Re Andel Pty Ltd v Century Car Care Pty Ltd; Century Marketing Pty Ltd; Triplink Pty Ltd; Branstar Pty Ltd; John Mcgaw; Christina Helen Tyson; Kemsley Gray Schmidt; James Newman Mckean and Commonwealth Bank of Australia [1989] FCA 19 (16 February 1989)

FEDERAL COURT OF AUSTRALIA

Re: ANDEL PTY LTD
And: CENTURY CAR CARE PTY LTD; CENTURY MARKETING PTY LTD; TRIPLINK
PTY LTD; BRANSTAR PTY LTD; JOHN McGAW; CHRISTINA HELEN TYSON;
KEMSLEY GRAY SCHMIDT; JAMES NEWMAN McKEAN AND COMMONWEALTH BANK OF
AUSTRALIA
No. G365 of 1988
FED No. 56
Torrens System - Jurisdiction

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Torrens System - caveat - claim of fraudulent misrepresentation - claim of right to reconveyance - whether equitable interest - whether sufficient interest in land to sustain caveat - no evidence of wrongdoing alleged against purchaser - no serious question to be tried.

Jurisdiction - Federal Court - cross-vesting - "state matter" - notice of motion for removal of caveat.

Real Property Act (Qld) 1861-1988, s.99

Jurisdiction of Courts (Cross-vesting) Act (Qld) 1987, s.4

HEARING

BRISBANE
16:2:1989

Counsel for the applicant: D.R. Boughen

Solicitors for the applicant: Feez Ruthning

Solicitors for the 2nd, 3rd, 4th, and 6th respondents: Anderson & Bone

Counsel for the 8th and 9th respondents: D.R. Cooper

Solicitor for the 8th and 9th respondents: Morris Fletcher & Cross

Solicitor for the 5th respondent: Chambers McNab Tully Wilson

Solicitor for the 7th respondent: Thynne & Macartney

ORDER

The caveat be removed forthwith.

The 8th and 9th respondents be struck out of the proceedings, and the proceedings continue against the 1st to 7th respondents only.

The costs of and incidental to the proceedings brought by the 8th and 9th respondents, including the proceedings today, be taxed and paid by Andel Pty Ltd except that no costs shall be allowed of the hearing that took place on 14 December 1988.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is an application for removal of a caveat lodged on Torrens title land. The power to remove such a caveat is vested, by s.99 of the Real Property Act 1861-1988 of the State of Queensland, in the Supreme Court of Queensland. Under s.4 of the Jurisdiction of Courts (Cross-vesting) Act 1987 of this State, "the Federal Court has and may exercise original and appellate jurisdiction with respect to State matters".

2. A "State matter" is defined to mean one of two sorts of matters, of which the first is a matter "in which the Supreme Court has jurisdiction otherwise than by reason of a law of a Commonwealth or of another State". Section 99 of the Real Property Act gives the Supreme Court jurisdiction to remove a caveat. No jurisdictional point was argued, but it appears to me that the application for removal may be heard, and I so hold, on the ground that it is a State matter.

3. It is no doubt arguable that a "matter" within the meaning of the Act is a whole controversy, and not a segment of one, but I prefer to give such a construction to the Act as would appear to accord with what is well known to be its intended purpose, rather than a narrow construction. I have referred to the application as a segment of a controversy because it is brought in proceedings in this Court reflecting larger issues.

4. The caveat was lodged on 11 August 1988 by Andel Pty Limited ("Andel"), a company which is respondent to and which resisted, by its counsel, the application for removal of the caveat.

5. The ground on which the caveat is based is that the caveator claims to be "entitled to a reconveyance" of the land in question "as a result of fraudulent misrepresentation and/conduct ... by which Triplink Pty Limited obtained a transfer of the land ..." The caveat says that the caveator claims an estate in fee simple; that it plainly does not have, on any view. However, I would be disinclined to remove the caveat on that simple ground, since the point was not argued before me, and a defective caveat may, in appropriate circumstances, be amended: Queensland Estates Pty Ltd v. Co-ownership Land Development Pty Ltd (1969) Qd R 150.

6. Andel has set out the matters which are the basis of its claim to caveat, by proceedings instituted on 11 November 1988 in this Court. It was presumably the pendency of such proceedings which prompted the thought that the application for removal should be made to this Court, rather than to the Supreme Court.

7. It appears from the wording of s.4 of the 1987 Act referred to above that this Court could decline to exercise the jurisdiction given to it, leaving the matter to the Supreme Court, but neither party asked me to do so.

8. Andel has delivered a statement of claim relying on s.52 of the Trade Practices Act 1974 and other causes of action alleging misleading conduct which, it is said, induced it to enter into a transaction involving the transfer of the land in question by Andel to the third respondent named in the principal proceedings, namely Triplink Pty Ltd, which became registered as proprietor on 7 October 1987.

9. Andel seeks, in the principal proceedings, rescission of an agreement pursuant to which the transfer to Triplink was made, and also an order for re-transfer of the land. The applicants for removal of the caveat are J.N. McKean and the Commonwealth Bank of Australia. Mr McKean says he entered into a contract, on 23 March 1988, to buy the land from Triplink Pty Ltd and gave the bank a mortgage to secure payment of moneys advanced by it to fund the purchase. As it happened, the bank was already a mortgagee of the land in respect of another loan, but that does not seem to me to affect the issues. Mr McKean's purchase was settled on 5 April 1988, but for reasons which are unexplained, the transfer to him and mortgage to the bank were not then lodged for registration. On 11 August 1988, the caveat was lodged, and on 11 November, the proceedings in this Court were, as I have mentioned, commenced. On the same day, the transfer from Triplink to Mr McKean and the mortgage from Mr McKean to the bank were both lodged for registration in the Real Property Office. Because of the lodgment of the caveat, neither has been registered.

10. Mr McKean and the bank were, on their own application, joined as parties to the principal proceedings by an order made on 14 December 1988. They have delivered a pleading in the principal proceedings claiming an order for removal of the caveat, and have also filed and served a notice of motion seeking the same relief. Section 99 of the Real Property Act 1861-1988 contemplates that proceedings for removal of a caveat shall be instituted by a summons to show cause. No submission was made, however, that the use of a notice of motion is a fatal procedural error, nor does it appear to me to be one.

11. It was contended on behalf of the applicants for removal, Mr McKean and the bank, that Andel's interest in the land could not be more more than a mere equity and that it is not an equitable interest such as to give it a right to caveat. However, in Re McKean's Caveat (1988) 1 Qd R 524 at 525, Ryan J. expressed the view that, "the right to set aside a contract entered into is equally an equitable interest sufficient to found a caveat".

12. Some years before, Dunn J. in Re Pile's Caveat (1981) Qd R 81 at p 83 held that where a caveator claims "a personal equity ... to have the lands the subjects of the caveats re-conveyed to her because of the fraud of her husband" there is no right to caveat. That view appears to me inconsistent with the later expression of opinion of Ryan J., but is consistent with a view which has come to be accepted that a merely conditional right to specific performance does not ground a right to caveat.

13. The latter doctrine was first established, I think, in the case of Re Bosca Land Pty Ltd's Caveat (1976) Qd R 119. In Re C.M. Group Pty Ltd's Caveat (1986) 1 Qd R 381, Dowsett J. referred to both Pile's case and Bosca at pp 382-385, and discussed them in the light of subsequent authority in the High Court. His Honour remarked of the approach taken by Dunn J. in those cases, that if the later view expressed by Mason and Deane JJ. in Legione v. Hateley [1983] HCA 11; (1982-83) 152 CLR 406 were adopted by members of the High Court, Bosca would not be good law (p 389). Nevertheless, he followed Bosca's case, and a similar course was taken by Connolly J. in Re Dimbury Pty Ltd's Caveat (1986) 2 Qd R 348.

14. In view of the conclusion I have come to on another point raised, it is unnecessary to discuss this aspect of Mr Cooper's argument further. I indicate, however, that I would not have been inclined to give effect to the dictum I have quoted from Re Pile's Caveat, but would have preferred to follow the view expressed by Ryan J. in Re McKean's Caveat. It appears to me rather improbable that the legislature intended the right to caveat to be so narrowly confined as to exclude parties such as the caveator here, or to force persons in Andel's position to apply for an injunction.

15. It is a curiosity of the case that neither the applicants for the removal of the caveat, Mr McKean and the bank, nor the caveator, Andel, has sought to place any evidence before me on a critical question; that is whether Mr McKean or the bank had any knowledge, at the time of Mr McKean's purchase in March 1988, of the matters complained of in the principal proceedings, and in particular, the misleading conduct. It is not even stated whether Mr McKean, at the time of the purchase, had any knowledge at all of the prior transaction by which Triplink had obtained title. Mr McKean has made an affidavit, and one has been made on behalf of the bank. Neither mentions the subject; nor was any attempt made to cross-examine the deponents on the point.

16. Counsel for Andel, however, says that, because of the unexplained delay in lodging the transfer to Mr McKean and the following mortgage, the Court should be sufficiently suspicious to leave the right of Andel against Mr McKean to be determined at the trial. He does not suggest that the application for removal be adjourned for a short time only, but says that it should not be dealt with in an interlocutory way at any stage.

17. A difficulty in accepting that contention is that Andel has made no claim against Mr McKean or against the bank in these proceedings. Nor is it suggested that Andel presently has any evidence implicating either in the wrongdoings alleged in the statement of claim, or any evidence that either had knowledge or should have had knowledge of those matters. I am simply told that Andel hopes to assemble a case against Mr McKean or the bank by making further inquiries, and perhaps by use of discovery and interrogatories; it is, of course, clear that Andel has known of the interest of Mr McKean and the bank in the matter for months.

18. It is true that one would have expected some explanation for the long delay (April to November) in lodging the transfer to Mr McKean and the following mortgage, but the delay does not necessarily point to a likelihood that either the purchaser or the mortgagee had knowledge of or was implicated in any wrongdoing by the vendor. Indeed, one would have expected that, if Mr McKean thought there was anything dubious about his right, he would have lodged the transfer to himself as quickly as possible. In short, there is no evidence that Mr McKean, an unregistered transferee from the registered proprietor, bought with notice of Andel's claim.

19. On the facts presented to me, if the caveator were applying for an injunction to restrain Mr McKean and the bank from proceeding to register the dealings in their favour, the caveator would, plainly enough, fail on this evidence. In Re Jorss' Caveat (1982) Qd R 458, the Full Court of the Supreme Court of Queensland held that in such an application as this, the caveator must satisfy the Court that "on the evidence presented to it his claim to an interest in the property does raise a serious question to be tried" (p 465) following, in that regard, the decision of the Privy Council in Eng Mee Young v. Letchumanan (1980) AC 331 at p 337. It appears that a similar practice prevails in New South Wales, as is exemplified by Venios v. Machon (1986) 3 BCLR 171.

20. In the result, it appears to me inevitable that an order must be made for removal of the caveat, unless I were inclined not to follow the view which has been established in this State since Re Jorss' Caveat. It is, in my respectful opinion, plain that I should follow that decision, and on the basis of it am obliged to hold that there was no evidence presented which raises a serious question to be tried, as against the subsequent purchaser Mr McKean or the bank. I therefore make an order that the caveat be removed forthwith. I will further order that the 8th and 9th respondents be struck out of the proceedings, and that the proceedings continue against the 1st to 7th respondents only.