Boral Resources (Qld) Pty Ltd v Thomas & Anor as trustees for the Avandel Property Trust & Ors [2010] QSC 297

1-1 SUPREME COURT OF QUEENSLAND CITATION: Boral Resources (Qld) Pty Ltd v Thomas & Anor as trustees for the Avandel Property Trust & Ors [2010] QSC 297 PARTIES: BORAL RESOURCES (QLD) PTY LIMITED ACN 009 671 809 (plaintiff/applicant) v ANDREW JUSTIN THOMAS AND KERRY LEANNE THOMAS AS TRUSTEES FOR THE AVANDEL PROPERTY TRUST (first defendant/respondent) ANDREW JUSTIN THOMAS (second defendant/respondent) KERRY LEANNE THOMAS (third defendant/respondent) FILE NO: BS6047 of 2010 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: Delivered ex tempore on 3 August 2010 DELIVERED AT: Brisbane HEARING DATE: 2 August 2010 JUDGES: Atkinson J ORDERS: 1. Judgment entered for the plaintiff against the second and third defendants in the amount of $35, 814.07 plus interest of $600.64; 2. The second and third defendants pay interest from 3 August 2010 on the daily balance of so much of the above $35, 814.07 that is outstanding from time to time at the rate of 12.48% per annum; 3. The second and third defendant pay the costs of the plaintiff of and incidental to this application on the Magistrates’ Court Scale of Costs to be assessed; 4. The application filed 23 July 2010 otherwise be adjourned to the Registry. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – SUMMARY JUDGMENT – where applicant applied for summary judgment following the failure of a small construction company to repay debt – where the second -- 1 of 9 -- 1-2 ORDER respondent, who was the director of the construction company, and the third respondent, his wife, had provided a personal guarantee and indemnity – where applicant had lodged a caveat over land the subject of the personal guarantee and indemnity – where court considered s 126(4)(a)(ii) of the Land Title Act1994 (Qld) which requires a caveator to commence proceedings in the Supreme Court within three months to avoid the lapse of a caveat if the caveatee has not consented to its filing – whether summary judgment should be entered for the plaintiff – recommendations for law reform Land Title Act1994 (Qld), s 126(4)(a)(ii) Uniform Civil Procedure Rules 1999 (Qld), r 288 Land Title Act (NT), s 142 Real Property Act 1900 (NSW), s 74I Transfer of Land Act 1958 (Vic), s 90 COUNSEL: A Lyons for the applicant No appearance for the respondents SOLICITORS: James Conomos Lawyers for the applicant No appearance for the respondents -- 2 of 9 -- 1-3 ORDER HER HONOUR: This is an application for a default judgment under rule 288 of the Uniform Civil Procedure Rules. This application has to be made by the Court because of the nature of the claim. It is not a default judgment that can be given in the Registry, notwithstanding that there has been no defence filed. The facts of the matter are relatively easily set out. The plaintiff is part of the Boral Limited Group of Companies. Sanburg Constructions Pty Ltd, which appears to be a firm involved in concreting, applied for credit from Boral Limited, which would cover all its related bodies corporate, for the supply of goods such as concrete from Boral. The nature of the business was said in that credit application to be that of a residential builder. It is apparent that Sanburg Constructions Pty Ltd is one of the thousands of small companies in this nation that engage as independent contractors in work in the building industry. Such companies may be thought to be key economic drivers of this country. Its director was said to be an Andrew Thomas and he is the second defendant. His wife is Kerry Thomas and she is the third defendant. Together, as trustees for the Avandel Property Trust, they are the first defendant in this matter. As part of its standard requirements, Boral required a personal guarantee and indemnity from Mr Thomas, as director, -- 3 of 9 -- 1-4 ORDER and Mrs Thomas. It does appear from the material that she was for one short period a director of the company and was a shareholder of the company. That company is now in liquidation. As part of the guarantee and indemnity, both Mr and Mrs Thomas were required to indemnify Boral and guarantee the debts of Sanburg Constructions to Boral or any of its related bodies corporate. Paragraph 9 of the personal guarantee and indemnity has this form which is standard in all of Boral’s guarantees and indemnities: "The guarantor hereby agrees to charge all their equitable interest in freehold or leasehold property. The guarantor agrees to deliver to the supplier within seven days of demand a properly executed memorandum of mortgage in a form approved by the supplier and which includes a covenant providing that interest may be charged on all outstanding moneys at rates set from time to time by section 94 of the Supreme Court Act 1970 (NSW) and otherwise in accordance with memorandum Q860000 registered at the Office of the Registrar General in Sydney." In fact, of course, the situation with regard to equitable interests of real property and their protection is different from State to State, and that is a matter on which I will comment later. The contract of supply was carried out and goods were supplied to Sanburg Constructions Pty Ltd. However, after a period of -- 4 of 9 -- 1-5 ORDER some time where it appears there was no default, the plaintiff supplied goods to Sanburg Constructions and was not paid for those goods. The sum of $33,144.76 remains unpaid. The plaintiff then commenced a claim against the defendants filed in this Court on 10 June 2010. No notice of intention to defend has been filed. I should say, in case it be thought relevant, that, of course, this claim does not come within the case management regime of this Court because no defence has been filed and case flow management does not apply to any claim where no defence has been filed. The sum of $33,144.76, of course, is well below the jurisdiction of this Court and is the kind of debt which is ordinarily dealt with in the Magistrates Court, particularly where it appears that the defendant does not dispute the debt. The reason why the matter is in this Court is because the claim is not restricted to repayment of the debt but is a claim for a declaration that the plaintiff holds an equitable interest as chargee on land situated at 6 Counihan Street, Ormiston, which is land owned by the first defendant. Then the claim seeks orders under the Property Law Act, section 99(2), that the Ormiston property be sold and consequential orders. It then seeks further or, in the alternative, repayment of the debt by the second and third defendants. There appears to be no reason at all why the plaintiff does not have the right to have a judgment for repayment of the -- 5 of 9 -- 1-6 ORDER debt which includes interest and costs which I am satisfied have been incurred, although the costs, of course, are greater because the matter has been brought in this Court. What makes this case more difficult is whether or not I should at this stage make the declarations and make the orders for the sale of the property. The plaintiff is merely one of many parties with an interest in the land. It is not, of course, the registered mortgagee, which appears to be the Bank of Queensland. There appears to be a second registered mortgagee, and then a number of caveators of whom the plaintiff is well down the line. Indeed, another caveat has been put on the property subsequently. The reason why the plaintiff appears to have brought the action making the claims that it has rather than just for repayment of the debt which, presumably, is its real interest is that in Queensland a caveat lapses, if it is not filed with the consent of the caveatee, under section 126(4)(a)(ii) within three months after the lodgement of the caveat unless the caveator starts a proceeding in a Court of competent jurisdiction to establish the interest claimed under the caveat, and the Court of competent jurisdiction in such a case is this Court. There is another way in which the caveator may be required to start proceedings and that is if a notice is served on the -- 6 of 9 -- 1-7 ORDER caveator and it then must start proceedings within 14 days. That notice must be served by the caveatee. It was said to me in submissions that in no other State of Australia is there such a provision, and that is true. There is such provision in one of the Territories, the Northern Territory. Section 142 of the Land Title Act (NT) has a similar provision. The provision has the advantage of being very clear and means that the register is not clogged up with caveats which are essentially stale. However, it has the disadvantage that plaintiffs who wish to protect their caveats must start proceedings in this Court with all the attendant expense and, as I have said, it appears to be used in this State particularly by big suppliers against small business, particularly in the construction industry, which means that the cost to those small businesses is ramped up by the cost of proceedings in this Court to enforce the interests. It would be a nice question for law reform whether or not Queensland legislation should follow or be more similar to that in other States. For example, in New South Wales under section 74I of the Real Property Act 1900, there is a provision which means that once a dealing is lodged with the Registrar of Titles, then the caveator has 21 days to commence proceedings in the Supreme Court to extend the operation of the caveat which is a way of ridding the title of unnecessary caveats but means that caveators do not have to commence proceedings to protect caveats if no other dealing is lodged. -- 7 of 9 -- 1-8 ORDER In Victoria, there is a period of 30 days under the Transfer of Land Act 1958, section 90. The Real Property Acts were considered by the Queensland Law Reform Commission some 20 years ago. The three month period earlier referred to was taken from the earlier Real Property Acts, although the working paper of the Commission did look at what the provisions in the other States were. It does not appear that it was anticipated that caveats would grow to be used in the way in which they are now and with the attendant costs for small business. In all of the circumstances, it is, in my view, appropriate to give judgment for the money amount that has been sought, that is, the sum of $35,814.07. I decline at this stage to grant the other relief sought in the claim. It is unnecessary to make the declaration as to the equitable interest that has already been used to support the lodgement of the caveat which would not have been able to be lodged without it. It is inappropriate to order the sale of the property at the hands of this caveator when there are so many with a superior claim to it. So I give judgment, as I have said, for the plaintiff against the second and third defendants in the sum of $35,814.07. -- 8 of 9 -- 1-9 ORDER Although the plaintiff is entitled to costs on an indemnity basis under the guarantee and indemnity, I do not think it is appropriate, in view of the judgment that has been given, to award costs on anything other than a Magistrates Court scale. So I award costs on that basis, and under the guarantee and indemnity, the plaintiff is entitled to interest from the date of commencement of this proceeding to the date of payment or judgment, and I order that judgment for that interest. I adjourn the application for judgment on the claim for a declaration and for sale of the land set out in paragraphs 2, 3 and 4 of the claim to a date to be fixed. ... ----- -- 9 of 9 --