Commonwealth Bank of Australia v Everingham [2001] QSC 342

SUPREME COURT OF QUEENSLAND CITATION: Commonwealth Bank of Australia v Everingham [2001] QSC 342 PARTIES: COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 (applicant) v GARRY EVERINGHAM (respondent) FILE NO: S7522 of 2001 DIVISION: Trial Division DELIVERED ON: 21 September 2001 DELIVERED AT: Brisbane HEARING DATE: 18 September 2001 JUDGE: Mackenzie J ORDER: 1. The application by Garry Everingham is dismissed with costs to be assessed. 2. Pursuant to s 74(2) of the Property Law Act 1974, a caveat bearing dealing number 704718509 and lodged on 23 April 2001 by Garry Everingham over Lot 5 on SP125186 County of Ward Parish of Gilston, Title Reference 50334290 be removed. 3. The respondent Garry Everingham pay the applicant’s costs of and incidental to the application to be assessed. CATCHWORDS: QUEENSLAND – POWERS UNDER RULES OF COURT – JOINDER OF PARTIES – JOINDER OF ACTION – application by respondent to join a third party to the applicant’s application and to join the applicant’s application with another proceeding – whether the joining of the third party would assist the respondent in the application – whether the respondent has established that the applicant’s application and the application to be joined involve substantially the same question. CONVEYANCING – LAND TITLE UNDER TORRENS SYSTEM – CAVEATS AGAINST DEALINGS – LAPSE, REMOVAL OR WITHDRAWAL – Application by the -- 1 of 4 -- 2 applicant to remove a caveat lodged by the respondent – whether a purchaser under an instalment contract for the sale of land registered under the Land Title Act may caveat – whether applicant’s interest in the land as mortgagee arose before the respondents equitable interest in the land claimed in the caveat – whether the applicant’s title is indefeasible – whether caveator has established a serious question to be tried. Land Title Act 1994 (Qld) s 49A(2), s 184(1) Property Law Act 1974 (Qld) s 71, s 74(1), s 74(2) Re Jorss’Caveat [1982] 1 QdR 458, applied Law Mortgagees (Queensland) Pty Ltd v Thirteenth Corp Pty Ltd [1999] VSC 360, considered COUNSEL: T J Bradley for the applicant The respondent appeared on his own behalf SOLICITORS: Minter Ellison Lawyers for the applicant The respondent appeared on his own behalf [1] MACKENZIE J: There are two applications. One is by Mr Everingham to join Spengler Pty Ltd as a party to the Commonwealth Bank’s application to set aside Mr Everingham’s caveat and to join the Bank’s application with proceedings S5751 of 2001 in which Questvale Pty Ltd sues Spengler Pty Ltd. The Commonwealth Bank was originally joined as second defendant in that action but on 25 July 2001 it was, by consent, struck out of the claim and the statement of claim was also struck out. [2] Claim S5751 of 2001 seeks a number of declarations concerning business dealings between Questvale and Spengler. They include declarations that Questvale lent $650,000 to Spengler; that Spengler remains indebted for that amount; that three contracts of sale of building units by Spengler to Questvale had not been rescinded; that Spengler and Questvale had agreed to certain set-offs against the price of the units to reduce the debt owed by Spengler to Questvale, including a payment in respect of the lot which Mr Everingham claims in the present proceedings to have purchased; that the contracts entered into by Questvale and Spengler are instalment contracts under s 71 of the Property Law Act 1974; and that certain caveats lodged by Questvale were caveats pursuant to the provisions of s 74(1) of the Property Law Act 1974. [3] The second application is by the Commonwealth Bank to remove a caveat lodged by Mr Everingham over Lot 5 in a block of home units at Broadbeach called “The Albert”. Mr Everingham’s application seeks, in addition to the procedural relief, an order that the caveat remain on the register until determination of the matter, and an injunction against dealing with or promoting sale of the property until that time. Mr Everingham bases his caveat on a contract to purchase one of the units from Spengler, and in particular, on the proposition that the contract is an instalment contract. The contract was entered into on 10 August 1998 and the purchase price was shown as $320,000. -- 2 of 4 -- 3 [4] At the time the contract to purchase the unit was entered into, an agreement expressed to be supplementary to the contract was also executed. It provided for a deposit of $32,500 to be paid in an equivalent number of “trade dollars”. Of the balance, $97,500 was to be paid in “trade dollars” and $169,000 by cash or bank cheque. Mr Everingham said that there was also commission owed to him to be taken into account. It appears that the deposit actually amounted to $58,000. According to the contract the settlement date was 14 days after the seller notified the buyer that the scheme had been established, and that the council had issued a certificate of classification for the building containing the lot, and that “(in the reasonable opinion of the seller) the lot is ready for occupation.” Clause 7.2 of the contract nominated 31 December 1999 (subject to provision for extension in certain specific circumstances) as the date after which the contract could be terminated by either party. According to correspondence, 23 November 2000 was nominated as settlement date. Clause 7.1 provided that a settlement of the contract was subject to establishment of the community title scheme containing the lot. [5] The contract on its face appears to be an unremarkable contract for purchase of a community title unit. It provides for payment of a deposit and of the balance in due course. However, the ground of claim upon which the caveat is said to be based is that the contract is an instalment contact under the Property Law Act 1974. Section 71 of the Property Law Act 1974 defines an “instalment contract” as “an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit) without becoming entitled to receive a conveyance in exchange for the payment or payments.” Section 74(1) of the Property Law Act 1974 allows a purchaser under an instalment contract for the sale of land registered under the Land Title Act 1994 to caveat under that Act. [6] In support of his application to have the proceedings in S5751 of 2001 heard together with the present matter and to join Spengler as a party Mr Everingham relies on an affidavit by Peter Andre Hodul, filed in S5751 of 2001. The exhibits to the affidavit are not included in the copy provided as an exhibit to Mr Everingham’s affidavit, but its effect reflects the allegations in that action that Questvale lent Spengler money by way of “trade dollars” which had the effect of reducing the amount Spengler had to borrow from a mainstream lender. It is alleged that Questvale purchased its three lots about 10 days before Mr Everingham’s contract. There was an arrangement between Spengler and Questvale providing for repayment of the moneys advanced and the arrangement referred to reflects the claim in that action (summarised above) in para [2]. However, there is no evidence at all that any recognisable form of registrable security was created over the land by those transactions, leaving aside the question of instalment contracts. [7] On 7 October 1998 the Bank registered a mortgage over real property owned by Spengler which subsequently became the land comprised in the community title plan to which Mr Everingham's contract relates. The mortgage remained in force at all times. On 12 March 2001 the bank appointed a receiver and manager to Spengler. The bank’s mortgage is the only registered mortgage over the land. [8] Mr Everingham is in the unfortunate position of being out of pocket by a large sum as a result of the current situation. The question is whether, according to law, he has any right of redress in the form in which he seeks it, by claiming an interest enforceable against the Bank in the unit which he has contracted to purchase. His -- 3 of 4 -- 4 contract related only to a lot that had not yet come into existence. A “lot”, including a community title lot, is created when the plan is registered (s 49A(2) Land Title Act 1994). See also s 184(1) as to priority, and Law Mortgagees (Queensland) Pty Ltd v Thirteenth Corp Pty Ltd [1999] VSC 360. [9] The inevitable conclusion, putting the matter at its highest for Mr Everingham, is that the contract entered into neither creates any interest in the unit with priority over the Bank’s nor a right to caveat on the basis that it is an instalment contract. It is not a contract which bound him to make payments (other than a deposit) without becoming entitled to a conveyance in exchange. His only obligation was to pay the deposit and, on the settlement date, the balance. [10] To successfully resist an application to set aside a caveat, the caveator must establish that there is a serious question to be tried. (Re Jorss’Caveat [1982] Qd R 458). This threshold is not reached on the facts before me. The Bank is therefore entitled to have the caveat set aside. [11] On the case Mr Everingham seeks to make out, Spengler’s presence as a party would not assist him. It is therefore futile to join Spengler as a party to the Bank’s application. Claim S5751 of 2001 involves similar allegations by Questvale, and as far as the material goes, there is no reason to think that requiring it to be heard at the same time as the Bank’s application would lead to any different outcome. [12] The orders are: 1. The application by Garry Everingham is dismissed with costs to be assessed. 2. Pursuant to s 74(2) of the Property Law Act 1974, a caveat bearing dealing number 704718509 and lodged on 23 April 2001 by Garry Everingham over Lot 5 on SP125186 County of Ward Parish of Gilston, Title Reference 50334290 be removed. 3. The respondent Garry Everingham pay the applicant’s costs of and incidental to the application to be assessed. -- 4 of 4 --