Bunnings Group Limited v Asden Developments Pty Ltd & Anor [2013] QSC 99

1-1 SUPREME COURT OF QUEENSLAND CITATION: Bunnings Group Limited v Asden Developments Pty Ltd & Anor [2013] QSC 99 PARTIES: BUNNINGS GROUP LIMITED (plaintiff/applicant/cross-respondent) v ASDEN DEVELOPMENTS PTY LTD (first defendant/first respondent) and MELINDA JAYNE NICHOLS (second defendant/second respondent) v PETER NICHOLS, DEBRA NICHOLS, GEORGE NICHOLS AND JONATHON MCLEOD (cross-applicants) FILE NO/S: BS 2798/11 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 9 April 2013 DELIVERED AT: Brisbane HEARING DATE: 9 April 2013 JUDGE: Philip McMurdo J ORDER: 1. Judgment be given to the Plaintiff against the Second Defendant pursuant to rule 288 of the Uniform Civil Procedure Rules 1999, in the following terms: a. That the Second Defendant pay to the Plaintiff the sum of $27,581.84 pursuant to a written guarantee. b. That the Second Defendant pay interest at the rate of 14% per annum to the date of judgment as follows: i. On $2,318.18 from 1 December 2010 to 10 February 2011; ii. On $24,170.50 from 1 January 2011 to -- 1 of 8 -- 1-2 ORDER 1 10 20 30 40 50 60 10 February 2011; iii. On $6,488.68 from 11 February 2011; iv. On $19,178.36 from 1 February 2011. 2. The Plaintiff’s claim is otherwise dismissed. 3. The order made by this Court on 13 November 2012 in 9666/12 be varied so as to include Bill Karageozis of McLeod & Partners as a statutory trustee for sale together with Jonathan Paul McLeod. 4. Caveat number 713967903 registered by Bunnings Group Limited against the interest of the second defendant on Lots 1, 4 and 5 on SP213917, County of Stanley, Parish of Tingalpa, be removed pursuant to section 127 of the Land Title Act 1994 (Qld). 5. The sum of $45,984.82 currently held in the trust account of Bennett & Philp Lawyers be paid to the trust account of the solicitors for Jonathan Paul McLeod and Bill Karageozis. 6. The plaintiff pay Peter Nichols, Debra Nichols, George Nichols, and Jonathan Paul McLeod’s costs of and incidental to this application fixed in the sum of $8000. CATCHWORDS: CORPORATIONS – CHARGES, DEBENTURES AND OTHER BORROWINGS – CHARGES – VALIDITY – OF CHARGES IN FAVOUR OF CERTAIN PERSONS – where plaintiff claims that pursuant to terms of its contract with the second defendant it is entitled to a charge over any property of the second defendant – where plaintiff claims it is entitled to a charge over the second defendant’s interest in five lots of land – where statutory trustee appointed for the five lots of land – whether the appointment of the statutory trustee put paid to the charge claimed by the plaintff Property Law Act 1974 (Qld), s 38 Crocombe v Pine Forests of Australia Pty Ltd (2005) 219 ALR 692, distinguished COUNSEL: C T Young (sol) for the plaintiff/applicant/cross-respondent No appearance for the first defendant/first respondent No appearance for the second defendant/second respondent M D Martin for the cross-applicants SOLICITORS: Bennett & Philip Lawyers for the plaintiff/applicant/cross- respondent No appearance for the first defendant/first respondent No appearance for the second defendant/second respondent M.S. & Cliff Lawyers for the cross-applicants -- 2 of 8 -- 1-3 ORDER 1 10 20 30 40 50 60 HIS HONOUR: The plaintiff has applied for judgment against the second defendant. The judgment which is sought is in part a money judgment and in part one for declaratory relief. The plaintiff supplied goods to the first defendant which is a company in liquidation. The second defendant was a guarantor. She has not appeared to resist this application and it is sufficiently clear that the plaintiff is entitled to the money Judgment or Judgments which it seeks by paragraphs 1(a) and 1(b) of its application filed on 21 March. The controversy today, in broad terms, is between the plaintiff and other people who are not parties to these proceedings but who have interests in property for which the plaintiff claims declarations of an entitlement to a charge over that property. To explain that controversy there are, or were, relevantly five pieces of land, which are those set out in paragraph 1(c) of the application. The second defendant was, until 13 November last year, a registered co-owner of each of those lots. The plaintiff claims that pursuant to the terms of its contract with the second defendant, it is entitled to a charge over any property of the second defendant to secure the performance of the guarantee. It claims, therefore, that it became entitled to a charge over the second defendant's interest in those lots. That is not conceded by the parties who are resisting this application, -- 3 of 8 -- 1-4 ORDER 1 10 20 30 40 50 60 whom I will call the respondents. They contend that there were arrangements between the second defendant and others, the effect of which was that the second defendant held no beneficial interest, at least, in the five lots. That issue cannot be fairly determined today and for present purposes I will assume that the second defendant did have a legal as well as an equitable interest in the five properties until last November and that her interest became charged in favour of the plaintiff. Then on 13 November 2012 an order was made in proceedings 9666 of 2012 for the appointment of Mr J P McLeod, one of the respondents, as a trustee for sale. The order was made pursuant to section 38 of the Property Law Act 1974. The plaintiff was not a party to those proceedings. The applicants were the present respondents as well as the second defendant in this case. The order was made by the Deputy Registrar and by consent. It was that Mr McLeod be appointed trustee of each of the properties to be vested in him "subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares to be held by him on the statutory trust for sale." The terms of that order correspond with those of section 38(1) of the Act. The plaintiff claims that its charge survived that appointment of a statutory trustee for sale. The plaintiff has lodged a -- 4 of 8 -- 1-5 ORDER 1 10 20 30 40 50 60 caveat over the interest of the second defendant in the five lots. The practical effect of that caveat would be to prevent Mr McLeod from selling them or any of them. As matters have developed the plaintiff has agreed to a sale of lots two and three and lots one, four and five are yet to be sold. Whilst the caveat remains, the sale of them is impeded. A sum of about $45,000 from the proceeds of the sale of lot two has, by agreement between the plaintiff and the respondents, been placed into the trust account of the plaintiff's solicitors pending the resolution of this dispute. That sum, with the accrual of interest on the plaintiff's debt, is now insufficient to cover the entirety of the plaintiff's claim but the difference is relatively small. The respondents resist the making of a declaration as sought by the plaintiff against the second defendant, because it would be inconsistent with what they say is the present ownership of the lots or those of them which have not been sold and of the funds held in trust by the plaintiff's solicitors. Now, strictly speaking, a judgment in the proceedings brought by the plaintiff would not bind the respondents if they are not parties to those proceedings. But there is a question for determination as to what should happen to the moneys which are held in trust and the question between the plaintiff and the -- 5 of 8 -- 1-6 ORDER 1 10 20 30 40 50 60 respondents, which turns upon the effect of the appointment of Mr McLeod as a trustee for sale, thereby affects the declaratory relief sought by the plaintiff, as well as the outcome of the cross application made by the respondents. By that application the respondents seek the removal of the caveat over lots one, four and five and they seek an order that the sum presently held in trust by the plaintiff's solicitors be paid to the solicitors for the statutory trustee or trustees. (To explain that they seek a further order to vary the appointment of the trustee for sale to make it an appointment of Mr McLeod and one other person as trustees. In that last respect there is no controversy.) Therefore the essential question is whether the appointment of Mr McLeod, as trustee of the five lots, put paid to the charge which is claimed by the plaintiff. By that order it was further provided that the proceeds of sale of the properties, after deduction of the costs of the applicants for the order, be paid to those applicants, that is to the present respondents. In other words the order provided that none of the proceeds of sale would be paid to the present second defendant. The consequence of that order, in my view, was to put paid to any interest which could be claimed by the plaintiff in any of the five lots or in turn to the proceeds of sale of any of those lots. According to the terms of section 38(1), the effect of the order was to vest the five properties in -- 6 of 8 -- 1-7 ORDER 1 10 20 30 40 50 60 Mr McLeod as a trustee, free from any encumbrance affecting any undivided share. According to the plaintiff's claim, its charge was such an encumbrance. The plaintiff - on its argument - would have been entitled to a charge on any property constituted by the second defendant’s entitlement to some of the proceeds of sale. But she has no such entitlement because of the terms of the order. The present case differs from Crocombe and Another v Pine Forests of Australia Pty Ltd and Others at (2005) 219 ALR 692. The position then is that the plaintiff has no entitlement to a charge over any of the lots or of the moneys presently held in trust, and the respondents' cross-application, apart from what is sought by way of the costs of it, to which I will come, must succeed. Apart from the question of costs, the outcome will therefore be that the plaintiff will have judgment against the second defendant in terms of paragraphs 1A and 1B of its application filed on 21 March 2013. The plaintiffs' application will otherwise be dismissed. There will be orders in terms of paragraphs one, two and three of the application filed by leave, which is made by Mr Peter Nichols, Ms Debra Nichols, Mr George Nichols and Mr McLeod. ... -- 7 of 8 -- 1-8 ORDER 1 10 20 30 40 50 60 The remaining questions concern costs. The respondents, as I have called them, seek the costs of their cross-application upon the indemnity basis. In that respect they rely upon correspondence sent prior to the hearing, but only last Friday. It seems to me that the proposal in that letter was made so close to the hearing that the plaintiff could not be said to have been unreasonable in not accepting it. Nevertheless the respondents have prevailed upon the substantial point and they should have their costs, subject to this consideration, that the respondents had to make some approach to the Court, albeit not in a contested hearing, to add the further trustee for sale. I am concerned that having regard to the small amount of money in contest, that the process of assessment of these costs might lead to a disproportionate outcome. I think it is better to fix the costs now. It may be that the amount I have in mind is a little more than would be allowed on an assessment, but by fixing them now I will save the parties the costs of that exercise. The order will be that the plaintiff pay to the cross-applicants, their costs of the application filed by leave today, fixed in the sum of $8000. Thank you. ----- -- 8 of 8 --