Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd
[2010] QDC 80
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- Unreported Judgment
- Appeal Determined (QCA)
- Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd[2010] QDC 80
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Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd[2010] QDC 80
Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd[2010] QDC 80
DISTRICT COURT OF QUEENSLAND
CITATION: | Oakwood Constructions P/L v Wyndon Properties P/L [2010] QDC 80 |
PARTIES: | OAKWOOD CONSTRUCTIONS PTY LTD ACN 052 282 863 (plaintiff) v WYNDON PROPERTIES PTY LTD ACN 080 418 891 (defendant) |
FILE NO: | BD 3470 of 2007 |
DIVISION: | Civil jurisdiction |
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 12 March 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 1, 2 February 2010, subsequent written submissions to 11 February 2010 |
JUDGE: | Robin QC DCJ |
ORDER: | Order for vesting in the plaintiff of defendant’s land on payment of $95,000 |
CATCHWORDS: | Abdul-Rahman v Jeffs [1988] QSC 346, considered Bilecki v Weber [1942] 2 DLR 210, considered Cartwright v Cartwright (1941) 1 DLR 369; [1942] 2 DLR 210, considered Ex parte Karynette Pty Ltd [1984] 2 Qd R 211, applied Lumbers v W Cook Builders Pty (in Liq) (2008) 247 ALR 412, cited Pohlmann v Harrison [1995] 2 Qd R 59, cited Acts Interpretation Act 1954, s 36 District Court of Queensland Act 1967, s 52, s 68, s 69 Integrated Planning Act 1997 , s 3.1.4(1), s 3.5.19, s 3.5.30, s 4.3.1(1) Property Law Act 1974, s 196, s 197 Builder seeks compensation for improvements (house) erected on defendant’s land, or vesting in it of the land in exchange for payment of unimproved value – whether builder had a “genuine belief” land was owned by the entity with which it contracted to build – the entity was purchaser under an uncompleted purchase from the defendant – in course of construction builder learnt its customer was financially unable to complete and supplied sufficient funds for that purpose – defendant not informed, nor aware that construction by plaintiff was happening |
COUNSEL: | Mr Barlow for the plaintiff Ms Richards (law student, by leave under s 52 of the District Court Act 1967) for the defendant |
SOLICITORS: | Walsh Halligan Douglas for the plaintiff The defendant appeared in person |
- [1]ROBIN QC DCJ: The plaintiff claims relief against the defendant under s 197 of the Property Law Act 1974 in consequence of its having erected a house on the defendant’s land (Lot 24) at 201 Lakes Drive, Laidley, which has an area slightly in excess of 6,000 square metres. The section applies in circumstances that satisfy s 196 of the Act:
“Relief in case of improvements made by mistake
Where a person makes a lasting improvement on land owned by
another in the genuine but mistaken belief that –
- (a)such land is the person’s property; or
- (b)such land is the property of a person on whose behalf the improvement is made or intended to be made;
application may be made to the court for relief under this division.”
(Only paragraph (b) is relevant here.)
Section 197, so far as relevant, provides:
“(1) If in the opinion of the court it is just and equitable that relief should be granted to the applicant or to any other person, the court may if it thinks fit make any 1 or more of the following orders-
- (c)vesting in any person or persons specified in the order the whole or any part of the land on which the improvement or any part of the improvement has been made either with or without any surrounding or contiguous or other land;
- (d)ordering that any person or persons specified in the order shall or may remove the improvement or any part of the improvement from the land or any part of it;
- (e)ordering that any person or persons specified in the order pay compensation to any other person in respect of –
- (i)any land or part of the land; or
- (ii)any improvement or part of the improvement; or
- (iii)any damage or diminution in value caused or likely to be caused by or to result from any improvement or order made under this division;”
Neither party was interested in an order being made under sub-section (b). The relief claimed by the plaintiff from the outset has been:
- (A)A declaration that Wyndon holds Lot 24 in trust for Oakwood;
- (B)Alternatively orders under s 197…;
- (C)In the further alternative equitable compensation.
Only (B) was seriously pursued at the trial; (A) may well have been there to support a caveat and/or to establish the court’s jurisdiction. See [1] before. In the event, (B) meant seeking payment to the plaintiff of compensation reflecting the value of its improvement of Lot 24 or vesting in it of Lot 24 subject to payment of the value of the land unimproved.
- [2]The defendant has been the registered proprietor of the land since 1999. It does not represent the defendant’s only real property. Indeed, the court heard of a second similar site in the same general locality (5 Maroske Road, Plainland) where the plaintiff also did work, but only to a limited extent. The defendant had no dealings whatever with the plaintiff, indeed he had never heard of the plaintiff until 30 September 2004. On that day, Mr Richards, principal of the defendant, visited the site from his home in Indooroopilly and discovered that a house, estimated or accepted on both sides as 80 percent complete, had been recently erected there. Mr Richards said that (in circumstances to be described below in [11] he “expected” that a house would be built but had no knowledge before that day of this actually happening. The plaintiff had ceased work not long before (indeed on the day, if I understand Mr Lewis correctly) on realising that its customer did not have and might be unlikely to get title, making the work done secure against depredations of intruders or the elements. Mr Richards says he brought in “chippies” to do some further work to that end but nothing appears to turn on that. At no time did the defendant ask the plaintiff (or anyone else) to do building work on the site.
- [3]The plaintiff is an experienced builder of houses. It is represented by Mr Lewis, who resides on Bribie Island. In 2004 it had a local representative, Mr Brendan Pfeffer. Mr Des Jennings was the registered builder and the plaintiff’s nominee. He played no role that the court heard of, although doubtless his details were displayed on the site. In June 2004 Mr Pfeffer (no longer with the plaintiff after late 2004) introduced Mr Lewis to one Gordon Beckett (who is said to have made the original approach to Mr Pfeffer). In June 2004 Mr Lewis meet Mr Beckett and Mr Gerard McDonald for lunch at Brothers Leagues Club near Ipswich. In hindsight it seems amazing that Mr Lewis quickly developed and for a few months retained total confidence in these gentlemen and their organisation, identified as “Fasta Financial Group”, Gerard McDonald Principal ([email protected]) according to the business card that was given over. He says he was impressed by Fasta’s having offices in Sydney, Melbourne, Brisbane, Canberra, the Gold Coast and Sunshine Coast (also Lockyer Valley) according to the business card, which lists the locations mentioned without any statement that there was an office there (the only contacts given, apart from the email address, being telephone and fax numbers and a post office box at Burleigh – along with a website matching the email address). Fasta’s activities were represented as including “spec building” of commercial and domestic properties, such projects being mentioned in terms of hundreds. Mr Lewis disavowed any interest in commercial development.
- [4]I accept Mr Lewis’ evidence. It is unfortunate that he was not given the opportunity in cross-examination (conducted by Mr Richards’ daughter, a final year law student given leave to represent the defendant under s 52 of the District Court of Queensland Act 1967, who acquitted herself pretty well) to comment on assertions later made in precise terms from the witness box by Mr Richards of threats against him and the Richards family, and that his unchallenged evidence of having offered the defendant $65,000 for Lot 24 on top of $20,000 of funds that came in directly from and through the plaintiff, would be the subject of conflicting evidence of Mr Richards, which had not been foreshadowed in any way. I accept from Mr Lewis that he was assured by McDonald that “Fasta” had unlimited finance available, even that he took from the words “financial” and “group” in its name that it truly had the attributes of a financial institution (such as a bank, although Mr Lewis did not expressly say that) and gained substance from being part of a “group”. Mr Lewis’ naivety may be attributable to his considerable experience being essentially with one-off contracts for domestic construction with “mum and dad” customers. Mr Lewis caused the plaintiff to take steps, by way of building houses on Lot 24 and three other sites to a similarly advanced stage, and by providing funds when a problem emerged on 29 August 2004 to corroborate what he says about the trust and confidence reposed in Mr McDonald and Fasta. I think that was a “genuine belief”, to pick up an important expression in s 196. I accept that McDonald told Mr Lewis that Fasta owned properties and that Mr Lewis took it (indeed, that the meaning of the men’s communications was) that the 10 building projects that the plaintiff would be given to start off related to sites that Fasta owned.
- [5]It was left to Mr Pfeffer (and to Mr Beckett, it seems) to prepare and execute domestic building contracts for the sites identified. The court has only one, exhibit 4, in respect of Lot 24. It is probably representative of the others. It is a lump sum contract with a lump sum component of $104,647, prime cost items $12,000. It is dated 9 June 2004 and provides for practical completion after 120 days, although Mr Lewis said that given favourable weather conditions less than half that time would be required; liquidated damages of $50 for each day of delay and interest at 5 percent per annum on overdue payments were provided for. The contract was subject to loan approval, the lender being Global Ltd, Royal Exchange Building, 19 Martin Place, Sydney, the amount of the loan being “succifient (sic) to complete”, loan approval date left blank. The contract is in the Queensland Building Services Authority standard form which incorporates the glossy general conditions of building contract (exhibit 10). The defendant places considerable emphasis on the contractual documents, especially exhibit 12 and on the departures from what the plaintiff ought to have done or insisted upon by reference to the conditions as part of its attack on the genuineness of Mr Lewis’ asserted belief that Fasta owned Lot 24, i.e. (quoting s 196) that it was the “property” of Fasta. The definition of “property” in s 36 of the Acts Interpretation Act 1954 is as wide as could be imagined, bringing in ownership in equity and “interests”.
- [6]The plaintiff obtained on its letterhead the following document signed by Beckett:
“I Gordon Beckett am being the representative of Fasta Financial Group Pty Ltd, who are
The Owners of Lot No 282 Andrews Crt
288 Andrews Crt
103 Finch Crt
44 Grebe Crt
4 Hewitt Dr
35 Hooper Dr
24 Lakes Dr
5 Maroske Rd
220 Pelican Dr
112 Thallon Rd
Hereby give Oakwood Constructions Pty Ltd permission to sign all relevant forms in relation to the building and plumbing work applications to be conducted on the above propertys (sic).
Signed: G W Beckett
Dated: 5/7/2004” (exhibit 6)
- [7]This authorisation was important given that, at the time, development applications for permits to erect homes had to show the consent of the owner of the land (this is no longer the case); the IDAS Form 1 Development Application under the Integrated Planning Act 1997 for Lot 24, exhibit 5, is signed by Mr Lewis on behalf of the plaintiff (as applicant) and by him on behalf of “Fasta Pty Ltd” as owner, the post office box being given for contact details. This document is dated 7 July 2004. (The proliferation of names attributed to the “owner” will be noted; another FFG Pty Ltd. In the end nothing came to turn on the confusion. It is convenient to use the common description “Fasta”.)
- [8]This development application was assessed by a private certifier, Mr Porter, who gave evidence. He endorsed on exhibit 5 that he received it on 8 July 2004 and that the date of his engagement, which had to be advised to the Laidley Shire Council, was the day following.
- [9]Although Mr Porter was engaged to assess and decide the development application (and ultimately did so by a favourable decision notice of 18 August 2004), the Council was necessarily involved, given its role in respect of plumbing, drainage, water connection and like matters. The application to the Council for compliance assessment in respect of proposed plumbing and drainage work showed Fasta P L as owner. It seems plain that the Council officers consulted their records and ascertained that the registered proprietor was someone else, i.e. the defendant. There appears to have been a corresponding discovery in respect of all ten of the properties Mr Beckett had declared that Fasta Financial Group Pty Ltd owned. Exhibit 29 is Mr Porter’s letter of 27 July 2004 sending to the Council in respect of plumbing and drainage applications “contracts of sale and solicitors’ letters” for all ten properties. We do not have the enclosures or any idea of how many “contracts” or how many “letters” there were. Mr Porter cannot say whether the material he enclosed (whatever it was) came from Mr Lewis or from Mr Beckett. Mr Lewis swears (and I accept) that it was not from him, that he knew of no requisition along these lines. Presumably whatever came from or to the Council came from or to Mr Beckett, with Mr Lewis remaining ignorant. Ms Richards’ conduct of the case was expressly on the basis that Mr Lewis represented the mind of the plaintiff, rather than Mr Beckett; as I understood her, she did not assert that any knowledge Mr Beckett might have derived in the exhibit 29 exercise should be attributed to the plaintiff for the purposes of this proceeding. I think that was the correct approach in the circumstances.
- [10]What was the situation in relation to Lot 24? A contract dated 25 May 2004 in the REIQ form of contract for houses and land (5th edition) between the defendant as seller and Gordon Beckett for a price of $58,000 including a deposit of $250 had been signed. Settlement 60 days from the date of the contract was required (with a 12 percent default interest rate applicable) and the contract was subject to finance “sufficient to complete the purchase of the land” being approved within 21 days, and also to a soil test. The plaintiff knew nothing of these matters, being of the belief that an entity with “Fasta” in its name owned the land. Nor did it know of a request dated 1 June 2004 (exhibit 31) that the Beckett contract for Lot 24 “be in the name of FFG Pty Ltd” to satisfy “his financier”: exhibit 31. The response indicated in an email of 3 June 2004 (exhibit 32) was indication of an agreement to transfers being amended to that company name, provided there were no adverse stamp duty consequences for the defendant. I interpolate here that that company name is probably correct; it was used by the entity in Supreme Court proceedings against the defendant (exhibit 19). Although one may doubt whether finance was approved, the parties to the sale contract treated it as still on foot, the purchaser’s solicitors, Conveyancing Works, writing to their counterparts on 19 July 2004 (exhibit 33):
“FFG PTY LTD A.C.N. 109 133 235 PURCHASE FROM WYNDON PROPERTIES LOT 24 LAKES DRIVE, LAIDLEY
We are instructed to request an extension of settlement until 30 September 2004 on the following terms:
- Our client pay $5,000.00 to you this Friday 23 July 2004 over and above the purchase price and not part of the deposit;
- Our client pay an additional $5,000.00 to you over and above the purchase price and not part of the deposit on or before 30 September 2004;
- You allow access to the property before settlement for our client to construct a dwelling on the property.”
- [11]Part of what followed was a “Deed of Consent to Occupancy” dated a week later (exhibit 34). This seven page document recites the defendant’s having entered into a contract to sell Lot 24 to “the Occupier”, and the latter’s requesting early possession for the construction of a dwelling. Provisions include:
“2.1 Right to occupy Occupied Land
Subject to the provisions of this document, the Owner consents to the Occupier occupying the Occupied Land from the Commencement Date to and including the Termination Date.
…
- Purpose of Occupation
The Owner consents to the Occupier occupying the Occupied Land from the Commencement Date to and including the Termination Date for the sole purpose of constructing a dwelling on the Land.
- Ownership of Works, Plans and Approvals
The Occupier agrees that the Owner shall be entitled to the ownership, possession and control of all building works and documentation in relation to the construction of the dwelling on the Land including but not limited to Building Plans and Council Approvals if the Occupier breaches one or more of the following:
- (a)the Occupier’s obligations under this document; or
- (b)the Occupier’s obligations under the Contract.”
- [12]In the interim, the defendant’s solicitors had dealt with other aspects of the sale of Lot 24 in the following fax:
“FACSIMILE TRANSMISSION
To: Faes & Co From: Marion Roberts |
Fax: 5538 8851 Pages: 1 |
Attn: Melinda Kenney Date: 23 July 2004 |
Re: Wyndon Properties Pty Ltd sale to FFG Pty Ltd |
Property: Lot 24 Lakes Drive, Laidley |
Dear Colleagues,
We refer to the above matter and have been instructed by our client to amend the terms of granting the extension to 30th September 2004 to read as follows:-
- Your client pays the sum of $5,000, over and above the purchase price and not part of the deposit, to our client by way of bank cheque or electronic transfer on or before Friday 23 July 2004.
- Your client pays the sum of $5,000, over and above the purchase price and not part of the deposit, to our client by way of bank cheque or electronic transfer on or before 23rd August 2004.
- Our client allows your client access to the property before settlement for the purposes of constructing a dwelling on the condition that a Deed is entered into by the parties handing over all rights to the building works including all plans and council approvals to our client in the event of default by your clients together with an indemnity against all claims in relation to such works. That Deed is to be prepared by this form and our fees in the sum of $450.00 plus GST are to be paid by your client to bank cheque at settlement.
- As per our facsimile of 21st July 2004, the settlement figures are to be calculated at the original settlement dated of 26th July 2004.”
Settlement did not occur. Fasta Financial Group Pty Ltd, after the defendant had indicated it was rescinding, commenced a Supreme Court proceeding number 9710 of 2006 against the defendant seeking declarations that the Lot 24 contract, and that for Lot 5 Maroske Road were valid and binding, and specific performance of them, among other relief, including restitution of the $10,000 paid in July 2004 and August 2004 (corresponding payments allegedly being made for both contracts). The statement of claim (exhibit 19) appears to assert that time ceased to be of the essence; that any reported rescission was improper. There may be an issue whether the defendant effectively made the separate contracts interdependent, in the sense that the purchaser was not entitled to settle one unless it completed the other at the same time. The Supreme Court proceeding went nowhere; the plaintiff there has been wound up on the application of the present plaintiff. The court accepts the truth of statements attributed by Mr Lewis to the liquidator that nothing will be recovered pursuant to its proof of debt for moneys owing under the building contract.
- [13]As for the land sale contract, matters proceeded (as appears above) in a way very different from that presented to Mr Lewis by McDonald. On 29 August 2004 McDonald asked to see Mr Lewis and on doing so, at his home, told him that the finance he was counting on for Lot 24 had fallen over and that settlement was required the next day, 30 August. While this is at odds with the evidence about conveyancing matters, that it is what Mr Lewis (and I think his wife as well) were told and believed is borne out by their providing $65,000 to FFG or Fasta’s solicitors, Faes & Co to cover the amount supposedly required for settlement the next day. This was achieved in great haste.
- [14]$60,000 was provided by Mrs Lewis, who gave evidence which I accept. The remaining $5,000 was the amount of a bank cheque procured by the plaintiff at its own direct expense. I accept from Mr Lewis, who was not challenged on this, that the whole $65,000 was made available to Faes & Co on the express basis communicated to its relevant employee that it was to be held in trust for the purposes of completion of Lot 24. I am satisfied that Mr Lewis had the belief and absolute confidence that completion would occur promptly. It did not occur promptly or on 30 September 2004, the date agreed on by the seller and the replacement buyer. It appears that $20,000 was used to pay a $5,000 sum for an extension in respect of Lot 24 (which Mr McDonald told Mr Lewis about), for another $5,000 in respect of Lot 24 (which Mr Lewis was never told anything about) and for two separate amounts of $5,000 in respect of the defendant’s sale to “Fasta” of Lot 5 Maroske Road about which Mr Lewis knew nothing except that the plaintiff was to build there – it might be noted here for convenience that the same design, provided by Fasta, was adopted for all ten houses which the plaintiff was engaged to build. Faes & Co have returned to the plaintiff only $45,000 of the amount they received. There is not the slightest suggestion that Mr Richards or the defendant knew anything about the plaintiff’s provision of the funds here being discussed.
- [15]Sometime in the first week of September Mr Lewis contacted McDonald (presumably to check that settlement had occurred, to be told that it had not “and that they had got an extension on their contract to the 30th September”).[1] McDonald said he would have his finance by 30 September and return the plaintiff’s money. It could not be returned immediately because “$20,000 of that funds had been … sent to Wyndon Properties to extend the contracts”.[2] Mr Lewis knew the identity of the defendant from 29 or 30 August 2004; Mrs Lewis had indicated Wyndon Properties on the butt of the cheque she drew on 30 August.[3] It is astounding, in retrospect, that no contact was made with the defendant directly. No doubt it is a mark of the confidence still reposed in Fasta/McDonald and a reluctance to interfere in their affairs by going behind their backs to the defendant. The facsimile machine imprint on Exhibit 10 (the Lot 24 contract, more accurately, a copy) suggests Mr Lewis got it on 7 September 2004. Things were proceeding more effectively pursuant to the house construction contract, proceeding apace from about 18 August 2004 until 30 September when Mr Lewis ascertained from Mr McDonald that settlement had not occurred, whereupon he stopped work on the project. The house was then at “lockup” or “pre-paint” stage, about 80 percent complete. Mr Lewis suggested he had been telephoning Mr McDonald in September “constantly to find out how finance was going”. He was told on or soon after the 30th that Fasta could not settle because $20,000 of the $65,000 had been used to gain an extension “which left them with only $45,000 and apparently there were some dealings between Wyndon Properties and Fasta which I was not aware of to settle two blocks of land”. Mr Lewis had no idea of the defendant’s linking of the two contracts. He did, it seems, accept that the Lot 24 contract, the one that concerned the plaintiff, “… was over. He couldn’t settle the land and so I made arrangements to see if I could purchase the land myself.”
- [16]In that regard, there were four blocks with houses substantially completed by the plaintiff which it set out to purchase, with successful outcomes in respect of three of them, but not with the defendant in respect of Lot 24. The other six blocks were not pursued, although according to Mr Lewis he had spent “about five thousand on each block getting the Council approval … I didn’t have the finance and resources to be able to do anything with it.”[4]
- [17]I accept Mr Lewis’ evidence that once he made telephone contact with Mr Richards early in October he offered to pay $65,000 for the land (Lot 24) on the basis of the defendant retaining the $20,000 which in his mind the defendant had already got by reference to Lot 24. Mr Richards said he could not commit himself. I was not convinced by his claim that uncertainty about what Fasta/FFG might do in relation to Lot 24 precluded his coming to terms with Mr Lewis.
- [18]While it is interesting that Mr Lewis was able to come to terms with three other owner-vendors, that has no bearing on the court’s task in this proceeding. That task is to determine whether the plaintiff comes within s 196, which involves a fact-finding exercise and some interpretation of the section, and (if s 196 applies) determine whether any and if so what relief it is “just and equitable” to grant under s 197. This part of the court’s task involves identifying relevant considerations and balancing them and exercising an extraordinarily broad discretion. In my opinion, in many situations there will be a range of outcomes that could qualify as “just and equitable”.
- [19]The Property Law Act provisions are extraordinary. From the defendant’s point of view, which is perfectly understandable, it stands to have its property confiscated against its will (albeit on the basis of compensation which, however munificent, will provide no balm to a defendant standing on principle) or be compelled to pay for a lasting improvement (here the house) which was never desired or requested or even constructed with the defendant’s knowledge. The provisions are part of our statute law and represent but one of many instances of compulsory acquisition provided for, not only in respect of land but of other kinds of property such as shares which may be compulsorily converted into money or other investments if a threshold of success is reached in a takeover.
- [20]It is interesting to refer to the Queensland Law Reform Commission Report (QLRC 16) which explains and justifies the relevant Property Law Act provisions:
“194-197 Improvements under mistake of title. The rule that the owner of the land becomes the owner of any fixtures permanently attached to it means that a house or other structure or improvement mistakenly built upon the land of another becomes the property of that other without any right of compensation or removal in favour of the builder. The position is otherwise where the owner is aware that the building is being carried out on his land in error, since he may then be estopped from asserting his title: Ramsden v Dyson (1865) L.R.1 H.L. 129; but when there is no such acquiescence of inequitable conduct on his part, he is entitled to claim the structure or improvement so affixed free from any claim by the builder: Brand v Chris Building Society Pty. Ltd. [1957] V.R. 625. But as Sackville and Neave point out (Property Law Cases and Materials, at p. 100) the rigid solution adopted in the Victorian decision is not inevitable and some other legal systems confer on the builder a lien or right to retain possession of the land built upon until the owner pays a reasonable sum in respect of the unjust enrichment of his land: see Fletcher v Bulawayo Waterworks Co. Ltd. 1915 A.D. 636 (South Africa).
The problem has been tackled by legislation in the Canadian provinces and in New Zealand and more recently Western Australia. The Canadian statutes apparently have their origin in legislation of certain of the American States and commonly appear in two distinct parts, one conferring on the builder a lien for “lasting improvements” made on land in the mistaken belief that it is his own, and the other providing for relief in respect of encroachments in a manner similar to the Queensland Act of 1955: see, for example, Manitoba Law of Property Act R.S.M. 1954, c. 138, ss. 28 and 29. On the other hand, the Western Australian provision (s. 123 of the Property Law Act 1969), which is based upon s. 129A of the New Zealand Property Law Act 1952, is confined to cases in which a building has been erected on land by a person having an estate or interest in another piece of land which he mistakenly believes is the land built upon. The provision also extends to encroachments caused by mistake as to the boundaries of the land, and in this way it also partly serves the function which in Queensland is performed by The Encroachment of Buildings Act of 1955 and which in this Bill is covered by Division 1 of this Part.
The incidence of building on one allotment in mistake for another is surprisingly large, most practising members of the profession having encountered it on one or more occasions, and such errors are likely to recur as long as there is large-scale development of new residential sub-divisions which in their undeveloped condition often make it difficult to identify a particular allotment or to distinguish one from another. Legislation on this topic is, in our opinion, therefore not only justified but necessary. Because of the existing procedure in relation to encroachments under the Act of 1955 (which will be incorporated in and become Division 1 of this Part), we see no need to adopt legislation in the precise form of s. 123(1) of the Western Australian Act, which is somewhat complex in its terms. That provision also suffers from the limitations that it is available only in respect of a building and only where the builder owns other land at the time he erects the building in question, and this restricts its application to an extent which, in our view, is unwarranted. It may, for example, exclude the case of a person on whose behalf a house is being built by a building contractor, or who buys from a builder or other person before the mistake is discovered. We therefore prefer the Canadian form of legislation, which extends to any “lasting improvement” (which has been held to include the clearing of land on an improved farm: Mateychuk v. Kuchernowski [1930] 1 D.L.R. 367; contrast Tuckwell v. Guay (1917) 34 D.L.R. 106, but not to include a concrete footpath: Mohl v. Benft (1956) 6 D.L.R.2d.32), and which rests simply upon the existence of a genuine belief that the land belongs to the improver without the additional requirement of ownership of other land. Furthermore, the Canadian provisions have been the subject of a good deal of reported judicial decision which affords the advantage of a useful guide to interpretation of the legislation: in addition to the decisions mentioned, see, on the Ontario provision (now s. 38 of the Conveyancing and Law of Property Act, R.S.O. 1960 c. 66), the following: Bilecki v. Weber [1942] 2 D.L.R. 210; Derro v. Dube [1948] 2 D.L.R. 296; Cartwright v. Cartwright [1940] S.C.R. 659, mentioned in Laskin: Cases & Notes on Land Law (rev. ed.) at p. 161, and Gay v Wierzbicki [1967] 2 O.R. 211.
We therefore prefer and recommend the adoption of a general provision modelled on the Canadian legislation on this subject, as to which see cl. 195 of this Division. On the other hand, the Western Australian section is much more explicit and detailed on the subject of the powers of the court and the procedural aspects of the relief which may be granted, and for this reason we have chosen to incorporate sub-sections (2) to (7) of s. 123 of the W.A. Act in the draft provisions constituting Division 2 of this Part of the Bill.”
- [21]While the mischief the drafters had in mind focussed on construction of improvements on the wrong land (as opposed to the right land) the local cases are all attempts (successful or unsuccessful) to invoke the provisions where there is no mistake about identification of the land, but rather about the relationships, entitlements and expectations of people having involvement with the land. See ex parte Karynette Pty Ltd [1984] 2 Qd R 211 and Abdul-Rahman v Jeffs [1988] QSC 346 (4729 of 1987, Dowsett J, 19 August 1988). The circumstances of those cases have some similarities to the present ones, as do those of at least one of the Canadian decisions referred to in QLRC 16 and in argument in this proceeding: Cartwright v Cartwright (1941) 1 DLR 369; [1942] 2 DLR 210.
- [22]The local cases illustrate the issues the defendant raises regarding s 196, that the plaintiff fails to establish a belief that is both “genuine” and “mistaken”, as required. The defendant says there was no genuine belief Lot 24 was Fasta’s property, that a belief to that effect must have some basis, that the proper basis is a title search which, if done, would have put an end to the belief. Although he is an experienced registered builder, I do not accept Mr Richards’ evidence that it is practice in the industry for builders to do a title search to ensure that the client is the registered owner of the land where they propose to build – or any proposition to the effect that builders do or should not proceed unless the registered ownership in the client is established. In my opinion a belief need not be reasonable or soundly based to be “genuine”. What is required is that the belief actually be held. The more outlandish or unreasonable the belief, the more difficult would be a plaintiff’s task of persuading the court that the belief was truly held. Here, I am satisfied that Mr Lewis’ and the plaintiff’s beliefs were “genuine”. When the plaintiff committed itself to do the work, by becoming contractually bound and when it commenced to do the work, the belief existed: it was a belief to the effect that the entity represented by McDonald and Beckett was the owner. This imports that contractual arrangements giving rise to that ownership had all been completed so that, if a title search were conducted, it would show the entity as the owner – alternatively, the entity was armed with everything needed to get registered title without cooperation of anyone else. It would be unrealistic to attribute much refinement to Mr Lewis’ thought processes or to speculate as to whether he might have accepted theoretical threats to such ownership, for example if Lot 24 were mortgaged, default might lead to ownership terminating. That McDonald and Beckett’s assertions (or the latter’s letter) asserting Fasta’s ownership would not ordinarily be accepted as evidence of title does not gainsay that Mr Lewis genuinely held the belief he asserted.
- [23]The defendant argues that the belief ceased to be mistaken on 29 August 2004 when Mr Lewis learned that the property was under contract. As Abdul-Rahman establishes, there is no “operative mistake” once Mr Lewis’ belief about ownership changes to one which is not mistaken. He would have had a high degree of confidence, having provided his client with the funds required to achieve settlement and established a trust in respect of those funds to ensure their application for the purpose, that settlement would occur.
- [24]It may be that on the basis of Karynette, where it was said at 212:
“I am satisfied that the applicant genuinely believed that the land in question was its property pursuant to the contract which it had entered into with Coxside. It is clear that the applicant knew that Goodlet and Smith was the registered proprietor but it was an integral part of the applicant’s belief that it had acquired the beneficial interest in Lot 98 from Coxside and that it would not be divested of that interest by default on the part of Coxside. I am satisfied that such was its belief at the time of the expenditure by it on the making of the lasting improvement, namely, the dwelling house.
For the respondent, it is argued that the applicant’s belief was not a mistaken one. If its belief was that it had acquired the beneficial interest in Lot 98 and was at the time of the expenditure entitled in due course to the legal estate, that belief was not mistaken, so it was argued, but was correct. But in my view the belief of the applicant involved more than that. In particular, at the time it made the improvements it believed that it would not be divested of the beneficial interest in the property which it had acquired from Coxside. In that respect it was clearly mistaken and that mistaken belief was a genuine one. In the circumstances of this case, I am satisfied that the applicant held a genuine and mistaken belief that Lot 98 was the applicant’s property and having that belief it made the expenditure which it did in the making of the lasting improvement. Were it not of that belief, I am satisfied that it would not have expended the money.”
Mr Lewis was by then operating under a different mistake. Dowsett J doubted whether a belief that settlement would occur amounted to a mistake within s 196. It is unnecessary for me to resolve the apparent conflict. I understand the defendant’s contention that once Mr Lewis learned the truth, the plaintiff’s entitlement to charge the defendant with the costs of works on Lot 24 becomes more problematic, as the requisite belief to support the claim may have ceased to exist. Such considerations might be important in the context of the defendant being charged for the work. In deciding whether the land ought to be vested in the builder, the considerations are different. It seems to me that, having reached the position (as I do) that the jurisdiction under s 196 had arisen by 29 August 2004, the jurisdiction continues to exist. By that date, as the material in Exhibit 25 shows, there had been considerable expenditure and actual work in relation to the site. While a good deal of that expenditure relates to design and drafting work including engineering and soil testing, it is clear that work was done on the site including lasting improvements. For example, the slab had been poured and inspected, considerable draining and plumbing work had been done, likewise framing and provision of trusses. See Exhibit 25. In my opinion this is enough to trigger s 196. Whether any of the relief referred to in s 197 ought to follow is another question. In resolving it, reference may be made to all relevant circumstances pertinent to both the plaintiff and the defendant. That the plaintiff’s belief in its client’s ownership was revealed to require revision does not affect the s 196 issue, except to the extent that expenditure and work on the site thereafter cannot be said to occur on the basis of the belief. But the position as at 29 August 2004 cannot be undone retrospectively by the discovery that the plaintiff’s client had only the status of a purchaser. Upon that discovery, the plaintiff has a different belief, along the lines of that described in Karynette.
- [25]If Dowsett J is correct in Abdul-Rahman, a belief along those lines is “not mistaken” for the purposes of s 196. Fortunately, the conflict need not be resolved here. The original (genuine) belief satisfied s 196.
- [26]In my opinion, it is immaterial that the original belief may have been arrived at “negligently”, to quote the defendant’s criticism – or that the plaintiff might have been “negligent” in not doing more to ensure that the funds it provided would lead to its client obtaining legal title to Lot 24 at an early date. I am far from saying that there was negligence. On the assumption (which had not been falsified) that people could be trusted, the plaintiff may be seen to have acted reasonably both leading up to and proceeding from 29 August 2004.
- [27]Mr Barlow’s written submissions of 11 February 2010 responding to Ms Richards’ earlier one, which ably extracted several propositions helpful to the defendant from Abdul-Rahman, submits that that decision may be unhelpful because the applicable definitions of “land” and “property” in s 36 of the Acts Interpretation Act may not have been considered, further because, after the decision, on 12 June 1991, new, wider definitions were substituted. The new submission may be correct in asserting that Mr Lewis now believed Lot 24 was Fasta’s “property” in a different way (one thought to be risk-free once funds sufficient to cover settlement of the purchase had been provided). What the submission does not confront is the difficulty that the amended belief may not be “mistaken”, as required. Mr Lewis knew that settlement of the purchase would require entities other than the plaintiff to do the right thing.
- [28]I prefer to proceed on the basis that, once s 196 is satisfied, the court turns its attention to s 197 and what is just and equitable in light of all the circumstances, both before and after 29 August 2004, including the conduct and interests of the parties. The plaintiff acted reasonably, in my opinion, in proceeding with construction of the house and is not in the position of the plaintiff in Bilecki v Weber [1942] 2 DLR 210 who intended to purchase land next to her own on which to build a garage, but bought the wrong lot and persisted with construction against the protests of the owner of the land she intended to acquire, proceeding from that time on under no mistake of title but “deliberately” (212) and attracting condemnation for her “high-handed action”: “this plaintiff far from being a seeker of equity has assumed to herself an arbitrary and absolute role of expropriator – a convenient method of acquiring somebody else’s land” (213). Here, the plaintiff was under a contractual imperative to construct the house.
- [29]The defendant here does face “expropriation”. The evidence does not show it doing anything wrong. It did nothing to get the plaintiff (of whom it had never heard) into the situation. It is not shown to have acquired knowledge which might have led it to put the plaintiff on notice. On the other hand, the defendant’s expectations, from the point of view of what might be just and equitable under s 197, are far from being totally defeated if a vesting order is made in respect of Lot 24 in favour of the plaintiff on the basis of appropriate compensation. It was content to sell Lot 24 to Mr Beckett for $58,000 in May 2004, with settlement at the end of July and (for a generous consideration) to extend settlement to 30 September. The contract is Exhibit 10 (25/5/04). It was content to sell Lot 24 to Mr and Mrs Christison for $200,000 by a contract of 27 October 2007 (Exhibit 35) on terms including “Property purchased in an ‘as is condition’, purchaser acknowledges and accepts that no final certificate has been issued by Laidley Shire Council”. The case is not one in which the defendant has some special affinity with the land to support a contention that it would not be just or equitable to vest the land in someone else on appropriate terms. There may well arise circumstances in which for the purposes of s 197 retention of the land that has been improved by another is so important to the owner (maybe for sentimental reasons) that divesting could not be regarded as just and equitable. The Christison contract fell through in circumstances where the plaintiff had lodged a caveat standing in the way of settlement; Mr Lewis says that Mr Christison stated he did not want to acquire a house that had not been paid for. The two men came into contact when the Christisons wanted from the plaintiff documentation certifying the plaintiff’s construction. It is noted elsewhere that the defendant “expected” construction of a house (at least in part) before completion of Exhibit 10, albeit on the basis that would not require any payment by it in any event. That is not the same thing as an entitlement to have a house constructed without payment. In determining what is just and equitable, I would not place much weight on the defendant’s loss of the prospect of getting a free house. Just as it is not to be held against the defendant that it declined to follow three other land owners in selling their sites where the plaintiff had constructed houses on terms acceptable to it, I think it is beside the point that, in respect of those properties, as Exhibits 13, 14 and 15 would indicate, a company called Fairlite Constructions Pty Ltd (an associate of the plaintiff) purchased Lot 112, Thallon Road, Kensington Grove for $54,000 and sold for $240,000, purchased 4 Finch Court, Regency Downs for $72,000 and sold for $235,000, purchased 14 Grebe Court, Laidley Heights for $70,000 and sold for $225,000. Those exhibits were tendered to give the court assurance that the plaintiff had not emerged from the Fasta debacle with losses as extensive as might be imagined.
- [30]There was no challenge (or none of any consequence) to valuations performed by Mr Johnston (whose access to the property was made possible only by a court order, see: [2008] QDC 285). It is an interesting coincidence that he had already performed a valuation on 13 October 2004 for Equititrust Limited (Borrower: Fasta Financial Group Pty Ltd) which placed a value of $60,000 on the land, $160,000 on the improvements (“as if complete”). Other details noted are the plaintiff’s tender price of $116,647 (CHECK COST $140,000). Mr Johnston’s valuation of 13 December 2008 estimated a market value in December 2008 of $197,000 of which $85,000 was allocated to the land, $110,000 to improvements “as is”. See Exhibit 23. There was a further inspection and another valuation on 14 October 2009, when there had been some movement in the market, the current market valuation being placed at $210,000 ($95,000 to land, $115,000 to the improvements “as is”).
- [31]I am satisfied Mr Johnston has been alert to relevant factors, including deterioration in the building, some particulars of which he noted. In part this was attributed to the building’s being left unoccupied and (apparently) neglected. There is no reason not to accept Mr Johnston’s opinions. His evidence removed my concern that the values he placed on improvements might have been influenced by the plaintiff’s invoice to its client (said to have been accepted by McDonald) which aggregates $113,317.60 (exhibit 11).
- [32]I threw out a hint to the defence that evidence ought to be got before the court of any circumstances that might be relied on that might make it not just and equitable to act on Mr Johnston’s figures (depending on whether the outcome of the proceeding was that the defendant must transfer its land at valuation or pay something on account of the value of improvements), for example because of holding costs in respect of Lot 24 for rates, interest and the like. Mr Richards gave his opinion that values in the area were now higher than Mr Johnston assumed and made some other comments, but nothing emerged persuasive that the court ought to depart from the Johnston figures. Mr Richards’ notion appeared to be that the plaintiff, to get the land, ought to be required to pay its full improved value. A suggestion was forthcoming from the Bar table (which appeared to cause him some consternation) that the court might, if not going all the way, make a “50-50” split; perhaps this meant splitting the difference.
- [33]In proceedings under ss 196 and 197, the plaintiff is seeking an indulgence, the defendant faces “expropriation” or being forced to pay for improvements. They were not wanted; the defendant eschewed seeking an order that they be removed, (indicating that value is seen in the improvements). I am of the opinion that, in fixing monetary amounts, for example, the court ought to be generous, rather than parsimonious towards the defendant, particularly an innocent defendant, as here, as a way of feeling confident that the outcome is “just and equitable”. The outcome ought to be a vesting order and on the basis of compensation of $95,000. This incorporates generosity, in that the defendant, more accurately, Mr Richards, (as the evidence shows that he personally got the money) had $20,000, over and above the $95,000, of the plaintiff’s money. I am not impressed by any proposition that $10,000 of the $20,000 related to another lot and contract or that the amounts related to a consideration that was provided – although the purchaser did not take advantage of it.
- [34]There are other arguments the defendant may have been making which do not assist its case. One seemed to be that the authority to enter for the purposes of constructing a house which the defendant gave was personal to its purchaser, Fasta and did not authorise the entry or construction by the plaintiff. In my opinion the ordinary interpretation of such a provision would envisage and authorise the engagement of contractors by the person “authorised” to carry out construction. A related argument, which might have been more potent than the one that the plaintiff should not gain any advantage from having constructed as a trespasser, was that the construction was unlawful as a “development” undertaken without a valid development approval. The notion was that Mr Porter’s decision notice was not effective until it had been provided to the local authority and then forwarded on by it to the plaintiff. Ms Richards was invited to make supplementary submissions to establish the argument, the court indicating a tentative view that building work could properly proceed as soon as the building certifier signed the decision notice. One aspect of the helpful written supplementary submissions that came in from Ms Richards dated 5 February 2010 was a concession that ss 3.5.19 and 3.5.30 of the Integrated Planning Act 1997 as in force at the relevant time do not clearly state that the decision must be given to the applicant before it takes effect, and thus the defendant does not take this issue any further. (Section 3.1.4(1) provides that a development permit is necessary for assessable development; s 4.3.1(1) provides for a penalty if assessable development is carried out unless there is an effective development permit for the development.)
- [35]Although there was no evidence as to when or how the plaintiff learned of the signing of the decision notice (exhibit 7) by Mr Porter on 18 August 2004, it is a reasonable inference that the plaintiff expected and was awaiting issue of a decision notice about that time, and immediately commenced serious work on the site (considerable preparatory work off-site having been carried out already).
- [36]Another line of attack on Mr Lewis’ and the plaintiff’s performance was to the effect that there was failure to do various things “required” as a condition of the Building Services Authority Contract it had with Fasta Financial Group Pty Ltd (exhibit 4), 9 June 2004. That contract was in BSA standard form; it incorporates general conditions set out in the glossy illustrated booklet, exhibit 12. In the general conditions, condition 2 provides, in part:
“LOAN APPROVAL
Unless Schedule Item 14 states that this Contract is not subject to Loan Approval, this Contract is subject to the Owner obtaining from the Lender, on or before the Loan Approval Date, approval of a Loan not less than the Amount of the Loan stated in Schedule Item 14.
The Owner must apply to the Lender for Loan Approval within five (5) working days from the date of this Contract.
The Owner must give the Builder written notice within three (3) working days from the Loan Approval Date stating whether the owner has obtained Loan Approval.
If the Owner gives the Builder written notice that the Owner has obtained Loan Approval, or if the Owner fails to give the written notice within three (3) working days from the Loan Approval Date, this Contract continues and the parties must perform it.”
Although the contract exhibit 4 was made subject to loan approval by Item 14, no loan approval date was completed. The contract was treated by the parties to it as remaining on foot. Condition 6 is:
“OWNER TO PROVIDE EVIDENCE OF TITLE AND CAPACITY TO PAY
If this Contract is subject to Loan Approval then within fourteen (14) days from the Loan Approval Date, but otherwise within fourteen (14) days from the date of this Contract, the Owner must:
▲ give the Builder evidence of the Owner’s title to the Site described in Schedule Item 2; and
▲ give the Builder a bank reference or other evidence satisfactory to the Builder of the Owner’s capacity to pay the Total Price.”
I regard this as a provision for the protection of the builder which it might waive. I take the point that, had the plaintiff insisted on compliance by “the Owner”, it would not have got into the awkward situation which it did. As regards the second triangular “dot point”, albeit with some difficulty, I accept Mr Lewis’ assertions that, naïve as it seems in retrospect, he regarded the verbal assurances of Mr McDonald as satisfactory evidence “of the Owner’s capacity to pay the Total Price”.
- [37]The BSA Condition 16 provides:
“PAYMENT
The Owner must pay the Builder the price for the Works calculated and adjusted as provided by this Contract in accordance with the following provisions:
▲ The Owner must pay the Builder the deposit (if any) stated in Schedule Item 9 upon the signing of this Contract. The amount payable by way of deposit must not exceed:
- (a)5% of the Total Price if the Total Price is $20,000 or more; or
- (b)10% of the Total Price if the Total Price is less than $20,000.
If the deposit stated in Schedule Item 9 exceeds that percentage the deposit payable hereunder must be reduced to an amount equal to that percentage.
▲ The Builder is entitled to claim a Progress Payment when the Builder has achieved completion of each of the stages set out in Schedule Item 10 or in any separate document setting out payment stages.
▲ A progress claim must:
- (a)be in writing using a BSA Form 3 Progress Claim or other appropriate written notice;
- (b)certify that the work under this Contract has been completed to the relevant stage; and
- (c)be accompanied by invoices, receipts or other documents showing the cost to the Builder of any Prime Cost Item or Provisional Sum in respect of which a claim for payment is made.
▲ The Progress Claim for the Practical Completion Stage must, in addition to the requirements listed above, be accompanied by a written notice in BSA Form 4 Defects Documents or other appropriate written notice which must:
- (a)list any minor defects and any minor omissions which both the Owner and the Builder agree exist;
- (b)with respect to each minor defect and minor omission so identified, state a date by or a period of time in which the Builder is to correct the minor defect or minor omission; and
- (c)if applicable, list any minor defects and any minor omissions which the Owner says exist but that the Builder does not agree exist or does not agree that the Builder is liable to correct.
▲ The Progress Payment for each stage shall consist of:
- (a)the percentage of the Lump Sum Component applicable to that stage as stated in Schedule Item 10 or in any separate document setting out payment stages;
- (b)the amount payable for any Prime Cost Items completed to that stage and not included in a previous Progress Payment;
- (c)the value of any Provisional Sum Item completed to that stage and not included in a previous Progress Payment but if the value of any Provisional Sum item exceeds by 10% the amount allowed for that item in the Provisional Sums Schedule the Builder is entitled to payment of so much of the amount in excess as is reasonable. If there is a dispute between the parties as to reasonableness of the whole or part of the amount in excess that dispute must be referred for resolution in accordance with Condition 28; and
- (d)any other amount then payable to the Builder in respect of variations pursuant to and in accordance with Condition 21.
▲ The Owner must pay the Builder the Progress Payment, or so much of the relevant claim for Progress Payment as is not disputed by the Owner within five (5) working days of receipt of the relevant claim.
▲ If the Owner disputes the relevant claim for Progress Payment or any part of it, the Owner must within five (5) working days of receipt of the relevant claim give to the Builder a BSA Form 5 Notice of Dispute of Progress Claim with the particulars completed or other appropriate written notice, stating the reasons for so disputing the claim or part of it. If that dispute is not resolved by the parties within five (5) working days of the receipt by the Builder of the notice of that dispute, the dispute must be referred for resolution in accordance with Condition 28.”
- [38]In item 9 “Amount of Deposit” is left blank. Item 10 provides for progress payments as follows:
“Progress Payment Percentages Applicable to Lump Sum Component: | Base Stage (inclusive of Deposit) 10% Frame Stage 15% Enclosed Stage 35% Fixing Stage 20% Practical Completion Balance (Note: The stages in this clause for payment are appropriate for the construction of a new home. If the work to be done is something other than construction of a new home, the Owner and the Builder must set out separately the agreed stages for payment and attach that document to these general conditions.)” |
I do not think there was any relevant obligation on the plaintiff to require a deposit or to obtain progress payments. Mr Lewis’ confidence in Fasta was so great that when payments were sought he accepted that it would be an annoyance to his client to be providing cheques for multiple modest amounts and that it would prefer to wait until some substantial amount was due, which would be satisfied in a single payment. The evidence does not indicate when that arrangement was proposed to and acquiesced in by Mr Lewis; he said that he regarded it as a justification for adding in a builder’s profit component when he invoiced Fasta.
- [39]The proceeding was conducted as one under the Property Law Act. Mr Barlow was loath to abandon other bases of claim focussing on enrichment of the defendant. I could perceive little merit in such a claim. Such a claim can succeed, usually where the defendant has some responsibility for the situation that has arisen, as in Pohlmann v Harrison [1995] 2 Qd R 59. In opposition to it, Ms Richards referred to v W Cook Builders Pty (in Liq) (2008) 247 ALR 412, a recent decision of the High Court. I have not determined any claim other than the one under the statute, upon which I am satisfied the plaintiff has shown a strong case for relief. I acknowledge pressing Mr Barlow not to trouble to present his full argument about enrichment.
- [40]There is overlap between the factors relevant to the court’s jurisdiction being established under s 196 and the wider set of factors (virtually everything that was covered in evidence at the trial) relevant to whether any, and if so what relief ought to be granted under s 197. I have endeavoured to take into account all of those factors, including those described by Ms Richards as “disentitling”. Included in those are the failure to seek out the defendant to seek consent to the proposed building, although by the end of August or thereabouts the defendant had been identified; also that the plaintiff should have conducted a title search and the like. The defendant’s “innocence” ought not be forgotten. Its submission was that the discretion the court had should be exercised “in such a way as to result in there being no adjustment of the rights of the parties”.
- [41]The parties were invited to express a preference as to whether, if the plaintiff succeeded, an order ought to be made vesting the property in the plaintiff (subject to payment of appropriate compensation) or an order requiring the defendant to pay something for the lasting improvements on its land. The defendant’s election ought to be respected in present circumstances. It was clear that the defendant had no enthusiasm for the latter outcome. I understood it to be the plaintiff’s second preference as well, should that matter. In the circumstances, there is no point in pursuing my idea of an order which gives the defendant an election. I think s 197 would authorise such an outcome.
- [42]Accordingly, the plaintiff has established a case for an order vesting in the plaintiff or its nominee the whole of Lot 24 and an order requiring the plaintiff to pay $95,000 compensation to the defendant in return. Lot 24 is large, far exceeding the curtilage for a house; however, no submission was made to the effect that only part of it ought to go to the plaintiff. In many circumstances some subdivision of a parcel is likely to be appropriate. Here, the trouble and costs attendant on such an exercise are avoided.
- [43]No submissions were made regarding the court’s jurisdiction. References to the court in ss 196 and 197 are to the Supreme Court. This court could not entertain a proceeding based on them. Section 69 of the District Court of Queensland Act 1967, however, confers on the District Court all the powers of the Supreme Court in a proceeding properly brought in the District Court, i.e. one within section 68. The present proceeding may qualify under s 68(1)(b)(viii) for example, also (b)(i) and paragraph (a)(i).
- [44]The parties are invited to make submissions as to orders appropriate to give effect to the court’s intentions. The plaintiff will seek to ensure that documents acceptable to the Land Titles Office are produced; suitable arrangements to ensure that the $95,000 is paid over should be in the order; it may be that provision for the Registrar to execute a transfer in certain events is appropriate.
- [45]I am not inclined to award any costs to the plaintiff, which has been the author of its own predicament necessitating the seeking of the indulgence granted. I note that in Karynette, where a vesting order in respect of the land was inappropriate, as the registered proprietor had contracted to sell it to someone else, the outcome was an order for payment of a sum on account of the value of improvements effected, with interest. Carter J ordered the registered proprietor to pay the improver’s costs on the basis that:
“by letter dated July 6, 1983, the applicant offered to acquire the land on the terms offered by the registered proprietor to its original purchaser (through whom the applicant’s rights were derived, together with interest at 15 percent on outstanding money. No good reason appears on the material for the rejection of this offer. Accordingly, the applicant was left to pursue its claim for relief under s 196 of the Property Law Act, a claim which has been defended in its entirety.”
With respect to his Honour’s view, that seems to me a generous approach to the applicant; a harsh one for the respondent. An entitlement to apply under ss 196 and 197 strikes me as very different from an entitlement to or expectation of relief.
- [46]It is convenient to reproduce here a pertinent note regarding costs aspects in analogous contexts under the Property Law Act and similar legislation; it bears or whether indemnity costs might be appropriate.
- “A.The established practice in Queensland is to award even unsuccessful respondents in section 181 applications their costs. (One would expect the Court to be more concerned that successful respondents should not be out of pocket.) See Ex parte Proprietors of “Averil Court” BUP (1983) 1 Qd R 66 (where the outcome coincided with the applicant’s offer), Re Rollwell Australia Pty Ltd, Mackay 34 of 1998, de Jersey CJ, 1.10.98, BC9805083, where para 30 refers to “the applicant, having secured this advantage.” In neither matter was there any mention of a possible order for solicitor and client costs or indemnity costs under UCPR 704. It would seem none was asked for.
- B.In Re Eddowes (1991) 2 Qd R 381,397, Ambrose J acknowledged the general rule than an ‘applicant may be required to pay the costs reasonably incurred by a respondent opposing his application’, but restricted the respondent there to two-thirds of the costs, the respondent having gone ‘beyond what was reasonable’. It had been noted the respondents ‘demonstrated …(their easement) has never had much value to them’ (392 lines 20 – 25); the easement could not be used lawfully, and in existing circumstances was of no ‘conceivable benefit’ to the respondents; at 393 lines 26 – 30, it was noted that the respondents’ action in ‘fencing off access to the easement indicates in the clearest terms that at that stage in any event and indeed subsequently it was thought that the easement had no substantial value, utility or advantage to them.’ The reasons for judgment conclude:
‘I am unpersuaded that there is any reason why those costs ought to be taxed other than on a party and party basis.
(The foregoing suggests costs on a solicitor and client basis were asked for.)
- C.In more recent times, orders for indemnity or solicitor-client costs are more common. They have become enshrined in Rules of Court, such as UCPR r 360(1) and r 361(3)(b). There are instances of indemnity or solicitor and client costs being awarded in other circumstances, notably to property owners defending their rights under the ‘status quo’, eg Armflock Pty Ltd v Thimos, Cairns Writ 193 of 1998, Jones J, 16.12.98 (against servient tenement owner/defendants who unjustifiably purported to act under a power of attorney in an easement to execute a surrender: see BC9807304 at page 10 – his Honour specifically declined to find they had set out to mislead the Registrar of Titles (5), and treated the matter as one of omission, rather than fraud (8)), Elroa Nominees Pty Ltd v Registrar of Titles, State of Queensland, Council of the Shire of Noosa and National Australia Bank Limited [2002] QSC 176, where Chesterman J thought the application, calculated to ‘increase the area of the applicant’s land very substantially and correspondingly diminish the area of Chaplin Park”, had an element of vexation: ‘It should not have troubled the respondents with discredited arguments’ (para 30).
- D.An analogous situation is the imposition of a ‘statutory right of user’ under s 180 of the Property Law Act 1974, or an ‘easement’ in the NSW equivalent (s 88K of the Conveyancing Act 1919, which commenced on 12.2.96) considered in Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 97585 and Tregoyd Gardens Pty Ltd v Jervis, Supreme Court of NSW Equity Division 3900/97, Hamilton J, 25.9.97, BC9707649. There is no NSW requirement corresponding to that in s 180(3)(C) of proof that the respondent’s refusal to make available the desired right was unreasonable: Tregoyd Gardens, BC9707649 at 15. Section 180(6) permits an order for costs against the servient owner only in ‘special circumstances’; in NSW costs of proceedings are payable by the applicant, ‘subject to any order of the Court to the contrary.’ This appears to reflect the Queensland law respecting s 181. In the two NSW cases last cited, indemnity costs were awarded in favour of UNSUCCESSFUL respondents against successful applicants. In Tregoyd Gardens at 17 it was noted that the respondents, whose compensation was assessed at $10,000 were going to be no better off than if they had accepted ‘an earlier offer of $15,000 together with $5,000 towards costs’, but indemnity costs were awarded nonetheless, Hamilton J referring to Simos J’s order for indemnity costs in Coles Myer ‘in circumstances not dissimilar’. Unfortunately, the BPR report does not reproduce the order. A copy of it has been obtained from the Registrar of the NSW Supreme Court. It provides, in part: “8. Without prejudice to the respective rights of the parties in relation to such, if any, orders as may in the future be sought in these proceedings, the Plaintiffs pay the Defendant’s costs of these proceedings on an indemnity basis, up to and including the date of these orders.’ In Towerpoint Pty Ltd v Diridge Pty Ltd, Cairns OS 69 of 1990, 14.2.91; BC9102982, at 13, Thomas J said:
‘The position in relation to costs in these applications is a very special one and is dominated, I think, by the circumstances that one party brings another party to Court to change the status quo in relation to the Real Property Register and to obtain an advantage that that party did not formerly enjoy under the property law.’
Re Wembley Park Estate Co Ltd’s Transfer [1968] Ch 491 was a successful application under statute for a declaration that certain freehold land was not affected by a restriction in an instrument of transfer. Goff J at 507 said, ‘The last point is whether the costs of the defendants should be on a party and party or common fund basis since the obtaining of the order is something in the nature of a luxury to the plaintiff for which he ought to pay.’ O.62 r 28(4) of the RSC of 1965 aligns ‘common fund’ with solicitor and client taxation.”
- [47]If the plaintiff sought costs here, it did so very faintly. I would not be prepared to award costs, notwithstanding the defendant’s rejection of the offer made in 2004 corresponding to that in Karynette. In my opinion, an owner of land in the defendant’s situation is entitled to defend an application of the present kind strenuously. It cannot be said that Mr Richards ought to have anticipated that the outcome of the plaintiff’s claim is as it has been.
- [48]The defendant being self-represented, there will be no costs it can claim. I did not understand Ms Richards to be seeking costs, whatever the outcome; she was concerned that no order for costs be made against the defendant. I would regard an order against it as inappropriate in the circumstances, and far from “just and equitable”.