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Maradiegue v Moneytech Finance Pty Ltd[2024] QSC 160

Maradiegue v Moneytech Finance Pty Ltd[2024] QSC 160

SUPREME COURT OF QUEENSLAND

CITATION:

Maradiegue v Moneytech Finance Pty Ltd & Anor [2024] QSC 160

PARTIES:

HUMBERTO MARADIEGUE

(applicant)

v

MONEYTECH FINANCE PTY LTD

ACN 112 110 906

(first respondent)

and

KATHRYN JEAN BRIGHT

(second respondent)

FILE NO/S:

BS 5849 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

30 July 2024

DELIVERED AT:

Brisbane

HEARING DATE:

6 June 2024

JUDGE:

Martin SJA

ORDER:

The parties are directed to confer and agree upon the terms of an appropriate amendment to this application so that all questions between the parties may be resolved.

CATCHWORDS:

REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS – REMOVAL – PARTICULAR CASES – where Between Dreams Pty Ltd (BD) and Tranquil Beginnings Pty Ltd (TB) are the registered owners of real property – where each of BD and TB owns the property as a trustee – where the respondent provided a third party with a finance facility in exchange for, among other things, a guarantee by BD and TB and others – where the applicant lent $500,000 to BD and TB – where security for the applicant’s loan included a second mortgage over the property – where the applicant’s solicitors sought to register the mortgage on the title of the property – where registration was refused because the respondent had lodged a caveat – where the applicant seeks an order removing the caveat – where the respondent cross-applies for orders joining BD and TB and declarations about the nature of the competing interests – whether there is a “serious question” to be tried – whether the balance of convenience supports the removal of the caveat

GUARANTEE AND INDEMNITY – CONTRACT OF GUARANTEE – CONSTRUCTION AND EFFECT – GENERALLY – where the respondent lodged a caveat over real property – where the interest claimed in the caveat is “[a]n equitable interest as chargee of an estate in fee simple” pursuant to a clause of a guarantee between the respondent (the caveator) and the registered owner – where the guarantee includes that the guarantor(s) “agrees that they charge (as beneficial owner(s)) all freehold and leasehold interest in land and all interests in all other property, including personal property (including any statutory right, benefit or concession) … including, but not limited to, the land and other property (if any)” – where the respondent argues that the interest in land charged is BD and TB’s beneficial interest arising from the right of indemnity they have as owners of the property as trustees – where the applicant argues that the guarantee has an express limitation: the guarantors only agree to charge as “beneficial owners” – whether the caveator has demonstrated that there is a “serious question” to be tried

Land Title Act 1994 (Qld), s 122, s 126

AECI Australia Pty Ltd v Convey [2020] QSC 207, cited

Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524, cited

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

Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In liq) [2013] QCA 79, cited

Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360

Re Henderson’s Caveat [1998] 1 Qd R 632, cited

Re Jorss’ Caveat [1982] Qd R 458, cited

COUNSEL:

A F Messina for the applicant

P E O'Brien for the first respondent

SOLICITORS:

Scoglio Law for the applicant

JHK Lawyers for the first respondent

  1. [1]
    Between Dreams Pty Ltd (BD) and Tranquil Beginnings Pty Ltd (TB) are the registered owners of property at Murrarie (Lot 8). Each of them owns the property as a trustee of a family trust. 
  2. [2]
    In March and April 2019 Moneytech Finance Pty Ltd agreed to provide DCB Developments Pty Ltd with a finance facility. Part of the consideration for the facility was a guarantee by, among others, BD and TB. 
  3. [3]
    In February 2023 Mr Maradiegue lent $500,000 to BD and TB. Security for the loan included a second registered mortgage over Lot 8. Payments in accordance with the loan agreement were made until early August 2023.
  4. [4]
    On 4 August 2023 Mr Maradiegue’s solicitors lodged for registration the mortgage on the title of Lot 8. Registration was refused because, about one hour before the attempted registration, Moneytech had lodged a caveat. 
  5. [5]
    Mr Maradiegue seeks an order removing the caveat. Moneytech has cross-applied for orders joining BD and TB to this application and for declarations about the nature of Moneytech’s mortgage and that it has priority over the interest of Mr Maradiegue.

The second respondent is no longer involved

  1. [6]
    The application, so far as it concerned the second respondent, was discontinued by consent. 

Removal of a caveat – the relevant tests

  1. [7]
    In an application for an order that a caveat be removed the onus is on the caveator – the position of the caveator should be considered as equivalent to that of an applicant for an interlocutory injunction to restrain a dealing with property.[1] In AECI Australia Pty Ltd v Convey[2] Bond J summarised the relevant tests:
    1. The first inquiry is whether there is a “serious question” to be tried. In other words, has the caveator shown a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial.
    2. The second inquiry is whether the balance of convenience supports the relief claimed; in other words, whether the inconvenience or injury which the caveator would be likely to suffer if the application were refused outweighs, or is outweighed by, the injury which the caveatee would suffer if the caveat was not removed.
    3. The two inquiries are related and not independent of each other, so that the weight of considerations regarding one may well affect the other.
    4. 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”.

Has Moneytech shown that there is a serious question to be tried?

  1. [8]
    Moneytech argues that it has the benefit of an equitable mortgage over Lot 8.
  2. [9]
    A caveat may only be lodged by an equitable mortgagee if it is a caveat to which s 126 of the Land Title Act 1994 (LTA) applies – see s 122(2) LTA.  Such a caveat will lapse unless a proceeding is started to establish the interest claimed within the time limited under s 126(4) LTA.[3] Such proceedings have been commenced.
  3. [10]
    The interest claimed by Moneytech in the Caveat is: “An equitable interest as chargee of an estate in fee simple”.
  4. [11]
    The grounds of the claim set out in the Caveat by Moneytech are:

“4. Grounds of claim

Pursuant to a clause of that part of a written account application entitled ‘Deed of Guarantee and Indemnity’ between the registered owner and the Caveator by which the registered owner charged their interest in the land with payment of monies owning [sic] to the Caveator. The clause number and application date are:

Clause Number: Clause 15.1

Date:  18/04/2019”

  1. [12]
    An equitable interest in land can arise when a caveator is entitled to “something less than a full decree of specific performance ordering conveyance, that is it can exist provided that a claimant is entitled to equitable relief by way of injunction or other remedy to maintain and protect his interest.”[4]
  2. [13]
    Moneytech relies upon cl 15 of the guarantee. That clause relevantly provides:

15.1 The Guarantor(s) agrees that they charge (as beneficial owner(s)) all freehold and leasehold interest in land and all interests in all other property, including personal property (including any statutory right, benefit or concession) which they may now have or at any time during the currency of this Guarantee and Indemnity or thereafter until all Guaranteed Moneys due to be paid are paid in full including, but not limited to, the land and other property (if any) and hereby covenant that they will execute a registrable legal mortgage of such land or other property or a charge over a corporation when required by Moneytech in the form required by Moneytech. This clause 15.1 shall apply to all of the Guarantor(s) present and after acquired Property. This charge is a transfer by way of security in respect of property consisting of accounts and chattel paper.

  1. [14]
    The guarantors named in the Guarantee are BD, TB and four natural persons.
  2. [15]
    Moneytech contends that the “interest in land” charged by BD and TB is the beneficial interest which arises in their favour from the right of indemnity they have as owners of Lot 8 as trustees.
  3. [16]
    A trustee is entitled to be indemnified out of trust assets for expenses and liabilities properly incurred. That entitlement is available in two forms: reimbursement (or recoupment) and exoneration. The right of reimbursement entitles a trustee to be reimbursed for liabilities properly incurred in the execution of the trust which it has paid from its own resources. The right of exoneration entitles the trustee to pay or seek payment of such liabilities from the trust assets without first making payment out of its own resources.[5]
  1. [17]
    That right of indemnity creates an equitable proprietary interest in the trust property:

“If the trustee has incurred liabilities in the performance of the trust then he is entitled to be indemnified against those liabilities out of the trust property and for that purpose he is entitled to retain possession of the property as against the beneficiaries. The trustee’s interest in the trust property amounts to a proprietary interest, and is sufficient to render the bald description of the property as ‘trust property’ inadequate.”[6]

  1. [18]
    A corporation which owns property as trustee has the rights identified in Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth:[7]
  1. “[80]
    A corporate trustee’s right to be indemnified out of the assets of the trust confers “property” for the purposes of the Corporations Act. As was stated by the plurality in Octavo Investments Pty Ltd v Knight, although a trustee who enters into business transactions as trustee is personally liable for debts incurred in the course of those transactions, the trustee is entitled to be indemnified (whether by recoupment or exoneration) out of the trust assets against such liabilities, and thus enjoys a beneficial interest in those assets. The corollary, as was stated unanimously in Chief Commissioner of Stamp Duties (NSW) v Buckle, is that the trustee does not hold the trust assets solely for the benefit of the beneficiaries to the extent of that right of indemnity.
  1. [83]
    The trustee also has a right to be indemnified out of the trust assets in respect of liabilities properly incurred in the execution of the trust, which takes priority over the beneficiaries’ claim on the trust assets. Until that right has been satisfied, the beneficiaries cannot compel the trustee to exercise the trustee’s powers as legal owner of the trust assets for their benefit. A court of equity will assist the trustee to realise trust assets to satisfy the trustee’s right of indemnity, in priority to the beneficiaries’ interests, and thus it is said that the trustee has an equitable charge or lien over the trust assets. It is not, however, a charge or lien comparable to a synallagmatic security interest over property of another. It arises endogenously as an incident of the office of trustee in respect of the trust assets.
  1. [84]
    … The trustee’s right to apply trust assets in satisfaction of trust liabilities is proprietary in that it may be exercised in priority to the beneficial interests of the beneficiaries. To describe it as constituting a beneficial interest in the trust assets, and so as property, thus acknowledges the characteristic blending of personal rights and obligations with proprietary interests which is the “genius” of the trust institution. Such a beneficial interest falls naturally and ordinarily within the definition of “property” in s 9 of the Corporations Act.” (citations omitted)
  1. [19]
    A number of interests are purportedly charged by the provisions in cl 15.
  2. [20]
    First, the guarantors agree to “charge (as beneficial owner(s)) all freehold and leasehold interest in land”. This does not apply, because BD and TB are not the beneficial owners of Lot 8 and do not hold any freehold or leasehold interest in Lot 8.
  3. [21]
    Secondly, the guarantors agree to charge “all interests in all other property, including personal property (including any statutory right, benefit or concession) … including, but not limited to, the land and other property (if any)”. This is a regrettable example of the type of drafting in which a clumsy attempt is made to sweep up all types of interests.
  4. [22]
    The applicant argues that cl 15.1 contains an express limitation, that is, it only applies to real property of which the guarantors are the beneficial owners.  But that reading of the clause does not take into account the later, albeit clumsily expressed, provisions in the clause which appear to cover the interest claimed in the caveat.
  5. [23]
    The reference to “the land” is a more general reference to interests in land because, later in the clause, the following appears: “This clause 15.1 shall apply to all of the Guarantor(s) present and after acquired property.” That expression appears to include the type of beneficial interest in the trust property described in Carter Holt.
  6. [24]
    It follows that a serious question to be tried has been established. 

Where does the balance of convenience lie?

  1. [25]
    If the caveat is removed, the applicant’s mortgage will be registered and, subject to any further action, Moneytech’s rights will be subordinated.
  2. [26]
    There are matters external to these parties which must be considered. Hovering in the background is the status of TB and BD. Each is in receivership. There is also the bulky figure of the first mortgagee for Lot 8 – the ANZ Bank. It issued notices of default to TB and BD in February this year in which it claimed to be owed about $460,000 – with both Lot 7 and Lot 8 securing that debt. There is, therefore, the possibility that Lot 8 will be sold, with any surplus to be subject to any other enforceable security.
  3. [27]
    Moneytech argues that the status quo should be maintained by leaving the caveat on the title and allowing the parties to contest the priority each says it has. It says that it has prospects of obtaining priority for its equitable interest on the basis of these assertions:
    1. It was first in time.
    2. The applicant delayed and failed to act to register its mortgage expeditiously.
    3. The circumstances of the delay were not explained.
  4. [28]
    In answer to that Mr Maradiegue agrees that the mortgage was executed and not lodged for some months but says that that delay is irrelevant. Moneytech is not in a strong position when it criticises Mr Maradiegue for his delay when it didn’t call on TB or BD to execute a security document in the terms of cl 15.1 – “they will execute a registrable legal mortgage of such land or other property or a charge over a corporation when required by Moneytech in the form required by Moneytech.”
  5. [29]
    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.[8] No undertaking was offered by Moneytech and, in the absence of any estimates of the value of Lot 8, it is not possible to say what might be available should the ANZ Bank sell the property.
  6. [30]
    The rights able to be exercised by the ANZ Bank are not affected by the presence of the caveat. If the property is sold then the receivers of BD and TB will be required to determine what should occur with those companies and any assets they might then hold. Moneytech has commenced proceedings (to maintain its caveat) against BD and TB but, while Moneytech submitted that it expected to obtain judgment by default, I was not directed to any evidence that those proceedings had been served.
  7. [31]
    Moneytech proposes that the issues of priority and other rights be determined by amending this application by joining BD and TB and that orders be sought about Moneytech’s rights with respect to Lot 8.

Striking a balance

  1. [32]
    In a matter like this 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. 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 removing a caveat and rendering the caveator’s rights nugatory, or allowing the caveat to remain with the consequence that another creditor’s rights may be lost.[9]
  2. [33]
    While there is a serious question to be tried, the balance of convenience is a more difficult issue to determine. The solution is to allow the caveat to remain on the title but require the parties to engage in a process which determines the questions identified by Moneytech expeditiously.
  3. [34]
    To that end, I direct that the parties confer and agree upon the terms of an appropriate amendment to this application so that all questions between the parties may be resolved. I will hear the parties on any further application they may have for directions.
  4. [35]
    With respect to costs, I am minded to make an order that the costs of this hearing be each party’s costs in the cause, but I will hear the parties on that.

Footnotes

[1] Re Jorss’ Caveat [1982] Qd R 458; Re Burman’s Caveat [1994] 1 Qd R 123; Cousins Securities Pty Ltd v CEC Group Ltd [2007] 2 Qd R 520 at [38].

[2]  [2020] QSC 207.

[3] Circuit Finance Australia Ltd v Registrar of Titles [2005] QSC 283.

[4] Re Henderson’s Caveat [1998] 1 Qd R 632 at 637-638; Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In liq) [2013] QCA 79 at [62].

[5] Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] FCAFC 17 at [54].

[6] Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 369-370.

[7]  (2019) 268 CLR 524.

[8] Joyway Pty Ltd v Rochedale Holdings Pty Ltd [2022] QSC 273 at [16].

[9] AECI Australia Pty Ltd v Convey [2020] QSC 207; Joyway Pty Ltd v Rochedale Holdings Pty Ltd [2022] QSC 273 at [16].

Close

Editorial Notes

  • Published Case Name:

    Maradiegue v Moneytech Finance Pty Ltd & Anor

  • Shortened Case Name:

    Maradiegue v Moneytech Finance Pty Ltd

  • MNC:

    [2024] QSC 160

  • Court:

    QSC

  • Judge(s):

    Martin SJA

  • Date:

    30 Jul 2024

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
3 citations
Carter Holt Harvey Woodproducts Pty Ltd v The Commonwealth (2019) 268 CLR 524
2 citations
Circuit Finance Australia Ltd v Registrar of Titles[2006] 1 Qd R 204; [2005] QSC 283
1 citation
Cousins Securities Pty Ltd v CEC Group Ltd[2007] 2 Qd R 520; [2007] QCA 192
1 citation
Joyway Pty Ltd v Rochedale Holdings Pty Ltd [2022] QSC 273
3 citations
Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) [2013] QCA 79
2 citations
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
2 citations
Re Burman's Caveat [1994] 1 Qd R 123
1 citation
Re Henderson[1998] 1 Qd R 632; [1993] QCA 254
2 citations
Re Jorss' Caveat [1982] Qd R 458
2 citations
Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] FCAFC 17
1 citation

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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