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Bank of Queensland v Y&L Promising Pty Ltd[2022] QDC 52

Bank of Queensland v Y&L Promising Pty Ltd[2022] QDC 52

DISTRICT COURT OF QUEENSLAND

CITATION:

Bank of Queensland v Y&L Promising Pty Ltd [2022] QDC 52

PARTIES:

BANK OF QUEENSLAND 

(Plaintiff)

v

Y&L PROMISING PTY LTD

(Defendant)

FILE NO:

2611/21

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane District Court

DELIVERED ON:

24 March 2022

DELIVERED AT:

Brisbane

HEARING DATE:

21 February 2022

JUDGE:

Porter QC DCJ

ORDER:

  1. The claim is dismissed.

CATCHWORDS:

LAND TITLE ACT 1994 – TRANSFER OF LEASE – BREACH OF COVENANT BY PREVIOUS LESSOR – Whether section 62 Land Title Act transfers liability in respect to breaches of a lease completed prior to the transfer to the transferee.

DEEDS – DEED POLL – CONSTRUCTION AS TO WHO IS ENTITLED TO SUE ON COVENANT – Where identification of the beneficiary of a promise in a deed poll is a matter of proper construction of the deed – Whether the plaintiff has standing to enforce the covenants in the deed poll.

COUNSEL:

J. Hastie for the Applicant/ Defendant

M. Martin QC for the Respondent/ Plaintiff

SOLICITORS:

SLF Lawyers for the Applicant/ Defendant

Mills Oakley for the Respondent/ Plaintiff

Contents

Summary3

Summary judgment principles3

The Facts4

The s. 62 LTA Issue7

The parties’ contentions7

The authorities8

Measures v McFadyen8

Jodaway v Langton11

Queensland Premier Mines v French13

Analysis14

The nature of BOQ’s rights14

BOQ’s claims are based on completed breaches or accrued rights16

Another possible argument?18

The Deed Poll18

The standing issue18

The construction issue19

Conclusion20

clause 39.420

Conclusion20

Summary

  1. [1]
    The plaintiff (BOQ) is the lessee of commercial premises located at Coolangatta (the premises).  The defendant (Y&L) became the registered owner of the premises in 2021.  In 2019, BOQ alleges it incurred remediation costs in removing asbestos found on the premises.  BOQ contends that it is entitled to recover those costs under the terms of its lease.  It did not recover those costs from the owner of the premises at the time they were incurred.  BOQ contends, however, that Y&L as transferee is liable to it for the remediation costs either pursuant to s. 62 Land Title Act (LTA) or a deed poll executed by Y&L at the time of the transfer of the lot to Y&L from the previous owner.
  2. [2]
    Y&L defends on the basis, inter alia, that even if BOQ proves that it is entitled to recover the remediation costs under the lease, that liability remained with the party which was the lessor and registered proprietor at the time the costs were incurred.  Y&L contends that that liability did not pass to Y&L under s. 62 LTA or the deed poll.  Y&L contends that if those propositions of law are correct, BOQ has not real prospect of succeeding at trial even if all the factual issues in dispute are resolved in BOA’s favour.  Y&L seeks summary judgment on its defence.
  3. [3]
    For the reasons which follow, I agree that there is no real prospect of BOQ establishing that Y&L is liable for the remediation costs alleged and accordingly, I order that BOQ’s proceedings be dismissed.

Summary judgment principles

  1. [4]
    Rule 293 of the Uniform Civl Procedure Rules 1999 (UCPR) is familiar, and the applicable principles well-settled. If it is shown that there is no real, as opposed to fanciful, prospect of success on the claim, and there is no need for a trial of claim, summary judgment on the defence may be granted.[1] The discretion to order summary judgment must be exercised with great care to ensure that, under the guise of achieving expeditious finality, a party is not improperly deprived of its opportunity for trial of its case.[2]
  2. [5]
    It is trite that a summary judgment application will rarely succeed if its success depends on the resolution of disputed issues of fact.  The resolution of disputed issues of fact is ordinarily a matter for trial.  There are disputed issues of fact on the pleadings in this case in relation to matters such as the need for, and extent of, BOQ’s remediation of asbestos at the premises and the extent of the costs incurred.  Y&L seeks to avoid that difficulty by accepting the allegations by the plaintiff in its statement of claim as correct for the purposes of the summary judgment application.  Y&L submits that, even accepting those allegations of fact as correct, it must succeed as a matter of law.
  3. [6]
    Whilst a question of law can be sufficiently complicated that it is unsuited for summary determination[3], Dalton J observed in GWC Property Group Pty Ltd v Higginson & Ors[4] (at [3]), the existence of “difficulty questions of law” has “…never been a reason not to determine a matter summarily”.  If after full argument it is established that a party’s case is doomed to fail because it cannot make out its case as a matter of law even on the allegations made in its pleading, and that party does not seek to raise new allegations to answer the legal proposition which answers its pleaded case, then there is no reason to permit the proceedings to continue.[5]  Indeed in that case it is in the interests of both parties, and consistent with the principles enshrined in Rule 5 UCPR, that the proceedings be resolved by judgment earlier rather than later.

The Facts

  1. [7]
    Some of the following matters are admitted on the pleadings and others are allegations which the defendant accepts must be asuumed correct for the purpose of the summary judgment application.  
  2. [8]
    In April 2016, BOQ and Well Property Holdings Pty Ltd (WPH) entered into a lease over commercial premises in Coolangatta (the Lease).  The Lease was for 7 years commencing 29 April 2016 and finishing on 28 April 2023.  It was a registered and relevantly provided:
    1. (a)
      By Item 18 of the Schedule:
      1. The Lessee will not accept any lability for residual asbestos if contained in the premises.  Prior to handover, the Lessor must provide a full destructive report and remove any asbestos at the Lessor’s cost.  An asbestos certificate warranting that no asbestos is contained in the premises must be provided prior to handover.
      2. … 
    2. (b)
      By clause 23.10(c) (subparagraphs (a) and (b) were omitted by agreement):

23.10 Asbestos

  1. (a)
    …
  1. (b)
    …
  1. (c)
    If any asbestos is found in the premises during the Term or any Further Term, the Landlord will remove it at the Landlord’s cost in consultation with the Tenant, and any other associated costs incurred by the Tenant, directly or indirectly, with the removal of the asbestos will be the responsibility of the Landlord.
  1. (c)
    By clauses 35.3 and 35.4, relevantly:

35.3Landlord Default Events

  1. (a)
    A Landlord Default Event occurs if the Landlord does not comply with any obligation under this Lease within 14 days after the Landlord has received notice from the Tenant of the breach
  1. (b)
    …

35.4 Landlord default

If a Landlord Default Event occurs or the Landlord repudiates its obligations under this Lease and the Landlord fails to remedy it to the Tenant’s reasonable satisfaction within a reasonable time after the Tenant has given the Landord notice to remed it, then the Tenant may, without liminting any other rights that the Tenant may have, either:

  1. (a)
    Remedy the breach and the Landlord must pay to the Tenant all the reasonable Costs incurred by the Tenant in relation to remedying the breach, as a liquidated debt, within 7 days after demand or the Tenant may set-off the Costs against the Rent and other moneys payable by the Tenant under this Lease; or
  1. (b)
    terminate this Lease by notice to the Landlord.

The exercise by the Tenant of any of its rights under this clause 35.4 is without liability to the Tenant and does not prejudice any of the Tenant’s rights under this Lease.

  1. (d)
    By standard condition 39.4:

The assignment, expiry or termination of this Lease does not affect the rights of either party for a breach of this Lease by the other party before the assignment, expiry or termination.

  1. [9]
    It is also alleged by BOQ, and accepted by Y&L for the purposes of this application, that:
    1. (a)
      On 22 April 2016, WPH provided an Asbestos Clearance Certificate under Item 18 warranting there was no asbestos visually identifiable on the premises;
    2. (b)
      Asbestos was detected in the leased premises by a consultant engaged by BOQ in August 2017[6];
    3. (c)
      On 11 September 2017, BOQ notified WPH that asbestos had been identified and that remediation works were required immediately[7];
    4. (d)
      The discovery of the asbestos and the limited nature of the Asbestos Clearance Certificate (it is impliedly alleged that it was not to be a full destructive report) comprised a breach of Item 18 and clause 23.10;
    5. (e)
      On 11 April 2018, BOQ issued a Notice to Remedy Breach requiring WPH within 14 days to confirm it would carry out remediation works in accordance with a scope of work obtained by BOQ;
    6. (f)
      WPH did not take the steps to remedy the breaches in respect of the Asbestos[8];
    7. (g)
      BOQ proceeded to perform remediation works to remove the asbestos from the premises[9];
    8. (h)
      By October 2019 (at the latest) the remedial works had been completed at a cost of $193,102.50 (excl. GST)[10];
    9. (i)
      On 21 October 2019, BOQ demanded that WPH pay it the costs it had incurred in performing those works pursuant to clause 35.4. WPH did not do so.[11]
  2. [10]
    The land was transferred from WPH to Don and Sons Investment Pty Ltd (DSI) on or about 27 March 2020.[12] 
  3. [11]
    On 21 July 2021, BOQ demanded payment of the remediation costs from DSI, who refused to pay.[13]
  4. [12]
    Ironically, at about the same time, on 13 July 2021, Y&L became registered as the owner of the land by transfer of the lot from DSI.  On or about that date, Y&L also executed a Deed Poll as Buyer.  That deed provided:

Deed Poll by Buyer

Dated

BY Y&L PROMISING PTY LTD A.C.N. 639 419 775 AS TRUSTEE FOR Y&L TRUST (Buyer)

Background

  1. DON & SONS INVESTMENTS PTY LTD A.C.N. 135 600 743 TRUSTEE UNDER INSTRUMENT 719980075 (Seller) and the lessee named in the Schedule (Lessee) are parties to the Lease referred to in the Schedule to this Deed (Lease)
  2. The Seller has entered into a contract (Contract) to transfer to the Buyer the estate of the Seller in the land and building (Property) to which the Lease relates subject to the Buyer entering into this Deed in favour of the Lessee.

It is agreed

The buyer covenants for the benefit of the Lessee as follows;

  1. the Buyer agrees that it will on and from Monday 19 Tuesday 13 July (Settlement Date) abide by the terms of the Lease on the part of the lessor to be performed, fulfilled or observed on or after the Settlement Date and;
  2. without limitation, the Buyer agrees that it will on and from the Settlement Date observe the provisions of the Lease giving to the Lessee any option to renew or which otherwise do not touch and concern or run with the land. 
  1. [13]
    BOQ alleges that Y&L is liable for the remediation costs.  It contends that by reason of the transfer from WPH to DSI and the further transfer to Y&L, “all liabilities in respect of the Lease and any damage suffered by the plaintiff in respect of the Lease (or breaches thereof) vested in” Y&L.[14] 
  2. [14]
    BOQ relies on s. 62(1) LTA, the Deed Poll and clause 39.4 of the Lease to sustain that contention.  There are no facts pleaded which otherwise identify the terms of the Deed Poll nor the basis upon which BOQ can advance a claim under it.  It is accepted by Mr Martin QC, who appeared for BOQ, that this is inadequate and that if summary judgment is not ordered against BOQ, it will have to plead the basis of its claim under the Deed which was articulated in oral argument.  

The s. 62 LTA Issue

The parties’ contentions

  1. [15]
    Y&L contends that the liability in respect of the asbestos remediation accured before the transfer of the lot to Y&L.  Accordingly, it contends that that liability arose against and remains with WPH.  BOQ accepts that the liability for the remediation costs was a liability which accrued against WPH, and therefore before the transfer to Y&L.  However, BOQ contends that on its proper construction, s. 62 is effective to transfer that accured liability to DSI and then to Y&L because of the successive transfers of the lot on the land title register. 
  2. [16]
    Section 62 LTA provides:

62 Effect of registration of transfer

  1. (1)
    On registration of an instrument of transfer for a lot or an interest in a lot, all the rights, powers, privileges and liabilities of the transferor in relation to the lot vest in the transferee.
  1. (2)
    Without limiting subsection (1), the registered transferee of a registered mortgage is bound by and liable under the mortgage to the same extent as the original mortgagee.
  1. (3)
    Without limiting subsection (1), the registered transferee of a registered lease is bound by and liable under the lease to the same extent as the original lessee.
  1. (4)
    In this section –

 rights, in relation to the mortgage or lease, includes the right to sue on the terms of the mortgage or lease and to recover a debt or enforce a liability under the mortgage or lease.

  1. [17]
    In support of its construction BOQ points to the definition of liability in Schedule 1 to the Acts Interpretation Act 1954 (AIA) which provides that “liability means any liability or obligation (whether liquidated or unliquidated, certain or contingent, or accrued or accruing)”.  BOQ relies on the inclusion of accured liabilities in that definition.  It contends that reading that definition into s. 62 LTA has the consequence that any doubt about accured liabilities being included within the scope of the provision is eliminated.
  2. [18]
    BOQ recognises that the principal authority relied upon by Y&L (Measures v McFadyen [1910] 11 CLR 723) stands against its argument but contends that the statutory provision considered in that case differs materially from s. 62 LTA, particularly because it did not include the extended definition of liability which BOQ identifies as incorporated by the AIA.
  3. [19]
    Unsurprisingly, Y&L submits that despite differences in text between the provisions considered in Measures and the current s. 62 LTA, the approach to construction in Measures applies to the construction of s. 62 LTA in respect of liabilities of a transferee (bearing in mind that Measures itself dealt with the rights of a transferee, not liabilities of a transferee).  Y&L relies on the reasoning in Measures, the decision of Mullins J (as her then was) in Jodaway Pty Ltd v Langton [2004] 2 Qd R 272 and Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81. 

The authorities

Measures v McFadyen

  1. [20]
    The starting point is Measures v McFadyen.  In that case, Dr McFadyen (not the named party) as registered proprietor leased the land with its structures to Mr Measures for five years from 1 May 1906.  The lease contained a covenant requiring Mr Measures to construct certain buildings forthwith.   Dr McFadyen transferred the land to his wife, May McFadyen, on 11 February 1909.  At that time, Mr Measures had still not commenced construction of the buildings required under the covenant.  Griffith CJ, O'Connor and Isaacs JJ each separately agreed with the trial Judge that by the date of the transfer to Mrs McFadyen, Mr Measures was in breach of the the covenenant to construct the buildings “forthwith”, and that that breach was complete before the transfer date. 
  2. [21]
    Despite that, it was Mrs McFadyen not Mr McFadyen who sued for damages for breach of the covenant.   Griffth CJ summarised the issue (at 730):

It appears therefore on the face of the record that the plaintiff has sued for and has recovered in respect of a breach of covenant committed and complete before the transfer of the land to her.  If she cannot, the vedict cannot stand.

  1. [22]
    Mrs McFadyen’s right to sue on a completed breach before transfer turned on the proper construction of ss 51 and 52 Real Property Act 1900 (NSW) (the NSW Act) which at that time provided,
    1. (a)
      By s. 51:

Upon the registration of any transfer, the estate or interest of the transferor as set forth in such instrument, with all rights, powers and privileges thereto belonging or appertaining, shall pass to the transferee, and such transferee shall thereupon become subject to and liable for all and every the same requirements and liabilities to which the transferee would have been subject and liable if named in such instrument originally as mortgagee, chargee or lessee of such land, estate, or interest.

  1. (b)
    By s. 52(1):

By virtue of every such transfer, the right to sue upon any mortgage or other instrument and to recover any debt, sum of money, annuity, or damages thereunder (notwithstanding the same may be deemed or held to constitute a chose in action), and all interest in any such debt, sum of money, annuity, or damages shall be transferred so as to vest the same at law as well as in equity in the transferee thereof.

  1. [23]
    The question was whether on the proper construction of those provisions, the right to sue for damages for a breach of covenant completed before transfer of a lot, passed to a transferee of a lot by ss 51 and 52(1) of the NSW Act.
  2. [24]
    Griffith CJ, O'Connor and Isaacs JJ held that it did not.
  3. [25]
    Griffiths CJ held:

The term" transfer" in sec. 51 means the transference of estate resulting from registration, and the word "thereto" refers to the estate or interest transferred. The estate or interest transferred is one thing-, and the personal right of action in respect of an antecedent completed breach of contract is another. In my opinion the words of this section are not sufficient to transfer the right to bring an action in respect of such a past breach. The plaintiff, however, contends that the words "the right to sue upon any instrument and to recover any damages thereunder" in sec. 52 (1) are sufficient to transfer the right. The state of the law before the Act is shown by the case of Coward v. Gregory (1), and in my judgment these words are not sufficient to alter it. The purpose of the Act was to transfer the estate or interest of the transferor in the land with all the rights incidental to present and future possession, but I do not think that it was intended to transfer also mere choses in action in respect of past and completed breaches of covenant.

[underlining added]

  1. [26]
    O'Connor J held:

It is also clear that, in the case of a covnant to build, the breach is not a continuing breach. As Mr. Justice Willes says in Goward v. Gregory (4) that kind ofcovenant can only be broken once for all. It is well settled law that, apart from any statutory provision, the assignment of a reversion does not vest in the assignee a right of action for breach of covenant in the lease committed before the assignment. Woodfall, Landlord and Tenant, 17th ed., p. 279. The plaintiff, however, relied on sees. 51 and 52 of the Real Property Act as operating to vest in the assignee any cause of action which had accrued under the lease before the assignment of the reversion. If that contention is well founded, it is immaterial in an action by the assignee whether the breach occurred while the estate was vested in the assignor, or after it had become vested in the assignee. The interpretation of those sections is therefore the first matter to be disposed of. In my opinion the mere transfer of the freehold estate does not empower the transferee to sue for breaches of covenants in the lease committed by the lessee before the transfer. The words of sec. 52, referring to damages, relied on by the respondent's counsel, cannot, consistently with the other portions of the Act, material in this connection, be so interpreted. It therefore became incumbent on the plaintiff at the trial to show that the breach of the covenant took place after transfer.

[underlining added]

  1. [27]
    Isaacs J held:

Consequently, the breach, not being a continuing one, must be taken to have been complete before the assignment. Then it was urged by Mr. Knox, that even so, sec. 52 of the Real Property Act passed the right to the damages for the breach to the plaintiff. But the object of the section is only to perfect the transaction effected by the statutory transfer. With respect to personal obligations the Act primarily concerns itself with their security upon land for their fulfilment, and having provided a statutory transfer of the benefits of the obligation as between the transferor and the transferee, proceeds in this section to completely effectuate the transfer by affecting the third person, the obligor also. To this end it transfers the right to sue and recover whatever debt, sum of money, aimuity or damages (that is, right to damages) has been thereunder transferred.

But whether a right to damages has been transferred depends not on that section, but on the terms of the transfer and other sections of the Act. The real key to the section is contained in the words" notwithstanding the same may be deemed or held to constitute a chose in action." The general non-assignability of choses in action at common law was well known. So too was the vagueness of the meaning of the term, making it very uncertain in many cases whether a given claim fell within that designation. And to transfer a debt at common law required, as a rule, the assent of the debtor-really a novation. Sec. 52 was intended to put an end to all this, and to perfect, even in regard to legal procedure, the simplicity and directness which otherwise characterise the Statute. It was not intended to extend, and its language is not sufficient to extend to so radical and unexpected a change, and probably so unfair a change, as bodily transferring all accrued rights to damages, limited only by the Statute of Limitation and existing independently of the continuance of the obligation under which they arose, and of the land upon which they were originally secured.

[underlining added]

  1. [28]
    The following points arise from this decision.
  2. [29]
    First, on the facts, the case is concerned with the question of whether a right in the landlord (not a liability of the landlord) to claim damages for a completed breach of the lease by the tenant was transferred by the NSW Act.  Strictly speaking, therefore, this matter concerns a different issue from that which was before the Court in Measures.    
  3. [30]
    Second, each of Griffith CJ and Isaacs J agreed that the purpose of the provision was to alter the common law so far as was necessary to perfect the transfer of an interest in land by providing for the transfer of rights and liabilities incidental to the present and future possession of that interest in land. 
  4. [31]
    Third, Griffith CJ expressly identified text in the section which confirmed a construction consistent with that purpose, focussing on the reference to rights “thereto belonging” (ie belonging to the the transferred interest).   A similar notion is evident in the underlined passages in the above quotation from Isaacs J. 
  5. [32]
    Fourth, each of Griffith CJ and Isaacs J also find support for their construction in the improbability of a Parliamentary so radicially alter the common law as to transfer accured rights for completed breaches to transferees without using express words to do so.  In this respect, it is respectfully suggested, their Honours were invoking the presumption against an intention to alter common law doctrines and rights.[15] Although O'Connor J did not expressly refer to that matter, the approach of all three Judges might be thought to reflect the frequently cited statement of the presumption by O'Connor J in Pottern v Minahan (1908) 7 CLR 277 at 304:

It is in the last degree improbable that the legislature would overthrow fundamental principles, infrindge rights, or depart from the general system of law without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have had that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used.

Jodaway v Langton

  1. [33]
    The next case to consider is Jodaway Pty Ltd v Langton [2004] 2 Qd R 272.  In that case, the respondents were the several executors of an elderly couple, the Sealys, who had entered into a lease of a retirement village unit with the predecessor in title (Palm Springs) to the applicant, (Jodaway) as tenants in common.  The lease contained covenants pursuant to which the lessees made an interest free loan to the lessor.  The covenants also provided that the date and amount of the repayment depended on the date of the death of the last of the two occupants, and that the lease terminated on that same date.
  2. [34]
    It was common ground that the lease terminated on the death of the Mrs Sealy in August 1998, that the sum repayable under the lease was $76,800 and that that sum was due and payable on 26 February 1999.  Palm Springs encountered financial difficulties and ultimately, the land was transferred to Jodaway in about April 2002.
  3. [35]
    On the death of the Sealys, their executors registered a transfer of the interest of each of them in the lease.  Jodaway brought proceedings to compel the execution of documents to give formal effect to the termination of the lease.  The executors resisted that application, contending that Jodaway as transferee of the reversion in the lot was subject to the burden of repaying the loan by reason of the operation of s. 62 LTA.  Importantly, the section was in its current form.
  4. [36]
    Jodaway appears to have advanced three arguments against this proposition:
    1. (a)
      First, the obligation to repay the loan had accrued before the transfer of the land to Jodaway;
    2. (b)
      Second, that the lease had terminated before the transfer of the land; and
    3. (c)
      Third, that the obligation to repay the loan did not run with the land.
  5. [37]
    The first and second points did not appear to be in dispute in the hearing and her Honour acted on the basis they were correct.  The respondent however relied on s. 62 LTA as nonetheless imposing the obligation to repay the loan on Jodaway as registered transferee of the lot.
  6. [38]
    As to the third point, her Honour held that the obligation to repay the loan was not one which could be characterised as touching or concerning the land, seemingly because that obligation was properly characterised as a personal one.[16]   The obligation to repay a loan made by a tenant, albeit arising in the covenants contained in a lease, is difficult to characterise as one which affects the landlord qua landlord[17] or, put in other words, one which either affects the land as regards mode of occupation or of itself, not from collateral circumstances, affects the value of the land.[18] 
  7. [39]
    That left the question of the effect of s. 62 LTA.  Her Honour held in that regard:[19]

[18] The argument was put on behalf of the respondents that the effect of s 62(1) of the LTA was to make the applicant liable to repay the relevant part of the loan and to enable the respondents to remain on the register to enforce that repayment.

[19] Section 62 of the LTA is a provision which has a long history in that it can trace its genesis to ss 43, 65 and 66 of the Real Property Act 1861. It cannot be construed in isolation from this history. Provisions in similar terms to ss 65 and 66 of the Real Property Act 1861 were considered by the High Court in Measures v McFadyen (1910) 11 CLR 723 which held that on the transfer of the reversion those provisions did not enable the transferee to sue in respect of a breach of a clause in the lease that was completed prior to the assignment of the reversion. There appears to be no authority to support a construction of s 62(1) of the LTA that the expression “the rights, powers, privileges and liabilities of the transferor in relation to the lot” covers rights, powers, privileges and liabilities which do not run with the land. Section 62(1) of the LTA does not have the effect which the respondents seek to give it in respect of imposing on the applicant as the assignee of the reversion the obligation to make the repayment of the relevant part of the loan under cl 3.5 of the lease.

[20] To the extent that the respondents seek to rely on s 62(1) of the LTA as conferring on them the rights which Mr and Mrs Sealey had under the lease to obtain repayment of the loan, those rights are personal, do not run with the land and registration therefore does not assist the respondents in seeking to enforce those rights. As the lease has been terminated, the respondents have no entitlement to remain on the register as a means of improving their bargaining position in respect of the repayment of the loan.

  1. [40]
    There are two points to note:
    1. (a)
      First, s. 62 LTA has to be construed in the context of its purpose as identified by the High Court for a cognate provision in Measures.
    2. (b)
      Second, s. 62 LTA does not transfer liabilities of a lessor under a lease to a transferee of a lot where those liabilities are personal to the prior registered lessor and do not touch and concern the land.
  2. [41]
    The second proposition, respectfully, might be open to debate, at least in respect of its second aspect.  Covenants that do not touch and concern the land may nonetheless bind a transferee under s. 62 LTA.    The position is explained in Butt’s Land Law (7th Edn) at [7.1430] as follows (footnotes omitted)[20]:

First, s 51 of the Real Property Act provides that on registration of every “transfer”, the transferee becomes subject to the same liabilities to which he or she would have been subject had he or she been the original lessee. Section 3(1)(a) of the Act defines “transfer” to mean “the passing of any estate or interest in land under this Act”. And so, a “transfer” includes a transfer of a lease. In effect, the section creates privity of estate and privity of contract between the landlord and the registered transferee (assignee) of the lease. However, this privity lasts only for the time the lease is vested in the transferee. Specifically, the privity does not arise until registration of the transferee, and it ceases if the transferee in turn transfers to a further transferee who becomes registered. This provision would appear to abrogate the common law rule that prohibits assignees of the reversion, or assignees of the lease suing on covenants that do not “touch and concern” the land, insofar as it effects a statutory replication of the privity of contract co-existent between the lessor and the original lessee, at least until the assignee of the lease assigns his or her interest. But the provision is not broad enough to allow the enforceability of rights arising in an agreement collateral to the lease.

  1. [42]
    Notwithstanding this, it was arguably open to Y&L to contend in reliance on Jodaway that Y&L was not bound by the liability for remediation costs because that was a liability which did not touch and concern the land.   If correct on that characterisation of the liability for remediation costs, Jodaway would appear to be directly applicable to this case and should be applied unless I considered the case clearly wrong.  I would hesitate to reach that conclusion, particularly in the absence of full argument on the point.  In any event, it was not relied upon by Y&L and I do not have to determine the issue.  (I recognise that there might well be reasons I have overlooked why this argument was not available.)

Queensland Premier Mines v French

  1. [43]
    The proposition that the effect of the section is to create privity of contract while the transferee is on the registered proprietor of an interest in land cannot be pressed too far because on no view does s. 62 transfer rights and obligations collateral to the interest transferred.  That was confirmed in the High Court’s decision in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81.  In that case, an “all money’s” mortgage was transferred from the original registered mortgagee to a transferee.  The loan agreements caught by the mortgage were dehors the mortgage and contained in separate written loan agreements.  The High Court held that s. 62 LTA did not have the effect of also transferring the liability of the mortgagor under loan agreements dehors the mortgage instrument (though the Court accepted the section would likely transfer the liability of the mortgagor in debt if it arose under the words of the mortgage).
  2. [44]
    The issue in the case is quite different from that which arises in this matter.  However, the judgment makes relevant observations about s. 62.  The leading judgment was given by Kiefel J.  After reviewing the judgment of Isaacs J, her Honour explained:[21]

These aspects of his Honour’s reasons, to which the trial judge had regard, serve to explain the historical background to provisions such as s 62. The legal problem to which they were directed identifies what was necessary to be effected by them. That effect remains the same despite the removal of the words “notwithstanding the same may be deemed or held to constitute a chose in action” in later statutes such as the Land Title Act. Section 62 effects an assignment of both the mortgagee’s interest in the land and the mortgagee’s right of action with respect to moneys which become due under the mortgage. To that end it was necessary to extend the operation of the statute to the person whose obligation it was to pay the moneys, as the law would otherwise require their express agreement to pay the transferee. Isaacs J did not say that the statute extended to any person whose obligation to pay is secured by the mortgage the subject of the transfer. His Honour’s reasons assume that the debt transferred is that owed to the transferor. That is to say, the “obligor” is the mortgagor. His Honour’s emphasis of the word “thereunder”, which appears in s 52, identifies the mortgage as the source of the debt. It may be inferred that his Honour drew attention to the mortgage in that case, because it had been argued that the transfer was effective to pass rights to damages which were complete and independent of it. This does not detract from what his Honour said about the intended operation of the section.

The discussion in Consolidated Trust v Naylor confirms such an approach. Speaking of s 52, and by analogy of s 91 of the Conveyancing Act, Dixon and Evatt JJ identified as the concern of the statute dealings in land (62). Their Honours explained that it is only because the mortgage involves such a dealing that the statute concerns itself with the transaction in its entirety. It extends to the personal liability of the mortgagor for the mortgage debt “because that liability is intimately connected with the rights of property arising out of the mortgage transaction”.

In ES&A Bank v Phillips Dixon, Evatt and McTiernan JJ (63) pointed out that a statutory charge described in a mortgage, under the equivalent South Australian legislation (64), is a distinct interest, which may itself be dealt with, but which usually includes personal obligations. Latham CJ observed that a mortgage as a security could exist without a covenant to pay (65). The majority said that, whilst it was not possible to treat the personal obligations in the same way as the interest in land is treated by the registration system, “nevertheless, the plan of the legislation is to enable the proprietor to transfer by registration not only the interest in the land, but all the accompanying personal obligations normally incident thereto” (66), referring to Consolidated Trust v Naylor.

[underlining added]

  1. [45]
    In my respectful view, the underlined passages confirm, in respect of s. 62 LTA in particular, that the purpose of that statute remains as articulated in Measures, and that that approach to this kind of provision has become well entrenched in Australian law.

Analysis

The nature of BOQ’s rights

  1. [46]
    Measures stands as authority for the proposition that a right to recover for a completed breach of a lease does not pass to a transferee of lot under a cognate provision to s. 62 LTA.  It is therefore necessary to characterise the circumstances of the breaches in this case.   BOQ’s pleading identifies two breaches of the lease:
    1. (a)
      The discovery of asbestos on the premises is said to comprise a breach of clause 23.10 of the lease; and
    2. (b)
      The failure to provide a full destructive report prior to handover was a breach of Item 18 of the lease.
  2. [47]
    In my view, on their proper construction those clauses impose obligations in relation to asbestos as follows:
    1. (a)
      Item 18 imposes the following obligations:
      1. Prior to handover the landlord must obtain and provide a report on asbestos in the premises based on full destructive testing;
      2. Prior to handover, the Landlord must remove any asbestos at its own cost (presumably if any is identified in the report);
      3. Prior to handover, the landlord must provide an asbestos certificate warranting there is no asbestos in the premises (presumably after having obtained the report and removed any asbestos); and
    2. (b)
      Clause 23.10(c) imposes an obligation which arises if asbestos is found on the premises after handover, to remove the asbestos at the landlord’s cost.
  3. [48]
    Articulated in this way, the pleaded case on breach is deficient:
    1. (a)
      It was not a breach of clause 23.10(c) of the lease for asbestos to be found on the premises.  As has been seen, that clause required the landlord to remove asbestos if it was found on the premises during the tenancy (and despite the steps provided in Item 18);
    2. (b)
      While it would be a breach of Item 18 not to provide a full destructive report, the pleading does not plead a loss flowing from that failure, at least in any clear manner.   The only loss claimed is the loss flowing from the detection and removal of asbestos in the term.  The pleading does not say how the provision of a full destructive report would have avoided that loss.  Any such allegation would likely require pleading that if such a report had been obtained, it would have disclosed the existence of the asbestos.  That is not pleaded; and
    3. (c)
      The detection of asbestos during the term would of course be a breach of the covenant in Item 18 to remove any asbestos at its own cost prior to handover, but that claim is not pleaded.
  4. [49]
    There are further issues with the pleading of the BOQ claim.  BOQ pleads by paragraphs 21 and 22, that it issued a Notice to Remedy Breach to WPH requiring it to carry out remediation works to remove the asbestos.  This was presumably issued under clause 35.3(a) above.   It is alleged to have comprised a notice in respect of both alleged breaches.  However, a notice in the terms alleged does not require the remedying of a breach of the obligation to provide a full destructive testing report.  Such a notice would require the provision of such a report (if indeed it was capable of remedy at all, as a report provided subsequently would not be one which was provided at the time required by Item 18.1).  The notice does, however, articulate a requirement to remedy a breach of the obligation to remove asbestos if it is found during the term, as required by clause 23.10(c).
  5. [50]
    Measures only applies, if it applies to liabilities of a transferee at all, to breaches completed before transfer.  In light of the above analysis, it seems to me that both breaches pleaded by BOQ fall into that category.  The obligation to provide the destructive testing report arose prior to handover.  It therefore is necessarily complete at that time.  The same applies a fortiori to breaches of the other obligations in Item 18.1.
  6. [51]
    The position is not quite as crisp for the breach of clause 23.10.  That required the landlord to remove asbestos if it was found during the term of the lease.  That clause did not specify how long the landlord had to do so.  However, to echo the judgment in Measures, however long the landlord had to remove the asbestos in compliance with clause 23.10, it clearly had passed long before the transfer to Y&L.   
  7. [52]
    For completeness, I should observe that BOQ pleads that following failure of the landlord to comply with the Notice to Remedy, it carried out the remediation works itself and demanded that WPH pay those costs pursuant to clause 35.4(a).  The effect of that pleading seems to me that pursuant to that clause, BOQ is entitled to recover the sum as a debt within 7 days of demand or may set off those costs against the rent and other amounts.  BOQ’s claim does not seek payment of the remediation costs as a debt or liquidated demand but seeks only damages.  However, it is evident from the pleaded facts that BOQ could invoke the debt claim as an alternative. 

BOQ’s claims are based on completed breaches or accrued rights

  1. [53]
    BOQ’s claim is properly characterised either as a claim for damages for a completed breach of covenant or (to the extent clause 35.4(a) is relied upon) an accrued chose in action for a liquidated sum calculated under the lease as a contractual remedy for a completed breach of covenant.   Measures is authority for the proposition that the benefit of a cause of action for a completed breach of covenant by a lessee is not transferred to a transferee of the reversion.  Y&L relies on it as determining the result in this case.
  2. [54]
    However, as I have already observed, here the question is whether liability for a completed breach passes to the transferee of the reversion.   So, it must be recognised that the issue which arises here is different from the one which was determined on the facts in Measures.  Nonetheless, in my respectful view, the principle in Measures applies to liabilities under s. 62 LTA and accordingly BOQ must fail on this aspect of its defence.  I hold that view for the following reasons.
  3. [55]
    The provisions in Measures and s. 62 LTA have the same same purpose: ensuring the effective transfer of interests in the Torrens system which carry with them, not only the interest in land transferred, but the rights and liabilities incidental to that interest in land.  So much is obvious from the context and language of the two sections and is in any event put beyond doubt by the subsequent authorities set out in this judgment.  
  4. [56]
    Further, in Measures, Griffth CJ and Isaccs J both considered that that purpose did not support a construction whereby accrued rights passed.  
    1. (a)
      Griffith CJ observed that the focus of the language on rights “thereto belonging” directed attention to rights which related to the estate or interest in land transferred.  He considered a personal right from a completed breach did not fall within the scope of that language.  He considered this was consistent with the purpose of the statute because that purpose was achieved by construing the Act as transferring rights incidental to present and future possession.  Past and completed breaches were mere choses in action, which were not incidental to the estate or interest transferred.
    2. (b)
      Isaacs J reasoned in a substantially similar manner.  His Honour noted that the object of the section was the perfection of the transaction effected by the statutory transfer.  That required statutory intervention to ensure that choses in action transferred under the the transfer were effectively passed along with the transfer.  Like Griffith CJ, he considered that this did not extend to accrued rights for completed breaches because those rights existed independent of the convenants under which they arose.     
  5. [57]
    Further, the language of s. 62 LTA is substantively like the language in sections 51 and 52 of the NSW Act considered in Measures.  Of particular relevance is that s. 62 persists in including text which links the rights etc. to the interest transferred. So much is clear by the words “in relation to the lot” in s. 62(1) and which follows the reference to the list of rights and liabilities.  In my view, at worst for Y&L, the text of ss. 62(2) and (3) does not affect the link created by s.62(1) and on one view tends to add to the linking of the rights to the interest transferred.  That might arise because the focus in those provisions is on rights and liabilities under the mortgage or lease.  An accrued liability for a completed breach of a lease is a liability is not a liability which any longer arises under the lease, but rather has arisen under the lease and been merged into a completed cause of action for damages or debt.
  6. [58]
    If the purpose of the section is unchanged, and the key textual feature relied upon in Measures as supporting a construction which excludes accured rights is repeated in s. 62, what reason is there to give a different construction to a liability of a transferor in s. 62 from that adopted in Measures for a right of a transferor under the NSW Act?
  7. [59]
    BOQ relies on only one matter: the definition of liability in the AIA referred to in paragraph [17] above.   That definition applies “except so far as the context or subject matter otherwise indicates or requires”: s. 4 AIA.[22]  Given the entrenched nature of the approach to the construction of s. 62 and cognate provisions, I consider that the exception applies in this case.  
  8. [60]
    There is a further consideration which favours the adoption of the Measures approach to liabilities under s. 62 LTA.   As the High Court observed in 1910, the general law position is that the assignee of an interest in land does not obtain by the assignment causes of action for completed breaches of covenant.  There is no suggestion that position has changed.  Indeed, it applies with greater force to liabilities of a predecessor in title, because the burden of an obligation cannot be assigned.  Given the long standing nature of the decision in Measures construcing strongly analogous legislation, one would have expected clear words from Parliament if it intended “so radical and unexpected a change” (to use Isaacs J’s words) as to abandon the approach in Measures.   Nothing in the language of s. 62 supports such a change and no extrinsic material was put before the Court indicating that such a change was Parliament’s intention.

Another possible argument?

  1. [61]
    Clause 35.4 provides that the liquidated sum determined under that clause may, inter alia, be set-off against rent and other sums dues under the lease.   The tenant therefore has a choice under clause 35.4 to require payment of the debt within 7 days of its demand or to set it off against future rent.  If BOQ elected to set off the debt against future rent, rather than to demand payment within 7 days, the clause might arguably be construed as creating an on-going right to set off the debt against future rent which might be characterised as a current right under the covenant.   However, this point was neither pleaded nor argued.   And it seems strongly arguable that on its proper construction, clause 35.4 provides alternative rights between which BOQ had to elect and that by making the demand for payment within the time specified in clause 35.4, it had so elected by to crystalising the right to sue in debt.  Given those matters, I have not further considered this issue.

The Deed Poll

  1. [62]
    No claim based on the Deed Poll was properly pleaded by BOQ.  The only reference to the Deed Poll was as a particular of paragraph 31 of the Amended Statement of Claim which alleged:

By reason of the Transfer and the Subsequent Transfer, all liabilities in respect of the Lease and any damage suffered by the plaintiff in respect of the Lease (or breaches herefo) vested in the defendant.

  1. [63]
    The Deed Poll cannot be a particular of that allegation.  The case relying on the Deed Poll was developed in oral argument by Mr Martin for BOQ.  There are two issues which BOQ has to grapple with to articulate an arguable defence based on the Deed Poll:
    1. (a)
      The first issue arises from the character of the deed as a Deed Poll.  How in that circumstance does BOQ acquire standing to enforce the covenants in the Deed Poll?
    2. (b)
      The second issue is whether on its proper construction, the covenants in the Deed Poll expose Y&L to liability for the remediation costs.

The standing issue

  1. [64]
    BOQ argued that it has a real prospect of establishing that it has standing to sue on the Deed Poll based on s. 55 Property Law Act 1974 (PLA). There are difficulties with that proposition because s. 55 PLA has a number of elements, all of which must be met before it applies.  There are problems with establishing some of those elements:
    1. (a)
      First, a deed poll is a deed whereby a person expresses a unilateral intention to be bound as against a define category of person who are not parties to the deed.  Section 55 PLA only applies where a promise is made for valuable consideration passing from a promisee in favour of a third party beneficiary.  There is no consideration provided by any promisee in a Deed Poll.  It was argued by BOQ that consideration in the form of entry into the sale contract and transfer could be inferred from the Recitals.  I doubt that is arguable where the instrument in question is a deed poll.
    2. (b)
      Second, the section only applies where the beneficiary has accepted the benefit of the promise made to the promise.  There is no suggestion of any such acceptance by BOQ. 
  2. [65]
    However, the complexities of the application to s. 55 PLA to a deed poll need not be resolved because in my view, BOQ can enforce the Deed Poll directly.   A covenant in a deed poll can be enforced by any person sufficiently identified as the person in whose favour the promise is made.  Identification of the beneficiary of a promise in a deed poll is a matter of the proper construction of the deed.  Extrinsic facts are relevant to that process of construction.[23]  The construction process can be a complicated one in some cases, but it is not in this case.  The Deed Poll expressly identifies that the covenants in the Deed Poll are for the benefit of the lessee.  There is no possible dispute that the lessee objectively contemplated at the time of execution was BOQ.  Although the argument was not raised at the hearing, I have concluded that there is a real prospect of BOQ establishing it has standing to enforce the covenants in the Deed Poll.  Indeed, presently it is difficult to see any argument to the contrary.

The construction issue

  1. [66]
    In my view, by the Deed Poll, Y&L promises to be bound by the terms of the Lease only in respect of obligations arising under the Lease after the settlement date of the contract of sale, being specified as 13 July 2021.  So much is expressly stated in covenant 1.  I do not consider covenant 2 takes matters any further.  The plain purpose of that covenant is to make clear that the promise in covenant 1 includes convenants which do not touch and concern the land, options to renew being a well-known example of an important covenant which falls outside the scope of that principle.[24] 
  2. [67]
    BOQ appeared to concede that construction was correct.  However, it contended that the debt claim arising out of the procedure in clause 35.4 did fall within the scope of the covenants because the obligation to pay that debt was, at the Settlement Date, a term of the Lease on the part of the lessor to be performed.
  3. [68]
    I disagree.  In my view, the term of the Lease to be performed, fulfilled or observed was to pay the debt within seven days of the demand.  Once that time passed without the debt being paid, the Lessor was in breach of the obligation (or perhaps had failed to perform the obligation).  However, on no basis could it be said in my opinion that the term remained to be performed.  It was no longer possible to perform the obligation under clause 35.4 in accordance with the Lease once the 7 days after demand had passed.  As to the possibility of the set-off  in clause 35.4 leading to a different conclusion, I refer to my comments in paragraph [61] above.

Conclusion

  1. [69]
    For these reasons, I consider that BOQ has no real prospect of succeeding on its claim against Y&L by relying on the Deed Poll.

clause 39.4

  1. [70]
    No argument was directed to clause 39.4.  For completeness, I do not think it can assist BOQ in advancing an argument against Y&L.  The purpose of the clause is to preserve, for the benefit of a party to the lease, rights arising out of a breach of contract completed before an assignment.  This is an express contractual recognition that claims arising out of completed breaches are not pass on assignment.  It stands directly against BOQ’s position.

Conclusion

  1. [71]
    For the above reasons, I have concluded that BOQ has no real prospect of succeeding on its claim against Y&L.  Given the way the application was argued by Y&L, I also see no need for a trial of the claim. I therefore order that the proceedings be dismissed.  I will hear the parties as to costs.     

Footnotes

[1] DCT v Salcedo [2005] 1 Qd R 232 at 235

[2] QUT v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259, 264 (CA) (approving observations of Barwick CJ in General Steel Industries Inc v Commr for Railways (NSW) (1964) 112 CLR 125 at 130), affirmed again, Shaw v DCT [2016] QCA 275 at [31]

[3] Theseus Exploration NL v Foyster (1972) 126 CLR 507, 515

[4] [2014] QSC 264

[5] Subject to there being no other good reason why there should be a trial of the proceedings, a matter not raised by either party in this case.

[6] Amended Statement of Claim (ASOC) [14] – [17]; Affidavit of Mr Cliff pp. 61 to 91

[7] ASOC [19]

[8] ASOC [23]

[9] ASOC [24]

[10] ASOC [27] - [28]; Affidavit of Mr Cliff, pp. 226 to 237

[11] ASOC [26] – [28]

[12] ASOC [4]

[13] ASOC [28A]

[14] ASOC [31]

[15] Pearce & Geddes Statutory Interpretation in Australia (8th Edn) at 5.27 to 5.28

[16] See [17] and [20] of the judgment

[17] B Edgeworth et al, Sackville & Neave Australian Property Law (LexisNexis 2020, 11th Edn) at 8.122 

[18] Swift Investments v Combined English Stores Group Plc [1989] 1 AC 632 at 640-641

[19] Jodaway Pty Ltd v Langton [2004] 2 Qd R 272 [18] – [20] 

[20] And see Sackville & Neave Australian Property Law at 8.123 to 8.125

[21] Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 [44] – [46].

[22] See D Pearce & R Geddes, Statutory Interpretation in Australia (LexisNexis, 2014 8th ed) at 6.67 to 6.68.

[23] N Seddon, Seddon on Deeds (The Federation Press, 2015) at [6.10]

[24] W Duncan & S Christensen, Commercial Leases in Australia (Thomson Reuters Professional, 2020 9th edn) at [40.5500]

Close

Editorial Notes

  • Published Case Name:

    Bank of Queensland v Y&L Promising Pty Ltd

  • Shortened Case Name:

    Bank of Queensland v Y&L Promising Pty Ltd

  • MNC:

    [2022] QDC 52

  • Court:

    QDC

  • Judge(s):

    Porter QC DCJ

  • Date:

    24 Mar 2022

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2022] QDC 5224 Mar 2022-
Notice of Appeal FiledFile Number: CA4532/2220 Apr 2022-
Appeal Determined (QCA)[2022] QCA 21708 Nov 2022-

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Capuano v Q-Comp[2005] 1 Qd R 232; [2004] QSC 333
1 citation
Jump To
Cite 1 - [2005] 1 Qd R 232
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
1 citation
Jump To
Cite 1 - (1964) 112 CLR 125
GWC Property Group Pty Ltd v Higginson [2014] QSC 264
1 citation
Jump To
Cite 1 - [2014] QSC 264
Jodaway Pty Ltd v Langton[2004] 2 Qd R 272; [2003] QSC 79
3 citations
Jump To
Cite 1 - [2004] 2 Qd R 272
Cite 2 - [2004] 2 Qd R 272
Cite 3 - [2004] 2 Qd R 272
Measures v McFadyen (1910) 11 CLR 723
3 citations
Jump To
Cite 1 - (1910) 11 CLR 723
Cite 2 - (1910) 11 CLR 723
Cite 3 - (1910) 11 CLR 723
Potter v Minahan (1908) 7 C.L.R. 277
1 citation
Jump To
Cite 1 - (1908) 7 C.L.R. 277
Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81
3 citations
Jump To
Cite 1 - (2007) 235 CLR 81
Cite 2 - (2007) 235 CLR 81
Cite 3 - (2007) 235 CLR 81
Queensland University of Technology v Project Constructions (Aust) Pty Ltd (In Liq)[2003] 1 Qd R 259; [2002] QCA 224
1 citation
Jump To
Cite 1 - [2003] 1 Qd R 259
Shaw v Deputy Commissioner of Taxation [2016] QCA 275
1 citation
Jump To
Cite 1 - [2016] QCA 275
Swift Investments (a firm) v Combined English Stores Group Plc [1989] 1 AC 632
1 citation
Jump To
Cite 1 - [1989] 1 AC 632
Theseus Exploration NL v Foyster (1972) 126 CLR 507
1 citation
Jump To
Cite 1 - (1972) 126 CLR 507

Cases Citing

Case NameFull CitationFrequency
Bank of Queensland Limited v Y & L Promising Pty Ltd(2022) 12 QR 326; [2022] QCA 21715 citations
1

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