CCAFO Pty Ltd & Anor v Kaylo Pty Ltd [2014] QSC 206

SUPREME COURT OF QUEENSLAND CITATION: CCAFO Pty Ltd & another v Kaylo Pty Ltd [2014] QSC 206 PARTIES: CCAFO PTY LTD (ACN 117 166 275) (first plaintiff) AND MANSTAR PTY LTD (ACN 010 601 073) (second plaintiff) v KAYLO PTY LTD (ACN 010 601 073) ATF THE KAYLO FAMILY TRUST (defendant) AND MTSIA PTY LTD (ACN 167 283 285) (defendant by counterclaim) FILE NO: BS12267/13 DIVISION: Trial PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 5 August 2014 DELIVERED AT: Brisbane HEARING DATE: 5 August 2014 JUDGE: Atkinson J ORDERS: 1. Pursuant to section 127 of the Land Title Act 1994 (Qld) the caveat lodged by the defendant (dealing number 715787232) over the property described as Lot 2 on RP 175679, County Canning, Parish Bribie (title reference 16137181) (“the caveat”), also known as 5 Latcham Drive, Caloundra in the State of Queensland (“the Latcham Drive property”), be removed, such removal to be effected as set out in paragraph 2(a) and upon the provision of security as set out in paragraph 2(b) below. 2. At the settlement of the sale of the Latcham Drive property the: a) defendant shall cause to be tendered to the purchaser of the Latcham Drive property a withdrawal of caveat, the content of which shall be agreed with the defendant by counterclaim prior to the settlement; b) defendant by counterclaim shall require a -- 1 of 4 -- bank cheque for $190,000 to be tendered to it by the purchaser payable to the “Registrar of the Supreme Court of Queensland” (“the security cheque”); and 3. The defendant by counterclaim shall upon receipt of the security cheque forthwith deliver it to the solicitors for the defendant (or such representative of the solicitors for the defendant who may attend the settlement) who shall cause it to be tendered to the Registrar of the Supreme Court of Queensland. 4. The solicitors for the defendant by counterclaim and solicitors for the defendant shall be at liberty to agree in writing to direct the Registrar to pay an amount equivalent to the security cheque plus any accretions into a joint interest bearing account. 5. The application by the first and second plaintiffs and the defendant by counterclaim filed 25 July 2014 for security for costs as against the defendant be adjourned to a date to be fixed. 6. The application by the defendant filed 1 August 2014 for security for costs as against the second plaintiff be adjourned to a date to be fixed. 7. The plaintiffs, the defendant by counterclaim and the defendant each have leave to copy documents produced by the court pursuant to subpoenas issued to: a) Lander & Rogers; b) Procter Graham Lawyers; c) Muir Lawyers; d) Walsh & Walsh; e) Pitcher Partners. 8. Costs of the applications filed 25 July 2014 and 1 August 2014 be reserved. CATCHWORDS: REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS – REMOVAL – where the defendant had lodged a caveat over property owned by the defendant by counterclaim – where the defendant by counterclaim applied to remove the caveat – where the defendant has an equitable interest in the property – where the defendant does not wish to prevent the sale of the property by rather to vindicate its equitable interest – whether the caveat should be removed pursuant to s 127 of the Land Title Act – whether the order should require the provision of security for the defendant’s asserted interest in the land COUNSEL: P Dunning QC with J Meredith for the first and second plaintiff and defendant by counterclaim D A Skennar for the defendant SOLICITORS: Griffiths Parry Lawyers for the first and second plaintiff and defendant by counterclaim Morgan Conley Lawyers for the defendant -- 2 of 4 -- 1 JUDGMENT HER HONOUR: The defendant by counterclaim, MTSIA Proprietary Limited (“MTSIA”), has applied to remove a caveat that the defendant, Kaylo Proprietary Limited as trustee for the Kaylo Family Trust, has lodged over property owned by MTSIA, situated at 5 Latcham Drive, Caloundra (“the property”). A large quantity of evidence has been put before me, as well as the pleadings in this matter. Because 5 of the imminence of the settlement date for the sale of the property, it is necessary for me to decide this matter ex tempore. Further consideration would not lead me to a different outcome, but would certainly lead to more elegance and learning in these reasons for judgment. However, as I said, the matter is urgent and requires a decision now. 10 The pleadings show a long history of financial relationship between two business people who have used various corporate vehicles and trustee companies to conduct their business relationship with one another, which has been somewhat in the nature of a partnership, although that does not quite adequately describe the nature of the 15 long, involved history of financial relationships between them. This application concerns only one property, which was the subject of that relationship and which the defendant alleges is held on constructive trust in whole or in part by Manstar Proprietary Limited (“Manstar”) and/or MTSIA,which purchased the land from Manstar under an agreement which, on its face, does not appear to be a commercial 20 agreement. It is MTSIA who proposes to sell the property, although it is MTSIA and Manstar who, it appears, would receive the proceeds of that sale. That case, although not yet adequately pleaded, is arguable. I am by no means necessarily satisfied that it would 25 be successful, but there is a serious question to be tried. The defendant does have, in my view, an arguable case which it could plead; that because of its contribution, or at least its predecessor in title’s contribution, to the purchase price of the property, it is entitled to some of the proceeds of its sale and has an equitable interest in the property supported by its being the beneficiary of a constructive trust held over the 30 property. The second question to be considered in terms of removal of a caveat is what the balance of convenience requires or suggests. The defendant has frankly conceded that it has no interest in the property being retained and does not suggest or wish to 35 argue that the sale is not to a third party for value or that the property is not being sold at its market price, and therefore, it is only to vindicate its interest in the property that it wishes to retain the caveat, rather than actually to prevent the sale. The balance of convenience does favour the removal of the caveat to allow the sale 40 to go ahead. However, in these circumstances, it is appropriate under section 127 of the Land Title Act to make that order on terms which enable some security to be retained for the interest which the defendant asserts it has in the land. The plaintiffs and defendant by counterclaim have referred to the nature of the contributions made by the defendant to the property, being the deposit, legal fees on acquisition and the 45 difference between the amount loaned by the Commonwealth Bank of Australia for the purchase and the purchase price. It alleges that those moneys came from the consolidated revenue account into which it had made contribution. That is the nature of its contribution. 50 -- 3 of 4 -- 2 JUDGMENT Mr Dunning asserts – in my view, with some validity – that that would be in the range of 10 to 20 per cent of the value of the property. Taking it at its highest, therefore, given that the sale price of the property is some $950,000 the amount that should be paid into Court as a condition or term of the removal of the caveat is in the sum of $190,000. I make the following orders: 5 1. Pursuant to section 127 of the Land Title Act 1994 (Qld) the caveat lodged by the defendant (dealing number 715787232) over the property described as Lot 2 on RP 175679, County Canning, Parish Bribie (title reference 16137181) (“the caveat”), also known as 5 Latcham Drive, Caloundra in the State of 10 Queensland (“the Latcham Drive property”), be removed, such removal to be effected as set out in paragraph 2(a) and upon the provision of security as set out in paragraph 2(b) below. 2. At the settlement of the sale of the Latcham Drive property the: a) defendant shall cause to be tendered to the purchaser of the Latcham 15 Drive property a withdrawal of caveat, the content of which shall be agreed with the defendant by counterclaim prior to the settlement; b) defendant by counterclaim shall require a bank cheque for $190,000 to be tendered to it by the purchaser payable to the “Registrar of the Supreme Court of Queensland” (“the security cheque”); and 20 3. The defendant by counterclaim shall upon receipt of the security cheque forthwith deliver it to the solicitors for the defendant (or such representative of the solicitors for the defendant who may attend the settlement) who shall cause it to be tendered to the Registrar of the Supreme Court of Queensland. 4. The solicitors for the defendant by counterclaim and solicitors for the 25 defendant shall be at liberty to agree in writing to direct the Registrar to pay an amount equivalent to the security cheque plus any accretions into a joint interest bearing account. 5. The application by the first and second plaintiffs and the defendant by counterclaim filed 25 July 2014 for security for costs as against the defendant 30 be adjourned to a date to be fixed. 6. The application by the defendant filed 1 August 2014 for security for costs as against the second plaintiff be adjourned to a date to be fixed. 7. The plaintiffs, the defendant by counterclaim and the defendant each have leave to copy documents produced by the court pursuant to subpoenas issued 35 to: a) Lander & Rogers; b) Procter Graham Lawyers; c) Muir Lawyers; d) Walsh & Walsh; 40 e) Pitcher Partners. 8. Costs of the applications filed 25 July 2014 and 1 August 2014 be reserved. I am of the view that this matter should proceed to trial as soon as possible so that the 45 complex financial arrangements which the parties have undertaken can be sorted out and justice, to the extent that it can, be done between the parties. The matter is set down for a directions hearing in the supervised case list, so it is not necessary in those circumstances for me to give directions. 50 -- 4 of 4 --