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Joyway Pty Ltd v Rochedale Holdings Pty Ltd[2022] QSC 273

Joyway Pty Ltd v Rochedale Holdings Pty Ltd[2022] QSC 273

SUPREME COURT OF QUEENSLAND

CITATION:

Joyway Pty Ltd v Rochedale Holdings Pty Ltd and Ors [2022] QSC 273

PARTIES:

JOYWAY PTY LTD ACN 628 360 565

(plaintiff)

v

ROCHEDALE HOLDINGS PTY LTD (RECEIVER AND MANAGER APPOINTED) ACN 610 535 076 AS TRUSTEE FOR THE ROCHEDALE HOLDINGS UNIT TRUST

(first defendant)

and

ROCHEDALE HOLDINGS NO.1 PTY LTD (RECEIVER AND MANAGER APPOINTED) ACN 610 550 199 AS TRUSTEE FOR THE ROCHEDALE HOLDINGS NO.1 TRUST

(second defendant)

and

PARK RIDGE 94 PTY LTD (RECEIVER AND MANGER APPOINTED) ACN 616 893 924 AS TRUSTEE FOR THE PARK RIDGE 94 UNIT TRUST)

(third defendant)

and

PARK RIDGE 96 AND 98 PTY LTD (RECEIVER AND MANAGER APPOINTED) ACN 618 802 618 AS TRUSTEE FOR THE PARK RIDGE 96 AND 98 UNIT TRUST

(fourth defendant)

and

168 PARK RIDGE PTY LTD (RECEIVER AND MANAGER APPOINTED) ACN 619 549 334 AS TRUSTEE FOR THE 168 PARK RIDGE UNIT TRUST

(fifth defendant)

and

PARK RIDGE 180 PTY LTD (RECEIVER AND MANAGER APPOINTED) ACN 616 431 157 AS TRUSTEE FOR THE PARK RIDGE 180 UNIT TRUST

(sixth defendant)

and

MARC ANDREW CLANCY

(seventh defendant)

and

SHAN NGAI SO

(eighth defendant)

FILE NO/S:

BS 4329 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

14 December 2022

DELIVERED AT:

Brisbane

HEARING DATE:

9 September 2022

JUDGE:

Martin SJA

ORDER:

  1. Pursuant to section 127 of the Land Title Act 1994, the following caveats be removed:
    1. caveat number 721553236 registered over the land described as lot 2 on RP95781 (title reference 15760230);
    2. caveat number 721553237 registered over the land described as lot 2 on RP170091 (title reference 16038241)
    3. caveat number 721553245 registered over the land described as lot 1003 on SP324815 (title reference 51268587);
    4. caveat number 721553240 registered over the land described as lot 1002 on SP324815 (title reference 51268586);
    5. caveat number 721553271 registered over the land described as lot 13 on RP803799 (title reference 17463136); and
    6. caveat number 721553247 registered over the land described as lot 2 on RP172973 (title reference 16348086).
  2. I will hear the parties on costs.

CATCHWORDS:

REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DWELLINGS – REMOVAL – where the plaintiff and the first defendant entered into a loan agreement – where the loan was secured with a ‘second unregistered mortgage over 156 Park Ridge Road, Park Ridge’ – where the first defendant has failed to repay the amount of the loan – where, as a result of a series of subdivisions, the title of the land of 156 Park Ridge Road was cancelled and new lots were created – where the plaintiff has lodged six caveats over properties owned by the second to sixth defendants – where the caveated properties are located within the Park Ridge development area, but did not form part of the land which had previously been known as 156 Park Ridge Road – where the second to sixth defendants apply for the removal of the caveats – whether there is a serious question to be tried – whether the caveats should be removed

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – where the second to sixth defendants were not parties to the agreement between the plaintiff and the first defendant – where a Mr Ren and Ms Zheng made representations to a representative of the plaintiff, Mr Dong – where the plaintiff claims that Mr Ren and Ms Zheng were agents of the second to eighth defendants – where the plaintiff contends that the objective intention of the parties was that the plaintiff’s advance would remain secured by land within the Park Ridge development until the advance was repaid – where the plaintiffs contend that it was an implied term of the loan agreement that further lots within the Park Ridge development would secure the obligation to repay the loan as and when 156 Park Ridge Road was subdivided and sold – whether Mr Ren and Ms Zheng were agents of the second to eighth defendants – whether it was an implied term of the contract that the loan would remain secured by land in the Park Ridge development

Australian Consumer Law, s 18, s 30, s 237

Land Title Act 1994, s 127

AECI Australia Pty Ltd v Convey [2020] QSC 207

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226

Cousins Securities Pty Ltd v CEC Group Limited [2007] 2 Qd R 520

Re Jorss’ Caveat [1982] Qd R 458

COUNSEL:

M C Long for the second to sixth defendants/applicants

A F Messina for the plaintiff/respondent

SOLICITORS:

Thynne & Macartney for the second to sixth defendants/applicants

Auslaw Partners for the plaintiff/respondent

  1. [1]
    Joyway Pty Ltd (Joyway) has lodged six caveats over properties owned by the second to sixth defendants.  The applicants have applied for an order removing those caveats. 
  2. [2]
    The onus is on Joyway to show that there is a serious question to be tried and that the balance of convenience favours the caveats being undisturbed. 
  3. [3]
    For the reasons which follow, I have decided that each caveat must be removed.

The loan agreement

  1. [4]
    In October 2018, Joyway and the first defendant (Rochedale) entered into an agreement whereby Joyway lent Rochedale $2,000,000.  The loan was for a period of two years but, after a deed of variation, the term was extended to three years.
  2. [5]
    The loan agreement is in a recognisably standard form and provides definitions of terms used, obligations with respect to the money being lent, the payment of interest, events of default, rights of the parties upon default and other administrative provisions relating to the working out of the agreement. 
  3. [6]
    The loan was secured. The security was defined in the schedule of the agreement as a “Second unregistered Mortgage over 156 Park Ridge Rd, Park Ridge”. 
  4. [7]
    The agreement provided that the loan amount could only be used for the acquisition and/or the development of the “Secured Property” through the creation of separate indefeasible titles. The “Secured Property” is defined as the property which is secured by the Security, that is, 156 Park Ridge Road.
  5. [8]
    One of the events of default is the failure by Rochedale to pay sums when they become due.  The rights upon default include the right to “Register the Second Mortgage over the Security and enforce any rights and powers related to the Second Mortgage”. 
  6. [9]
    It is not in contest that there has been a failure by Rochedale to pay the amount of the loan with interest. 
  7. [10]
    On 16 December 2021, Marcus Watters was appointed by Ultimate Investment Portfolio Pty Ltd as the receiver and manager of various companies including the first to sixth defendants in this matter. 

The land at 156 Park Ridge Road

  1. [11]
    156 Park Ridge Road – Lot 7 on RP 80185 – was part of a larger development being undertaken by Rochedale.  It has been referred to as the Park Ridge development.  It was a multi-stage development with a master plan for the creation of numerous residential house blocks. 
  2. [12]
    Between 13 March 2020 and 13 May 2021, the title of the land described as 156 Park Ridge Road was cancelled and new lots were created.  By May 2021, the land which had been 156 Park Ridge Road consisted of various smaller subdivided lots. 

The ground claimed in each caveat

  1. [13]
    In each of the caveats the subject of this application, the ground claimed by Joyway is:

“…an equitable interest as mortgagee or chargee of the estate in fee simple in the land pursuant to cl 3 and 7 of the loan agreement made 23 October 2018 (as varied by deed made on 4 December 2020), which is binding on the registered owner, and which charges the land as security for the obligation to repay monies owing under the agreement.”

  1. [14]
    Clause 3 of the agreement is concerned with pre-settlement conditions and provides that Joyway was not obliged to make an advance unless, among other things, it had been granted the security on terms and conditions satisfactory to it.  The security is defined to mean the security specified in item 10 of the schedule to the agreement which, as has already been pointed out, was a second unregistered mortgage over 156 Park Ridge Road.  Clause 7 of the agreement provides for Joyway’s rights upon default.
  2. [15]
    The “land” referred to in each of the caveats means the land over which the caveat has been lodged.  In Mr Watter’s affidavit he demonstrates that none of the lots the subject of a caveat formed part of the land which had, until subdivision, been known as 156 Park Ridge Road.  In other words, the land held by the second to sixth defendants was land within the Park Ridge development but not within the area which had previously been referred to as Lot 7 on RP 80185. 

The relevant legal tests

  1. [16]
    An application for an order that a caveat be removed is treated as being analogous to an interlocutory injunction to restrain a dealing with property.[1]  The relevant tests to be applied in these circumstances were considered by Bond J in AECI Australia Pty Ltd v Convey.[2]  I gratefully adopt what his Honour said in that case:

“[14] In order to satisfy the first inquiry, an applicant does not have to show that it will probably succeed at trial. Rather, it is sufficient that the applicant shows a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.  How strong the probability of success needs to be depends upon the nature of the rights asserted and the practical consequences likely to follow from the orders sought.  The first inquiry is sometimes described as whether there is a “serious question” to be tried. There is no objection to the use of that phrase if it is understood as conveying the notion that the seriousness of the question must, like the likelihood of success, be sufficient in the circumstances to justify the order sought. 

[15] The second inquiry is whether the balance of convenience supports the relief claimed; in other words, whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the respondent would suffer if an injunction were granted.  The adequacy of an award of damages and the question of the sufficiency of the usual undertaking are to be considered as part of the totality of the balance of convenience question.

[16] The two inquiries are related and not independent of each other, so that the weight of considerations in regard to one may well affect the other.

[17] One example of this relationship occurs where the grant of an interlocutory injunction would have the same practical effect as if the applicant were granted final relief. In such circumstances, a Court might require the applicant to demonstrate a stronger probability of success than might be required in a different case. Of such a case, Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd [2016] QCA 260, Jackson J observed (McMurdo P and Gotterson JA agreeing):

“In those circumstances, it is desirable for the court to evaluate (if it can) and take into account the strength or weakness of the applicant’s case for final relief.  Also, in those circumstances, the court may refuse an interlocutory injunction even if the applicant has a strong case for a final injunction for breach of contract in restraint of trade.

[18] The bottom line is that in making its decision on an application for an interlocutory injunction, the Court should weigh in the balance all relevant factors, including the strength of the case to be tried and the factors affecting the balance of convenience. Then the Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong”, in the sense of granting an injunction to a party which fails to establish its right at an ultimate trial, or failing to grant an injunction to a party which succeeds at trial.” (emphasis added, citations omitted)

The basis for the ground relied on in each caveat

  1. [17]
    Joyway, in its Statement of Claim, pleads that the equitable interest upon which each caveat is based arises:
    1. (a)
      pursuant to an implied term in the loan agreement; or
    2. (b)
      pursuant to s 237 of the Australian Consumer Law[3] as a consequence of misleading or deceptive conduct engaged in by, or on behalf of, the defendants in contravention of ss 18 or 30(1)(b) of the Australian Consumer Law.
  2. [18]
    Joyway also pleads that the corporate defendants are estopped (because of the facts that underpin the statutory claim) from denying that their lots secure the obligation to repay the loan. In its submissions, the plaintiff contends that this also results in the plaintiff having an interest in the caveated lots as an equitable mortgagee or chargee, though this is not pleaded.
  3. [19]
    In its written submissions, Joyway contends that the “objective intention” of the parties was that the plaintiff’s advance would remain secured by land within the Park Ridge Development until the advance was repaid. It contends that it was an implied term of the loan agreement that further lots within the Park Ridge Development would secure the obligation to repay the loan as and when 156 Park Ridge Road, and other land, was subdivided and sold.

What is the serious question? An implied term?

  1. [20]
    In the statement of claim filed by Joyway, it seeks, among other things, a declaration that it holds an equitable interest as mortgagee or chargee of the estate in fee simple in each of the properties the subject of the caveats in this matter. 
  2. [21]
    In its submissions on this application, Joyway submits that it has such an interest on the three grounds set out in paragraphs 17 to 18 above.
  3. [22]
    The principles which govern the implication of a term are well known. They are accurately summarised in Halsbury’s Laws of Australia:

“[110-2125] The five strict requirements for implication in respect of terms implied in fact, which govern factual implications in formal contracts, are:

(1) the term must be reasonable and equitable;

(2) the term must be necessary to give business efficacy to the contract;

(3) the term must be obvious;

(4) the term must be capable of clear expression; and

(5) the term must not contradict any express term of the contract (citations omitted).”

  1. [23]
    In order to support the implied term ground, Joyway refers to the circumstances surrounding the creation of the loan agreement and pre-contractual representations which it says were made on behalf of the corporate defendants by its agents. 
  2. [24]
    In the Statement of Claim it is alleged that Thomas Ren was, at all times, the duly authorised agent of the seventh and eighth defendants and the corporate defendants.  It is also alleged that Emily Zheng made a number of representations to the representative of Joyway, Mr Dong.  Ms Zheng was said to have made them on behalf of Mr Ren.  Joyway seeks to support its case by reliance upon an affidavit of Xiaonan Wang.  She is employed by the solicitors for the plaintiff and makes the affidavit on information and belief. 
  3. [25]
    In Ms Wang’s affidavit she refers to the statement of claim and the allegation of an implied term and then, under the heading “Pre-contractual representations” she repeats what is set out in the statement of claim.  She says, for example, that “the plaintiff alleges by its statement of claim…” etc.  She then says that those representations set out are alleged to be relevant to the implication of the implied term amongst other things.  It appears that she relies upon a number of WeChat messages between Ms Zheng and Mr Dong and the English translations of them. 
  4. [26]
    None of the material referred to contains any statement by Ms Zheng that she is acting on behalf of Mr Ren or the corporate defendants.  The particular parts of the messages relied upon by Joyway to advance its claim of agency do not.  The messages are consistent with Ms Zheng seeking to obtain a suitable investment vehicle for Joyway.  There is, in an undated message sent by Ms Zheng before 12 August 2018, a reference to “another project of ours in Park Ridge”.  But that is in the same message where a reference is made to another project and it is said that “this project was obtained by us instead...  The developer didn’t come to ask us for funds.”  Later messages referred to Mr Dong being introduced to the Park Ridge project.  There are then a series of messages containing information about the investment period of “both projects” and to the relative value of them to Joyway.  There is a reference to “Thomas’ projects” but that is not identified with particularity. 
  5. [27]
    In a series of messages in or about October 2018, Mr Dong tells Ms Zheng that the developer in the Gold Coast is not willing to have a secured loan and he asks:

“Shall we initiate the second plan?” 

And the reply by Ms Zheng is:

“…let me ask Tony[4] to review the loan agreement of Park Ridge.  Let’s read the terms first.” 

Those were followed by a message in which she tells Mr Dong that there are several requirements and there is a discussion about collateral.  On that point, she says:

“With regard to collateral, your company name must appear in the land title as a proof that is registered under the name of your company before we release the funds.”  (emphasis added)

She later says:

“The other party must provide repayment plus interest in two years and collateral is worth twice as much as the amount of a loan.” (emphasis added)

  1. [28]
    In the message sent later which contained a map of the development area, Mr Dong asks her:

“I assume almost all questions have already been asked.”

Ms Zheng replies:

“We have basically considered your safety.  Basically, Tony has written almost everything that can protect your safety.” (emphasis added)

  1. [29]
    In another message, which appears to be undated, she says to Mr Dong (with respect to a project which is not identified but is probably the Gold Coast project):

“I have been communicating with Tony for a while.  It still doesn’t work.  We don’t think it will work. …  No matter how good the project is, we don’t want to take risk if the interests of our clients can’t be protected.  … Don’t invest for the sake of investing.” (emphasis added)

  1. [30]
    Under the heading: “Further evidence of Mr Ren’s agency”, Ms Wang refers to documents provided to her by Ms Zheng.  None of them provide any assistance in the determination of the issue of agency but there is an absence of any evidence that Ms Wang might have received from Ms Zheng about her involvement.  Other material exhibited to the affidavit concerns events that occurred after the loan agreement was executed. 
  2. [31]
    In its written submissions, Joyway argues that the WeChat messages support the allegation of representations made in paragraph 24 of the Statement of Claim. Those alleged representations are inconsistent with the loan agreement insofar as they refer to “Security will be in Stage 1 of the Park Ridge Development”.
  3. [32]
    Mr Watters, in his affidavit deposes to searching the records of the corporate defendants.  He says:

“…there is no mention of either [Mr Ren or Ms Zheng] being employees of the [first to sixth] Defendants or otherwise engaged to act in any capacity on behalf of the [first to sixth] Defendants.”

  1. [33]
    The material relied upon by Joyway does not support the existence of a serious question to be tried about the alleged agency of Mr Ren and, through him, Ms Zheng.  Indeed, the material tends more to the conclusion that Ms Zheng was working for Joyway and acting on its behalf in negotiations with Rochedale and others. 
  2. [34]
    In any event, even if the material relied upon by Joyway did demonstrate a serious question, the interest claimed by it on each of the caveats is unsupportable for a number of reasons.
  3. [35]
    First, it is not contended by Joyway that the applicants are parties to the loan agreement but are, in some undefined way, bound by it. The ground set out in the caveat asserts that each of the applicants is bound by clauses 3 and 7 of the loan agreement. But, while it is pleaded that each of the respondents is a related entity of the others, it is not pleaded (nor argued) that the applicants are parties to the loan agreement. Further, neither of those clauses could have any application to any of the applicants. Clause 3 concerns pre-settlement conditions and clause 7 provides for Joyway’s rights upon default none of which could apply to the applicants.
  4. [36]
    Secondly, the implied term claimed by Joyway is inconsistent with the express terms of the loan agreement. That agreement provides that the money advanced was for the acquisition and/or development of 156 Park Ridge and that the loan was secured against that property. The money advanced could not be used for the purposes of acquiring or developing any other property in the Park Ridge development. It is inconsistent with the express term of the agreement to assert that properties other than the property specifically defined in the schedule to the loan agreement would be subject to an equitable mortgage or charge.
  5. [37]
    Thirdly, it could not, with respect, be said that it was obvious that property owned by entities which were not parties to the loan agreement, and which would not benefit from the advance being made, would be subject to the equitable interest claimed by Joyway. For a term to be “obvious” it must be a term which, on an objective test, was one which would have been obvious to both parties at the time of entry into the contract. Joyway did not explain how it was obvious that entities other than the parties to the loan agreement would have their property subjected to an equitable mortgage. It did not explain how the identities of those other entities and their specific properties were obvious at the relevant time. There is no evidence that, at the time of entering into the loan agreement, Joyway had any knowledge of the applicants or the properties they owned.
  6. [38]
    Fourthly, I am not satisfied that the implied term is necessary to make the contract work. The difficulty faced by Joyway is exemplified in part of the reasons of the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd:[5]

“Neither of the implied terms alternatively urged by the appellant satisfy these requirements. Neither term is so obvious that both the insurer and the assured would clearly have agreed to its inclusion in the contract of insurance had they directed their minds to it at the time they concluded their bargain. This will commonly be the situation where the term sought to be implied is adverse to the interests of one of the parties, as they are adverse to the interests of the insurer here. An implication which may be regarded as obvious to one party may not be so regarded by the party detrimentally affected: Scanlan's New Neon Ltd. v. Tooheys Ltd.; Treitel, Law of Contract, 6th ed (1983), p. 159. Unless it can be said that both parties would have consented to its inclusion, a term cannot be implied. Furthermore, there is real difficulty in the proposition that either term is necessary to make the contract work. The contract is capable of sensible operation in the absence of the implied terms, and the appellant's submission amounts to little more than an assertion that the terms are necessary to make the contract work in a manner that will avoid additional liability of the assured. In the result the implication of the suggested terms is not necessary to give business efficacy to the contract.”[6] (emphasis added, citations omitted)

The Australian Consumer Law ground

  1. [39]
    This ground was advanced by contending that Joyway, if successful in its claim on this ground, would obtain a declaration that it held the equitable interest claimed in the caveats. This may be dealt with briefly. I have held that there was no serious question to be tried about the agency of Mr Ren and Ms Zheng. That alleged agency is the basis of the claim made pursuant to s 237 of the Australian Consumer Law.

The estoppel ground

  1. [40]
    The estoppel claimed by Joyway would only be able to be argued at a trial. On an application of this kind, the onus is on the caveator. A caveat may only be lodged with respect to an interest in land. An estoppel does not create an interest in land. If successful, an estoppel works to exclude otherwise admissible evidence – in this case it is said to arise out of alleged representations. But the facts establishing an interest in land must still be proved. In any event, the estoppel claim also relies upon the issue of agency which I have dealt with above.

Conclusion

  1. [41]
    Joyway has failed to establish that there is a serious question to be tried. I will make an order that the caveats be removed. I will hear the parties on costs.

Footnotes

[1]Re Jorss’ Caveat [1982] Qd R 458; Cousins Securities Pty Ltd v CEC Group Limited [2007] 2 Qd R 520 at [38].

[2][2020] QSC 207.

[3]Schedule 2 to the Competition and Consumer Act 2010 (Cth).

[4]The reference to “Tony” is to Tony Chee a solicitor at C H Legal Group which were then the solicitors for Joyway.

[5](1986) 160 CLR 226.

[6]At 241-242.

Close

Editorial Notes

  • Published Case Name:

    Joyway Pty Ltd v Rochedale Holdings Pty Ltd and Ors

  • Shortened Case Name:

    Joyway Pty Ltd v Rochedale Holdings Pty Ltd

  • MNC:

    [2022] QSC 273

  • Court:

    QSC

  • Judge(s):

    Martin SJA

  • Date:

    14 Dec 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
AECI Australia Pty Ltd v Convey [2020] QSC 207
2 citations
Jump To
Cite 1 - [2020] QSC 207
Cite 2 - [2020] QSC 207
Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd [2016] QCA 260
1 citation
Jump To
Cite 1 - [2016] QCA 260
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
3 citations
Jump To
Cite 1 - (1986) 160 CLR 226
Cite 2 - (1986) 160 CLR 226
Cite 3 - (1986) 160 CLR 226
Cousins Securities Pty Ltd v CEC Group Ltd[2007] 2 Qd R 520; [2007] QCA 192
2 citations
Jump To
Cite 1 - [2007] 2 Qd R 520
Cite 2 - [2007] 2 Qd R 520
Re Jorss' Caveat [1982] Qd R 458
2 citations
Jump To
Cite 1 - [1982] Qd R 458
Cite 2 - [1982] Qd R 458

Cases Citing

Case NameFull CitationFrequency
Maradiegue v Moneytech Finance Pty Ltd [2024] QSC 1603 citations
1

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