provided evidence that Jacqueline Pares had actually received the application. -- 4 of 8 -- 5 [9] The solicitor for the applicant, Mr Patane, deposes to having received a letter from Bankwest, in response to the letter sent to the Commonwealth Bank of Australia, to confirm that the bank neither consents nor opposes the making of an order for sale. [10] In the circumstances, the defendants not having entered an appearance, pursuant to r 288 of the Uniform Civil Procedure Rules 1999 (Qld), the plaintiff is entitled to judgment against the first and second defendants. As provided in r 288(3), the court may give the judgment it considers is justified on the pleadings even if the judgment was not claimed. [11] The plaintiff seeks judgment in an amount of $23,056.80 for claim plus interest up to the date of judgment and the plaintiff’s costs of and incidental to this proceeding on an indemnity basis to be assessed, if not agreed. [12] The total amount of interest to be included in the order is an amount of $2,873.73 accrued on the amount outstanding up to 16 September 2020 and calculated at the rate of 15% per annum pursuant to the terms of the Credit Agreement together with an amount of $2,508.24 for the period from 17 September 2020 to 8 June 2021, being the date of the hearing of this application, and a further amount of $161.08 for the period from the date of the hearing to the date of judgment, making the total for interest an amount of $5,543.05. [13] The orders sought in relation to the Land are more complicated. [14] Based on the terms of the Guarantee, an equitable charge is created over the Land for the amounts owing by the first defendant to the plaintiff. [15] The authorities show that the power to order a sale under s 99(2) of the Act extends to equitable charges.1 [16] The jurisdiction under s 99(2) of the Act is discretionary.2 1 Phillips & Anor t/a D & M Plant Hire v Hogg [2001] QSC 390; Worrell v Issitch [2001] 1 Qd R 570; Hanson Construction Materials Pty Ltd v Davey [2010] QCA 246. 2 William Fisher and John Lightwood, Law of Mortgage (Butterworths, Australian Ed, 1995) at para 21.21; Palk v Mortgage Services Funding plc [1993] Ch 330. -- 5 of 8 -- 6 [17] The exercise of the right is consistent with the terms of the Guarantee and the plaintiff has given the defendants ample opportunity to make payment so as to avoid the necessity of enforcing that right. [18] The only issue is whether the power granted in s 99(2) of the Act extends to a sale of a part interest in a property. Here, the equitable charge granted extends only to the second defendant’s interest, whose interest is an interest held as a joint tenant with Jacqueline Pares. [19] No authorities were referred to which dealt with the question of the power under s 99(2) of the Act to order a sale of a part interest. On the face of it, s 99 appears to only deal with a situation where there is a mortgage or equitable charge on the whole of a property. [20] As an alternative to seeking relief pursuant to s 99(2) of the Act, the plaintiff sought relief pursuant to s 38 of the Act on the basis that s 38 dealt with a sale by co-owners. A person holding an equitable charge is a co-owner by virtue of the definitions in s 37 and Schedule 6 of the Act. [21] Section 38(1) permits a co-owner to make application for the court to “appoint trustees of the property and vest the same in such trustees, subject to encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.” [22] The section permits the making of an order for the appointment of trustees of the entire property, even though the equitable charge held by the plaintiff is limited to a charge over the interest of one joint tenant. [23] Paragraph 3 of the draft order sought a sale of the second defendant’s interest in the Land. Though it is not clear how that might work in practice, it was submitted that orders to that effect were frequently made. However, no authority was referred to that effect. [24] Leaving all that aside, an order for the sale of only that interest, was obviously not what was contemplated by the plaintiff. Paragraphs 4 and 6 (and implicitly 7) sought an order for the sale of the whole of the Land. -- 6 of 8 -- 7 [25] The difficulty with that proposition is that the other co-owner, Jacqueline Pares, was not personally served with the application; only sent a letter as to its existence. Ms Pares, as I mentioned earlier, has not responded nor appeared at the hearing. [26] In these circumstances, it is not appropriate for an order to be made appointing a trustee for sale in the form requested. [27] Apart from this matter, there is in addition no evidence before the court as to the extent of the entitlement of the second defendant as joint tenant in the property. Even if the other co-owner had been served, accordingly, it would not have been appropriate for the court to order the payment by the trustees to the plaintiff of the whole of the amount owed to the plaintiff by the second defendant; as sought in paragraph 8 of the draft. Whether and what amount should be paid by the trustees to the plaintiff would have had to await evidence in respect of the entitlement of the second defendant as joint tenant in the property and a further order of the court. [28] As to the other terms of the draft order, I see no reason for the appointment of two trustees from the same firm; as sought in paragraphs 4 and 7 of the draft. Whilst I am satisfied as to the qualifications of each, I consider that a dual appointment is an unnecessary expense and that it would have been appropriate to appoint only one trustee of sale. [29] Although no order should be made at present for the sale of the property, having established a right for an order for sale of the interest claimed, there is no reason why the court should not give a declaration as to the existence of the actual interest giving rise to the power to order a sale.3 [30] Accordingly, orders will be made in the following terms: 1. The first defendant and second defendant pay to the plaintiff the sum of $23,056.80 for claim plus $5,543.05 for interest up to the date of judgment and the plaintiff’s costs of and incidental to this proceeding on an indemnity basis to be assessed, if not agreed. 3 Hanson Construction Materials Pty Ltd v Davey [2010] QCA 246 at [58] per Chesterman JA (Muir JA and Applegarth J agreeing). -- 7 of 8 -- 8 2. As against the second defendant, declarations that: (a) by a written guarantee and indemnity granted by the second defendant to the plaintiff on or about 7 July 2019 (the Guarantee), the second defendant granted an equitable charge to the plaintiff in respect of his interest in the estate in fee simple in the land described as Lot 174 on Survey Plan 110557, being the whole of the land contained in Title Reference 50242628 (the Land); (b) the equitable charge charges the second defendant’s interest in the Land with the payment of all moneys due and owing by the second defendant to the plaintiff on any account whatsoever (including claims for interest and costs on a solicitor and own client basis) associated with the credit facility held in the name of the first defendant, all of which sums are due and owing by the second defendant to the plaintiff under the Guarantee; and (c) the sum of $28,595.85 for claim and interest and the plaintiff’s costs of and incidental to the proceedings on an indemnity basis is owing by the second defendant to the plaintiff and the Land be charged with payment of that sum. 3 The application is otherwise adjourned to a date to be fixed. -- 8 of 8 --