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  • Unreported Judgment

Hanna v Gippsreal Ltd

 

[2008] QSC 106

 

 

SUPREME COURT OF QUEENSLAND

  

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

30 May 2008

DELIVERED AT:

Brisbane 

HEARING DATE:

26 May 2008

JUDGE:

Acting Justice Skoien

ORDER:

Application dismissed.

CATCHWORDS:

Real property – Torrens title – Caveats against dealings – Removal – Onus of proof – application to remove caveat – whether caveator established a serious question to be tried – whether the balance of convenience favoured retention of the caveat

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – STATUTE OF FRAUDS, section 4 –  contracts to which applicable – CONTRACTS FOR SALE OR DISPOSITION OF LAND OR ANY INTEREST IN LAND – where mortgagee claimed caveatable interest based on unsigned Deed of Offer – requirements under section 59 Property Law Act 1974 – whether emailed offer containing contractual reference to Deed was accepted by signed letter of respondent’s solicitor – whether letter constituted signed acceptance of the Deed

Land Title Act 1994, s 127

Property Law Act 1974, s 11(a), s 59

Cousins Securities Pty Ltd & Ors v CEC Group Ltd [2007] 2 Qd R 520, applied

Masters v Cameron (1954) 91 CLR 353, considered

COUNSEL:

Ms DA Skennar for the applicant

Ms SD Anderson for the respondent

SOLICITORS:

Turner Freeman Lawyers for the applicant

Leonard Legal for the respondent

 The application

[1] The applicant seeks the removal of caveat No. 711561834 lodged on 8 April 2008 over property at 17 Murphy Street, Port Douglas (the caveat).

[2] The caveat was lodged by the respondent, Gippsreal.  The caveat stated that the interest being claimed is “an equitable share or interest as mortgagee of an estate in fee simple”.  The grounds of claim are:

“The Registered Proprietor, Paul Vincent Hanna has charged all property, inclusive of real property by agreement to the Deed of Offer of Finance dated 20 March 2008 and in particular clause 35 which states ‘The Borrower acknowledges that immediately upon execution of this Deed (and irrespective of whether or not this Deed has been delivered to the Mortgagee or if the terms of this Deed have been fulfilled) the Mortgagee has a caveatable interest (as charge) over the Borrower’s securities and the Security.  It is the express intention of the parties that (without limitation) the mortgagee at its discretion and either before or after settlement of the Proposed Mortgage lodge a caveat against the title to any of the Security, and/or register a debenture charge over any Bodies Corporate a party to this Deed or the Proposed Mortgage, to secure payment of the amount outstanding.’

Paul Vincent Hanna granted an equitable Mortgage to the Caveator.”

The agreement

[3] Gippsreal and Mr Hanna on behalf of Celebrity Estates Pty Ltd (“Celebrity”) entered into an agreement dated 7 December 2007 for the sale of real property located in New South Wales.  Mr Hanna is the sole director of Celebrity and he guaranteed, in writing, the performance of the contract by Celebrity.  Celebrity failed to complete the contract on or before the settlement date and the completion date was extended by agreement.  The agreement to extend the settlement date entitled Gippsreal to enter consent orders in event of non-completion.  Celebrity again failed to complete the purchase.  A summons and consent orders were filed in the Supreme Court of New South Wales and the matter set for hearing on 27 March 2008.

[4] By email dated 26 March 2008 Gippsreal offered to adjourn the proceedings in exchange for a number of events occurring, including that Mr Hanna agree to the terms of a second mortgage finance for $500,000 “on the same terms and conditions as the offer dated 20 March 2008 and Hanna accepts this offer”.  Gippsreal claims that the offer was accepted on 27 March 2008 by a faxed letter from Mr Hanna’s solicitor.  The same day Gippsreal expressed contentment with that acceptance.  Mr Hanna did not execute the Deed of Offer of 20 March 2008 nor the mortgage, nor did he settle the sale of the property.  The caveat was then lodged. 

Removal of caveat

[5] Section 127 of the Land Title Act 1994 is:

127Removing a caveat

(1) A caveatee may at any time apply to the Supreme Court for an order that a caveat be removed.

(2) The Supreme Court may make the order whether or not the caveator has been served with the application, and may make the order on the terms it considers appropriate.”

[6] In Cousins Securities Pty Ltd & Ors v CEC Group Ltd [2007] 2 Qd R 520 at [38], Holmes JA said:

“Re Jorss’ Caveat made it plain that the onus was on the caveator to satisfy the court, as for an injunction, that there was a serious question to be tried and that the balance of convenience favoured the retention of the caveat on the title.  Australian Broadcasting Corporation O’Neill had clarified that the former involved showing ‘a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.  (references omitted)

Deed of offer

[7] There is a “Deed of Offer of Finance” which is expressed to be “made on the 20th day of March 2008” which names as parties Gippsreal and Mr Hanna.  Presumably it is the document referred to in the email of 26 March 2008.  The email specifies that the offer can ONLY be accepted by Mr Hanna and by Celebrity in the following manner:

(a) A letter from Dougherty & Smith confirming acceptance of this offer by 10am on 27 March 2008

together with a requirement that three other things be done by Mr Hanna and Celebrity.  Dougherty & Smith were the solicitors for Mr Hanna.

[8] The document relied on by Gippsreal as compliance with that condition (a) is this faxed letter from Dougherty & Smith (which was received within the specified time):

“We have had a brief discussion with Paul Hanna this morning and understand that he agrees to the terms outlined in the email”.

[9] Considering that the emailed offer of 26 March 2008 contains more than a page of closely typed terms that response might be regarded as perfunctory and vague.  There is no evidence that the other three requirements for acceptance were ever complied with.  However, it is clear that Gippsreal has accepted the letter of 27 March 2008 (and whatever of the other three requirements which may have been carried out by Mr Hanna and Celebrity) as acceptance of the offer.  Mr Hanna has not denied the suggestion that the offer of 26 March 2008 was accepted.  Gippsreal does not rely on that offer and acceptance to found the caveat.  Rather Gippsreal’s case is that the emailed offer incorporated, by express reference, the document, the “Deed of Offer of Finance made on 20th March 2008”, in particular, clause 35 of schedule 2 which contains the general conditions.  The material contents of clause 35 are set out in the caveat.  See par [2] above.

[10] Clause 38 of Schedule 2 of the Deed provides that:

“The Borrower will have accepted this Deed and the terms herein upon execution of this Deed by the Borrower and return to the Mortgagee within the acceptance period (‘the Accepted Deed’).”

The preamble to the Deed makes it clear, if clarity be needed, that Mr Hanna is the Borrower and Gippsreal is the Mortgagee.

Question to be tried

[11] The first and most obvious problem facing Gippsreal is that the Deed is unsigned, by anyone, yet it is on its face clearly intended to be executed as a deed by Gippsreal, Mr Hanna and Celebrity.  As to clause 35, there are famous enactments requiring writing, signed by the person to be charged (Mr Hanna) when an interest in land is to be created or sued for.

[12] Thus s 11 of the Property Law Act 1974 contains:

11Instruments required to be in writing

(1) Subject to this Act with respect to the creation of interests in land by parol—

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent lawfully authorised in writing, or by will, or by operation of law;…”

and more relevantly here, s 59 is:

59Contracts for sale etc. of land to be in writing

No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.” 

[13] In response to the problem raised by the non-execution of the Deed of Agreement, Ms Anderson for Gippsreal relies on Masters v Cameron (1954) 91 CLR 353, arguing that the parties intended to be bound immediately by the Deed, though not yet executed.  At p 360, the court said of the first of the three classes of agreement where a formal contract is contemplated:

“It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.”  (my emphasis)

[14] For present purposes I have to accept that Mr GB Dougherty (the signatory to the letter of 27 March 2008) was lawfully authorised by Mr Hanna to write on his behalf.  A solicitor is presumed to act on instructions and Mr Hanna would surely have denied that fact if it were not true.  Furthermore it was not argued that the letter would not constitute a sufficient memorandum or note of an agreement between the parties evidenced by the email and the letter.  In my opinion it would qualify.  The question is, what was that agreement?

[15] Critically the email makes no provision for the creation of a caveatable interest.  The argument for Gippsreal is that clause 2 of the emailed offer expressly incorporates in the offer the terms of the Deed of Offer made on 20 March 2008 when it says:

“2.Gippsreal re-issue the offer of second mortgage finance for $500,000 on the same terms and conditions as the offer dated 20 March 2008, and Hanna accepts this offer.”

[16] In my view it must be taken that the acceptance of 27 March 2008, perfunctory as it might have been, was an acceptance of the emailed offer and an acceptance of the terms and conditions of the Deed which is expressly referred to.  That Deed provides for Gippsreal as mortgagee, Celebrity as mortgagor and Mr Hanna as guarantor, for the sum of $500,000, secured over real property in New South Wales.  And clause 35 of Schedule 2 created the caveatable right in issue here.

[17] While certain inconsistencies in the respondent’s case were raised by Ms Skennar for Mr Hanna, I was not referred to any, or any serious, inconsistencies between the email and the Deed, so serious that they could not stand together.  Nor was it argued that the Deed lacked provisions so vital that the parties must have intended that a further distinctly new and different document must be executed.

[18] While the material does not show when Mr Hanna first saw the Deed of offer dated 20 March 2008 (he was sent a copy under cover of a letter dated 28 March 2008), I can only assume that when he told Mr Dougherty that he agreed with the emailed terms he knew about the Deed.  But of greater importance is the fact that acceptance of the emailed offer constituted acceptance of its clause 2.

[19] So in my opinion it is fairly arguable that, despite the fact that the Deed of Offer is unsigned, there is a sufficient note or memorandum thereof signed by a person lawfully authorised by the party to be charged that is, Mr Hanna (Property Law Act s 59).  So there is a serious question to be tried (Cousins Securities, supra).

[20] In the circumstances it is unnecessary to deal with the alternative submission of Ms Anderson that irrespective of the signature point Mr Hanna is estopped from denying that the Deed of Offer applies as between Gippsreal and him.

Balance of convenience

[21] Mr Hanna has sworn that he intends selling the land over which the caveat is registered and in the meantime he has borrowed some additional money and provided a mortgage over the land as security for that loan.  The exhibited mortgage, to Smits, records a loan of $700,000.   Then, mysteriously, he swears:

“13.If the mortgage to the lender is not registered or cannot be registered I am likely to suffer damages and expenses.”

I do not understand that.  There is the mortgage to Smits which is registered.  If there is some difficulty between Mr Hanna and Smits I am not told what it is.  If there is another lender I am told nothing about that.  No estimate is given of the amount of damages and expenses Mr Hanna may incur, or how he will incur them.

[22] Mr Rickard’s affidavit, on behalf of Gippsreal, swears to searches made which indicate that the agreement of Mr Hanna with Smits was made a month after the caveat was lodged.  Thus the caveat did not prevent Mr Hanna obtaining that loan or registering the mortgage.  He also swears to evidence that Mr Hanna has removed this land from the sale market.  Thus I have no real basis for concluding that the caveat is a serious impediment to Mr Hanna’s financial affairs.

[23] The matters sworn to in Mr Rickard’s affidavit as to the value of Mr Hanna’s assets and the amounts owing on his mortgages suggest that his finances may not be in a healthy state.  Gippsreal is pursuing the disputes between it and Mr Hanna in the Supreme Court of New South Wales.  It is reasonable that Gippsreal should have the protection of this caveat to recover money which may be owing to it by Hanna.

[24] So while I can see no particular detriment to Mr Hanna in the retention of the caveat, I can see a detriment to Gippsreal if it is removed.  Thus the balance of convenience favours the retention of the caveat.

Conclusion

[25] The application is dismissed.  I will hear argument on costs.

Close

Editorial Notes

  • Published Case Name:

    Hanna v Gippsreal Ltd

  • Shortened Case Name:

    Hanna v Gippsreal Ltd

  • MNC:

    [2008] QSC 106

  • Court:

    QSC

  • Judge(s):

    Skoien AJ

  • Date:

    30 May 2008

Litigation History

No Litigation History

Appeal Status

No Status