Burman, Re [1991] QSC 106

n C) CJ ·o .:Se, 9 I I , 0 b IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice Lee CATCHWORDS: o.s. No. 211 of 1991 IN THE MATTER OF the RealProperty Act 1861 (as amended) -and- IN THE MATTER OF An Applicationfor the Removal of Caveat by NEVILLE JOHN BURMAN JUDGMENT - LEE J. Delivered the 16th day of April, 1991. Torrens system - caveat - whether caveat lapsed - clause in building contract giving builder charge over proprietor's land with payment to builder of all moneys payable under the contract - action to enforce debt in Supreme Court - no specific claim for declaration of charge - no dispute as to existence or terms of contract including right of caveator to charge if debtestablished - whether action is "proceedings in any court of competent jurisdiction to establish his title to the estate or interest specified" - Real Property Act 1861 s. 98; Real Property Act 1 8 7 7 , s . 3 9 . Counsel: Solicitors: A. Stone for applicant s. Doyle for respondent Marshall and L'Estrange as town agents for MacDonnells for applicant Morris Fletcher and Cross for respondent Hearing date: 18th March, 1991 -- 1 of 12 -- n 0 IN THE SUPREME COURT OF QUEENSLAND o.s. No. 211 of 1991 IN THE MATTER OF the RealProperty Act 1861 (as amended) -and- IN THE MATTER OF An Applicationfor the Removal of Caveat by NEVILLE JOHN BURMAN JUDGMENT - LEE J. Delivered the 16th day of April, 1991. This is an application pursuant to s. 99 of the Real Property Act 1861 (as amended) by Neville John Burman, the proprietor of the land in question, calling upon the respondent Thiess Watkins White Constructions Pty. Ltd. (Receivers and Managers appointed) ( in liquidation) a builder who performed building works on the applicant's land, to show cause why Caveat No. T507177K lodged with the Registrar of Titles on 2nd November, 1990 should not be removed. By the caveat (ex. NJB2 to the affidavit of the applicant filed 8th March, 1991,) the respondent caveator claims "an estate or interest as chargee of an estate in fee simple" on the ground that:- "By charge created by Clause 21. 4 of a Building Contract dated 1 3 th March, 1 9 8 9 ( copy produced) , securing payment to the Caveator of all moneys certified by the Architect or otherwise payable under the Contract and securing the sum of $46,835.36payable pursuant to a progress certificate dated 15.09.89 (copy enclosed)." -- 2 of 12 -- 2 The contract in question (ex. NJB1 to the affidavit of the applicant) was entered into on 30th March, 1989. Clause 21.4 is in the following terms:- "The Proprietor hereby charges any interest which hehas in the parcel of land upon which or upon part of which the Works are to be executed with the payment to the Builder of all moneys certified by the Architector otherwise payable under this Contract.". The contract is a building contract with detailed provisions in the usual terms dealing with progress certificates issued by the architect which give rise to the proprietor's obligation to pay the sum so certified to the builder. Disputes arose between the parties mainly in relation to the standard of workmanship. On 15th September, 1989, the architect issued a progress certificate in the sum of $46,835.36 which the applicant did not pay within the time specified in the contract or at all. Accordingly, the respondent issued a District Court Plaint claiming this sum. By para. 2 thereof, the subject contract was n ~/ referred to in general terms, with the usual assertion that the () plaintiff will at the trial of the action refer to the said agreement for its full terms, true meaning and effect. By its defence in the District Court, the applicant proprietor admitted all material alleg_ations in the plaint including para. 2 thereof. The existence and content of the contract were thus not in dispute. The allegations in the plaint included all necessary facts covering the issue of the progress certificate and presentation thereof to the applicant for payment. The applicant simply denied the allegations in para. 8 of the plaint which alleged that the said sum became payable by the applicant on or about the 29th September, 1989. Thereafter a counterclaim was -- 3 of 12 -- 3 set up by the applicant in respect of alleged defective workmanship in relation to work performed under the subject contract as well as under other contracts between the parties. Summary judgment proceedings were then issued in the District Court by the respondent builder supported by an affidavit of Peter James Irwin sworn 14th February, 1990. Exhibited to that affidavit was a copy of the contract in question as well as the relevant progress certificate. The (] applicant by affidavit sworn 8th March, 1990 admitted the lump " ./ () sum contract as exhibited to the affidavit of Peter James Irwin and then raised matters which went only to the question of alleged defective workmanship and overpayment by the applicant to the respondent, and claims by the applicant with respect to sums said to be owing to him by the respondent. Summary judgment was refused. Counsel stated that the District Court proceeding is still afoot although it appears to have been subsumed in the C) later Supreme Court action. () The subject caveat was lodged on 2nd November, 1990. On 8th November, 1990 the respondent issued Supreme Court Writ No. 1804 of 1990 against the applicant and two other defendants containing extensive particulars. The writ purports to be a specially indorsed writ. It also includes unliguidated claims against all three defendants as well as claims for liquidated sums against the applicant who is the first defendant and against the third defendant. The indorsements at pp. 15, 16 are pursuant-, to O. 6 r. 8, and the indorsement pursuant to O. 25 r. 7 specifying ten days after the time limited for appearance as the time within which all the defendants must deliver their defence -- 4 of 12 -- 4 (to a specially indorsed writ) should have been 28 days allowed in the proviso to 0. 25 r. 7 where a non-special indorsement is joined with a special indorsement as occurred in this case. See O. 6 r. 12 which requires delivery of a statement of claim with respect to those claims which are not specially indorsed. The extensive particulars were obviously intended to be a statement of claim although the writ does not comply with O. 6 rr. 5, 12, as to the forms of indorsement for a specially indorsed writ, the I' particulars of which must be headed "statement of claim". See () -. _ __..,,, e.g. Form 58, O. 6 r. 12, 0. 24 r. 5(a) and decided cases. It does not appear whether a further statement of claim has been delivered so consideration of the nature of the respondent's claim is limited at this stage to the particulars indorsed in the writ. As against the applicant, the respondent claims various sums of money said to be due and owing under and pursuant to the C) subject building contract. These claims include the sum also the (:) subject of the District Court Plaint (being the sum referred to in the caveat) ( see paras. 24-27 of the particulars in the Supreme Court action) as well as other sums said to be due and owing. The subject agreement is again referred to in para. 2 of the particulars. The only terms particularised with respect to the claim of $46,835.36 are those giving rise to the contractual obligation in the applicant proprietor to pay the sums specified under the contract or otherwise due and owing. There are no particulars given of or any reference to cl. 21.4 of the building contract which is said to give rise to the charge in question. Nor is any relief at present specifically claimed in the writ as C) -- 5 of 12 -- 5 to the existence of the alleged charge or in respect thereof. It was not in dispute that the caveat was not lodged with the written consent of the applicant. Nor was it suggested that a charge if it existed in accordance with cl . 21 • 4 of the contract was not capable of giving rise to "an estate or interest as chargee of an estate in fee simple". What was in dispute was the contention on behalf of the applicant that within the meaning of s. 39 of the Real Property Act 1877, this caveat automatically LJ lapsed after the expiration of three months from its lodgment on 2nd November, 1990 because "the person by whom or on whose behalf the same was lodged" did not within the said three month period take "proceedings in any court of competent jurisdiction to establish his title to the estate or interest therein specified II . . . . It was not in dispute that notice of the Supreme Court writ was duly given to the Registrar of Titles on 5th December, 1990 and that the Registrar of Titles had declined to regard the () caveat as lapsed, leaving it as a matter for the parties to \_~ litigate in court. Counsel for the applicant submitted that the proceedings which must be commenced within the three month period are those "to establish his title". That is to say, the proceedings must make some specific claim to the "interest in land" upon which the caveat is based and that the outcome of the proceedings must result in an order of a court of competent jurisdiction which on its face establishes the caveator's interest in the land. In this case all that has been sought is a money judgment for art alleged debt. -- 6 of 12 -- 6 Reliance was placed on the decision of Dunn J. in Re; Piles caveat (1981) Qd. R. 81 at 84. In that case, less than three months after the lodgment of a caveat, the caveator filed an application in the Family Court of Australia claiming injunctions restraining her husband and the trustees from dealing with the lands in question and a declaration of her interest in those lands. His Honour, after ref erring to s. 39 of the Real Property Act 1877-1974, said (obiter) his inclination was that the "court of competent jurisdiction" is a court which has power to make an C) effective order, if necessary, that the Registrar of Titles make an appropriate entry in the register book in order to give effect to its judgment and that the Family Court of Australia was not such a court. It was said by counsel for the applicant that this dictum supported his submissions as to the type of proceedings which must be commenced within the three month period. As a result, according to the submission, the respondent had not commenced an action to establish its title to land and that the caveat accordingly lapsed. He sought an order for its removal. Counsel for the respondent submitted that in the particular circumstance of this case, there was no dispute between the parties as to t~e existence of the contract (which meant all of its terms), and that the only matters in dispute raised by the applicant related to alleged overpayments to the respondent and claims made with respect to alleged defective workmanship. In these circumstances, according to the submission, the action to establish a debt is an action by the respondent builder to establish its title to the estate or interest specified in the caveat, being the charge on the land which then automatically C) 0 -- 7 of 12 -- n 1 arises by virtue of the undisputed contract between the parties. Counsel further submitted that there was nothing ins. 39 which required that there must be a specific claim in the action for a declaration as to the existence or validity of any charge which the respondent claimed, and that, having regard to the undisputed agreement between the parties, once the validity of the debt in question was established, so was the charge in fact. In other words, the only relevant proceeding required to establish the charge was the proceeding to establish the debt. In support of this submission Counsel relied on two decisions by analogy. The first was a decision of Cockle C.J. in Re: Ede (1873) 3 S.C.R. 162 under s. 25 of the Real Property Acts 1861 (as amended). That case dealt with a caveat lodged by a beneficiary of the property of a testator, seeking to prohibit the Registrar General from bringing land under the Act at the suit of a mortgagee exercising power of sale and by the trustees () of the will of the testator, on the various grounds set out. An order was also sought prohibiting the Registrar General from u further proceeding to decide whether the caveat lodged had lapsed. The caveator brought two bills in equity to have accounts taken, to have the present trustees removed, and other trustees appointed. There appears to have been no specific claim "to establish his title to the estate, interest, lien or charge therein specified" as required by s. 25 of the Real Property Acts 1861 (as amended). Cockle C.J. held that the cestui que trust was under the special circumstances competent to maintain the caveat and had shown sufficient grounds for maintaining it and that the Registrar General had no authority to deal with it -- 8 of 12 -- 8 having regard to the proceedings which had been taken in equity within the three month period. The second case relied upon was Re: Jorss' caveat [ 1982] Qd.R. 458 where Andrews J. (with whom Douglas, Demack JJ. agreed) held that a caveat lodged pursuant to s. 98 of the Real Propertv Act 1861-1980 will be removed where the caveator fails to show on the evidence that there is a serious question to be tried which will justify leaving the caveat undisturbed. The caveator was the registered proprietor of land. She executed a power of () attorney in favour of her son who apparently granted three mortgages over the subject land in favour of the applicant, United Dominions Corporation Limited, one of which was registered and two were unregistered. The caveat sought to forbid the registration of any memorandum of sale or other instrument affecting any bill of mortgage registered against the land. It appears that in the action commenced on behalf of the caveator she simply sought a declaration that her power of attorney was given to her son as a result of his undue influence and that the second defendant as a party to her son's breaches of duty was liable to deliver up the bills of mortgage and deed of guarantee for cancellation and to procure the removal of a bill of mortgage from the register. From this it was submitted that it was not in question that there was no specific claim by the caveator in the action seeking a declaration as to her interest in the land. Counsel for the respondent also submitted that Re: Piles caveat (supra) did not determine the question which has arisen on this application but dealt (obiter) only with the question of the jurisdiction of the Family Court to make an appropriate order () -- 9 of 12 -- 9 in a case where that might be necessary. In this case he submitted that a declaration by the Court was not strictly necessary because once the debt was established, the charge, the entitlement to which was not otherwise in dispute, automatically arose. This submission is not altogether satisfactory because the question might arise in a case where a caveator commenced an action to recover a debt in an inferior court (the existence of () which debt gives rise to a charge of the type here under consideration), as to whether or not such a court could make an c-) appropriate order of the type referred to by Dunn J. in Re: Piles caveat. Any action in any court of competent jurisdiction to establish the debt is all that Counsel for the respondent submitted was necessary in order for the charge to automatically arise. However that may be, the Supreme Court is clearly a court which could make any such order as may be necessary. Both counsel informed me that they had searched the relevant authorities throughout Australia and New Zealand but could find no decision on the point in question. Nor have I located any decision precisely on point or reference in any text on the subject. It is clear that while the onus probandi is on those who seek to withdraw a caveat: in Re: Caveat No. 733. ex parte Hodgson (1873) Q.S.C.R. 158, the caveator must show that it has at least an arguable claim which ought to be allowed to go to trial: Re: Moore's caveat [1985] 1 Qd.R. 310. In Piles caveat (supra) Dunn J. said at p. 83: "It is established that, in order to maintain a caveat, the caveator must prove facts which indicate -- 10 of 12 -- 10 prima facie that he has an estate or interest in the land in respect of which his caveat is lodged. TheCourt will not, except perhaps in the plainest cases, resolve disputed questions of fact when it hears anapplication to remove a caveat." On all of the material and submissions, it is clear that the parties are well aware of the existence of the clause giving rise to the charge claimed and that if the debt is established, the charge does in fact come into existence. It would be artificial in the extreme if in these circumstances, the court ordered the caveat to be removed merely because on the present state of the () material in the action (presumably only the writ as referred to above), there is no specific claim for a declaration that a charge in fact exists. The respondent is clearly relying upon all of its rights and remedies pursuant to the contract and otherwise and this includes the right to the charge provided for by cl. 21.4. It is in effect claiming a charge over the land with respect to any moneys owing to it which it hopes to () establish by the litigation. The respondent has I think made out c=I a prima facie case that it has an estate or interest in the land in respect of which the caveat was lodged. On the other hand, it is strange that the respondent did not in the writ (or incorporated "statement of claim") specifically claim a declaration of entitlement to the charge as relief consequential upon a judgment based on the debt. It would have put the matter beyond doubt. The writ does not even have the catch-all claim "further or other relief". Had a claim been specifically included, as the ordinary rules of pleading suggest should be done, the current application would have been wholly unnecessary. It may be that if a (further) statement of claim ('j -- 11 of 12 -- .. 1 1 is delivered, such a claim might be possible or even intended if o. 24 r. 1 is wide enough to allow it. On the other hand, it is a matter of simple amendment to allow such a claim to be included therein. Any such amendment, whether effected by way of 0. 32 r. 3 or by leave, takes effect ab initio: Lynch v. Keddell (No. ll [1990] 1 Qd.R. 10; Wigan v. Edwards (1973) 47 A.L.J.R. 586; Grotherr v. Maritime Timbers Pty Ltd (Writ 2622 of 1985, Full Court 24th May, 1990 unreported). No application was made by the (-) respondent to amend the writ. CJ (_) In the result, on the particular facts of this case, the application for removal of the caveat is dismissed. However, if not already done so, steps should be taken to formally amend the writ in accordance with the rules, to specifically claim entitlement to the charge in question, with any necessary amendment to the pleadings for that purpose. submissions on the question of costs. I will now hear -- 12 of 12 --