Ferguson & Anor v Mackee [1999] QSC 371

• ) ) ) ) ol5f4, SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILE NO/S: Scott Raymond Ferguson and Yi-Yen Ferguson v Fiona Joy Mackee SCOTT RAYMOND FERGUSON and YI-YEN FERGUSON (applicants) v FIONA JOY MACKEE (respondent) No 10561 of1999 DELIVERED ON: 16 December 1999 DELIVERED AT: Brisbane HEARING DATE: 8 December 1999 JUDGE: Williams J ORDER: CATCHWORDS: COUNSEL: Order that Caveat No 703325384 be removed forthwith. Respondent to pay the applicants' costs of the application to be assessed. CONVEYANCING - LAND TITLES UNDER THE TORRENS SYSTEM - CAVEATS AGAINST DEALINGS - LAPSE, REMOVAL AND WITHDRAWAL - whether caveat should be removed as it was lodged without the leave of the court as required by s 129 Land Title Act - earlier caveat rejected by Registrar - whether Registrar rejected this earlier caveat in its amended form. Land Title Act 1994 (Qld) s 126, s 129. CONVEYANCING - LAND TITLES UNDER THE TORRENS SYSTEM - CAVEATS AGAINST DEALINGS - whether grounds of claim support the interest claimed - whether material supports the respondents' claim to a lien - no purchasers' lien over land as deposit still held by stakeholder. Hewett v Court (1983) 149 CLR 639, considered. Ex Parte Lord (1985) 2 Qd R 198, considered. Combe v Lord Swaythling (1947) Ch 625, considered. Re: Barnes' Caveat (1951) QWN 10, applied. Re: Powells' Caveat (1966) QWN 9, applied. Mr M J Burns for the applicant Mr J Webb for the respondent Mr D J Campbell for Mitchell Pty Ltd. -- 1 of 8 -- ) ) ) SOLICITORS: 2 Lang, Hemming & Hall for the applicant Spina Kyle Roati for the respondent Hemming & Hart Lawyers for Mitchell Pty Ltd [I] WILLIAMS J: The applicants, Scott Raymond Ferguson and Yi-Yen Ferguson, seek an order that a caveat lodged by the respondent, Fiona Joy Mackee, be removed. The application refers to Caveat No 703285359, but the applicants asked that the application be amended so that it refers to a later caveat lodged by the respondent bearing No 703325384. In the circumstances I will not order the formal amendment of the application, but treat it as referring to the later caveat. [2] The land in question is situated at 13 Austin Street, Wavell Heights, and is more particularly described as Lot 2 on GTP 106749, County of Stanley, Parish of Toombul, Title Reference 50209386. At all material times Mitchell Pty Ltd has been the registered proprietor of that land; it was served with the application and appeared by counsel. In these reasons I will refer to that company as "the vendor". [3] In October 1998 the vendor was the developer of a town house complex on the land in question. Apparently it was anticipated that the complex would be completed by about December 1998. [4] By contract dated 19 October 1998 the respondent agreed to buy from the vendor the town house described as Lot 2. The total purchase price was $169,600 and settlement was to take place "seven days from practical completion". Various plans, drawings and specifications relating to the town house formed annexures to the contract. [5] The contract provided for a deposit of $600 payable on signing the contract and a further payment by way of deposit of $4,500 on receipt of finance approval. The deposit holder was Ray White Nundah, who was the real estate agent who procured the sale. The Terms of Contract provided: "The Deposit Holder will hold the Deposit until a party becomes entitled to it." [6] During the hearing I gave the legal representatives for the vendor leave to file an affidavit setting out the position with regard to the deposit. I have subsequently received the affidavit ofM L G Frater deposing to such matters. [7] On or about 21 October 1998 a deposit of $600 was paid into the trust account of Ray White Nundah and then on or about 2 November 1998 a further $5,000 was so deposited. Ray White Nundah received a letter from the respondent's solicitors dated 20 January 1999 advising that the respondent was commencing proceedings for specific performance and placing that firm on notice "that you must not (unless authorised in writing by our client) release the deposit in this matter". [8] It is convenient to note at this point that Ray White Nundah still holds the $5,600 in its trust account. [9] By letter dated 14 December, solicitors for the vendor notified the solicitors for the respondent that the building was practically completed on II December 1998. In -- 2 of 8 -- ) ) ) [10] [II] 3 consequence it was said that "Settlement Date is 18 December- 1998". - The respondent contended that the town house was not constructed in accordance with the plans and specifications contained in the annexures to the contract. The respondent's solicitor spoke to the vendors' solicitor on 18 December 1998 and he asserts an extension of settlement to 21 December 1998 was agreed to in order to allow the respondent to have a builder inspect the premises and prepare a quotation to rectify the matters not constructed in accordance with the plans and specifications. That was confirmed at least in part by a letter dated 18 December from the vendor's solicitor to the respondent's solicitor in the following terms: "Our client is prepared to grant an extension for the settlement date to Monday, 21 December 1998. Time to remain ofthe essence. We note your client will inspect the unit on Monday morning. We suggest your client contact our client or the agents directly to arrange the inspection." There is a dispute between the vendor and the respondent as to what then occurred. According to the solicitor for the respondent, he spoke to the solicitor for the vendor on 21 December 1998 and informed him that the quotation of the builder would not be available for some time. The response, according to the solicitor for the respondent, was that due to the Christmas-New Year break "time is no longer of the essence and the matter can wait until the New Year". That last allegation is not specifically dealt with in the affidavit filed by the solicitor for the vendor. However, it should be noted that both affidavits were filed by leave at the outset of the hearing and each was obviously prepared in ignorance of the content ofthe other. [12] The respondent did not effect settlement on 21 December 1998 and as a result the vendor purported to elect to terminate the contract. It is accepted that such a decision was not conununicated to the respondent until the letter of 11 January 1999 which is in these terms: "Due to your client not effecting Settlement in accordance with the Contract Terms, our client elects, pursuant to clause 9.1 of the Terms of Contract, to terminate the Contract. In addition, in accordance with clause 9.3 of the Terms of Contract, our client elects to: 1) Forfeit the Deposit; 2) Resell the property; and 3) Sue your client for damages, once appropriate damages have been quantified." [13] Meanwhile on 29 December 1998 the applicants entered into a contract to purchase from the vendor the home unit being Lot 2 for $169,000. Settlement under that contract was due on 22 January 1999. There was a special condition in these terms: "This contract is subject to the lawful termination of an existing Contract of Sale, on or before 5/1/99." -- 3 of 8 -- ) 4 [14] On 6 January 1999 the solicitor for the applicants received a telephone call from a person acting on behalf of the vendor requesting an extension until 11 January 1999 for the satisfaction of the special condition relating to the existing contract of sale. That was confirmed by a letter of 6 January transmitted by facsimile; it was signed by Sandra Flett, Project Director for the vendor. Then on 7 January the solicitor for the applicants received a further fax transmission from Sandra Flett containing the following paragraph: "Further to our conversation and subsequent request on 6th instant, I now advise that special condition 2 has now been satisfied." Thereafter the applicants took steps to be in a position to settle when required. They obtained mortgage finance in the sum of $132,000 from the Commonwealth Bank of Australia. [15] Settlement was in fact effected on 19 January 1999. Funds totalling $164,121.03 were paid by the applicants to or on behalf of the vendor at settlement. Transfer documents were collected at settlement together with a mortgage in favour of the Commonwealth Bank for lodging with the Department of Natural Resources. All those documents were lodged with the Registrar of Titles on 25 January 1999 and have not yet been registered. [16] On 12 January 1999 the vendor's solicitors lodged a Settlement notice with the Registrar of Titles and forwarded a copy to the respondent's solicitors. As the lodging of such a notice does not affect a person's right to lodge a caveat (s 151 Land Title Act 1994) the rights of the parties to this application are not affected by that document in the circumstances ofthis case. [17] On 20 January 1999 the solicitor for the respondent became aware of the sale to the applicants and on that day lodged a caveat bearing Dealing No. 703124193. That caveat noted that the respondent claimed an "estate in fee simple" on the following ground: "Pursuant to an Agreement in writing dated 19.10.1998 made between Mitchell Pty Ltd the registered proprietor and Fiona Joy Mackee as purchaser." [18] Thereafter the vendor commenced proceedings against the respondent in the Magistrates Court on 18 February 1999 claiming damages in the sum of $10,644 consequent upon the respondent's failure to settle the contract on 21 December 1998; no claim for recovery or forfeiture of the deposit was made. The entry of appearance and defence of the respondent was filed on 17 March 1999. Amongst other things it denied that the vendor was entitled to rescind the contract of 19 October 1998. [19] On or about 16 March 1999 the respondent commenced proceedings in the District Court claiming specific performance of the contract of 19 October 1998 and also damages for breach of that contract. The plaint alleged that by the letter of 11 January 1999 the vendor "unlawfully purported to rescind the said agreement". That action has not yet been determined. [20] Pursuant to s 126 of the Land Title Act the caveat lodged 20 January 1999 would lapse after three months unless within that time the respondent had commenced proceedings to establish the interest claimed and notified the registrar within the three month period that a proceeding had been started and identifying the proceedings. The District Court proceedings were commenced within three months -- 4 of 8 -- ) 5 but notice was not given as required to the Registrar of Titles. Therefore that caveat lapsed on 20 April 1999. [21] However, on 16 April 1999 the solicitor for the respondent lodged another caveat. There is some confusion as to what happened with respect to this second caveat, but after considering the two affidavits of the solicitor for the respondent it appears that the following records what in fact occurred. [22] This caveat was given the dealing number 703285359. By it the respondent claimed an "estate in fee simple as purchaser" on the ground "Pursuant to an agreement in writing dated 19 October 1998 made between Mitchell Pty Ltd, the registered proprietor, and Fiona Joy Mackee as purchaser". In other words both the interest claimed and the ground of the claim were precisely the same as in caveat 703124193 lodged 20 January 1999. [23] On 21 April 1999 the Registrar of Titles issued a requisition stating a rejection date 19 May 1999 with respect to caveat 703285359 in the following terms: "The grounds of claim are the same or substantially the same as those in caveat 703124193. I draw your attention to s 129 of the Land Title Act 1994. Unless you can furnish this office with leave of a court of competent jurisdiction to lodge this caveat it should be fully withdrawn. If not withdrawn in 7 days the caveat will be rej ected." [24] In accordance with what appears to be the usual practice of the Titles Office the caveat as lodged was returned to the respondent's solicitor with the requisition. The solicitor then typed out the grounds of claim in the caveat as originally lodged and attached a schedule setting out fresh grounds of claim as follows: "As a lien on behalf of the Caveator for recovery of damages, deposit and other monies under a contract of sale which has been unlawfully terminated by the Vendor (Registered ) Owner)." The caveat as so amended was sent to the Titles Office on 23 April 1999. ) Then on 30 April 1999 the Registrar of Titles issued a requisition on the caveat as amended; it referred to a rejection date of 28 May 1999. The terms of the requisition were as follows: "Document requires attention with respect to the following items. Unless these items are complied with by the above Rejection Date, rejection may follow. As the claim and grounds of claim have been substantially changed this caveat should be fully withdrawn and a new caveat lodged with the new claim." . [25] On 10 May 1999 the Registrar of Titles sent a letter to the solicitor for the respondent referring to caveat 703285359 and the requisitions issued 21 and 30 April 1999; the letter stated: "In view of the first requisition issued and irrespective of the time allowed for completion of the second requisition on the above Caveat it is the Department's intention to rej ected the Caveat in -- 5 of 8 -- 6 seven days from today's date if the requirements are not satisfied within the seven days." [26] To complete the narrative with respect to caveat 703285359 it should be recorded that on 21 May 1999 the Registrar of Titles formally rejected the caveat pursuant to s 157 of the Land Title Act. The ground of rejection was that a requisition had not been complied with. [27] However, on 10 May 1999 the solicitor for the respondent lodged a third caveat which was given Dealing No. 703325384. Again it claimed an "estate in fee simple as purchaser". The grounds of claim were: "As a lien on behalf of the Caveator for recovery of damages, deposit and other monies paid under a contract of sale which has been unlawfully terminated by the Vendor (Registered Owner)." With that caveat the solicitor for the respondent gave the Registrar of Titles notice of the proceedings which had been commenced in the District Court in March 1999. That caveat No 703325384 has been registered and in consequence it is the caveat to which this application relates. [28] Apparently the practice of the Registrar of Titles is to require someone (probably usually the registered proprietor) to lodge a general request asking for the removal of a lapsed caveat. In other words a caveat which lapses pursuant to 5 126 because notice of proceedings was not given will remain on the register until such a general request seeking removal is lodged. That was not done in this case until 12 May 1999 when the vendor at the applicants' insistence lodged such a request. This is not the occasion on which to consider the legal ramifications of all that. Arguably there was no valid caveat on the title from 20 April 1999 to 10 May 1999 preventing the registration of the transfer and mortgage documents which had been lodged on 25 January 1999. But the fact is that those transfer and mortgage documents were not registered and caveat 703325384 is now considered to be an effective bar to their registration. [29] Counsel for the applicant advanced two principal arguments in support of the removal of that caveat. Firstly, he submitted that it should be removed because it was lodged without leave of the court as required by s 129 of the Act. Secondly, he argued that in any event the caveat in question was bad as the grounds alleged did not support the interest claimed. [30] The argument developing the first submission is rather complicated. Section 129 provides: "If a caveat lapses or is withdrawn, cancelled or removed for a lot, or is rejected by the registrar under s 157, the person who was the caveator may lodge another caveat for the lot on the same, or substantially the same, grounds only with the leave of a court of competent jurisdiction". There is no question here of withdrawal (5 125), removal (s 127) or cancellation (s 128) of either of caveats 703124193 or 703285359. However, it is clear that caveat 703285359, in at least one of its forms, was removed pursuant to s 157(1) which provides: "If a requisition under s 156 ... is not complied with by a person within the time specified or extended by the registrar, the registrar may reject the instrument or document to which the requisition relates and any instrument that depends on it for registration. [31] The argument by counsel for the respondent is that the Registrar rej ected caveat 703285359 only in the form in which it was originally lodged (claiming an estate in -- 6 of 8 -- 7 fee simple pursuant to the agreement) and not in its amended form claiming,-inter . alia, a lien over the land to secure repayment of the deposit paid. On his argument there was no formal lodging of the amended caveat because it was not accepted by the Registrar. [32] On the other hand counsel for the applicant points to the requisition of 30 April 1999 and letter from the Registrar of 10 May 1999 as indicating that the Registrar directed his attention to the caveat in its amended form for purposes of s 157. The argument is based on the proposition that the Registrar could only have made the statements he did if the caveat in its amended form was lodged and therefore properly before the Registrar. [33] Not without some hesitation I have come to the conclusion that the submission by counsel for the applicant is correct. Ultimately I have come to the conclusion that by the letter of 21 May 1999 the Registrar formally recorded a rej ection of caveat 703285359 because it failed to satisfy the requisitions delivered on 21 April 1999 and 30 April 1999. The rejection was, inter alia, of a caveat stating the grounds of claim to be: "As a lien on behalf of the Caveator for recovery of damages, deposit and other monies under a contract of sale which has been unlawfully terminated by the Vendor (Registered Owner)". [34] It therefore follows that the respondent required the leave of the court before lodging the third caveat, No 703325384, relying on the same ground. The failure to obtain the necessary leave is a sufficient ground for removal. [35] But I am further of the view that there are other grounds justifying the removal of' that caveat. [36] The grounds of claim as stated therein ("As a lien on behalf of the Caveator for recovery of damages, deposit and other monies paid under a contract of sale which has been unlawfully terminated by the Vendor (Registered Owner.") do not support a claim for an interest being an "estate as fee simple as purchaser". In other words the caveat on its face does not allege grounds supporting the interest claimed. Decisions such as Re: Barnes' Caveat (1951) QWN 10 and Re: Powells' Caveat (1966) QWN 9, decided under the earlier legislation, establish that the grounds of claim must support the interest in the land being claimed. It seems clear from the grounds of claim that the respondent is primarily seeking monetary relief (subject to the claim for a lien). Merely alleging that the contract was unlawfully terminated does not entitle the purchaser to an estate in fee simple. [37] The final question is whether or not the material supports the respondent's claim to a lien. A purchaser's lien over the estate in fee simple for deposit monies paid by the caveator pursuant to a contract of sale has been recognised in Hewett v Court (1983) 149 CLR 639, ex parte Lord (1985) 2 Qd R 198 and Combe v Lord Swaythling (1947) Ch 625. However in Combe (referred to in Hewett at 645 and cited with approval on this point in Lord at 201) Wynn-Parry J at 628-9 held that no lien would be acquired where the deposit was paid to and still held by a stake holder. The position here, as indicated above, is that the deposit is still held by the stakeholder, Ray White Nundah, and in consequence the respondent is not a secured creditor of the vendor; in those circumstances there can be no purchaser'S lien over the land. -- 7 of 8 -- 8 [38] It follows that the respondent has no valid claim for a lien and in consequence nothing in the stated "Grounds of claim" could sustain any interest in the subject land, let alone the interest claimed in the caveat ("estate in fee simple as purchaser".). [39] As the material before the court establishes that the respondent has no valid claim to a lien over the subj ect land, and as the grounds of claim do not support the interest claimed by the respondent in the caveat, the caveat should be removed. [40] It was also submitted on behalf of the applicant that, in accordance with the decision of the Full Court in Duncombe v New York Properties Pty Ltd (1986) 1 Qd R 16, the respondent could not obtain a decree for specific performance because the vendor was no longer in a position to comply with such an order. On reflection I consider that Duncombe is distinguishable because there the transfer to the equivalent of the purchaser under the second contract had been registered. Here the vendor is still the registered proprietor and (at best for the respondent) both she and the applicant have equitable interests. The caveat (if valid) could protect the interest of the respondent which is prior in time (cf sl81 of the Act, I A C Finance Ltd v Courteney (1963) 110 CLR 550, and Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265). [41] Counsel for the respondent argued that the applicants were not bonafide purchasers for value without notice. The contract expressly gave them notice of an earlier contract. The real issue is whether or not the applicants were entitled to rely on the letter of 7 January 1999 without making more enquires. That is not a matter which can be determined on this application; there is certainly an issue which should be tried in relation thereto. But such a conclusion does not avail the respondent because for other reasons the caveat cannot be sustained. [42] It therefore follows that for a variety of reasons dealt with herein there should be an order that caveat No 703325384 be removed forthwith. The respondent should pay the applicants' costs of the application to be assessed. -- 8 of 8 --