The Law of Real Property Mortgages (2007) – Book Review

Author: WD Duncan and WM Dixon Published by The Federation Press Reviewed by Gary Coveney

From time-to-time, a book comes along which prompts the question: “Why was nothing like this written before?”  Real property mortgages are so much a part of modern legal practice that it is difficult to imagine that there are so few quality texts on this topic currently available.  This situation has now been remedied with the publication of The Law of Real Property Mortgages.

The text has two formidable authors in Bill Duncan and Bill Dixon, both of whom are well-known and widely published in the area of property law.

The book is divided into five parts, tracing the law of mortgages from execution to remedies, including, importantly, concurrent mortgagee remedies available against guarantors.  The twelve chapters are organised in a logical manner and are further subdivided internally such that discrete topics are generally easy to find.  The text is referenced to all Australian states and is therefore highly portable for practitioners who regularly deal with cross-border issues.

As we have come to expect from these authors, the material is extremely well-referenced, giving an excellent head-start on any further research beyond the scope of the text which may be required.  To be fair, however, the extensive case analysis throughout the book is likely to be sufficient in most cases to determine what issues, if any, arise on the facts of a given situation.

A feature of the text is the attention given in Chapter 11 to corporate receivership.  The focus of the chapter is on the operation and ramifications of receiverships initiated by private appointment under the terms of security documentation.  This is proving to be an area of increased activity in practice, and the information in this chapter is not only useful in determining whether a receiver can be appointed, but is equally useful in advising the receiver of his or her rights and obligations whilst undertaking the role of receiver.

Overall, the book is a valuable touchstone for all who practise in the area of real property, and will no doubt deteriorate quickly as it is taken from its shelf and referred to on a regular basis.  It retails for $85, which is excellent value for money for such a thoroughly useful publication.

Construction Claims (2nd Ed, 2006)

Author: Philip Davenport Published by The Federation Press Reviewed by Christian Jennings

Philip Davenport is the chief adjudicator at Adjudicate Today, which is one of only a few bodies authorised to accept and facilitate adjudication applications under the Building and Construction Industry Payments Act 2004 (“the Security of Payment Act”).  In his book, “Construction Claims”, Davenport seeks to explain claims arising out of construction contracts with an emphasis on adjudication.  The book is intended for students and is said to be written with an emphasis on “logic rather than law”.  Broadly, the book outlines many, so-called, categories of construction claims, remedies and defences and provides a broad summary of costs and the adjudication process.

For the second edition of this book, Davenport says he has made many changes because of the introduction of compulsory rapid adjudication under the Security of Payment Act and similar legislation passed in New South Wales, Victoria, Western Australia and the Northern Territory.  He says adjudication has revolutionised construction claims in those jurisdictions and is “replacing traditional methods of resolving construction disputes such as litigation and arbitration”.  Davenport dismisses criticism of adjudication on the ground that it is made by “lawyers, arbitrators, experts and other [sic] who now cannot earn the same income as they previously earned from construction claims.”

No doubt, the adjudication process introduced by the Security of Payment legislation operates as the proverbial thorn in the side of unscrupulous property developers intent on reducing costs by withholding or delaying payments due to contractors in the belief that without substantial resources, contractors are unlikely to commence legal proceedings to recover those payments.  But to suggest that this process has brought with it a revolution in construction claims, or that it is replacing litigation, seems a gross exaggeration.

For readers unfamiliar with the Security of Payment Act, it provides a quick, cheap and interim resolution of disputes about payments allegedly due under construction contracts:  disputes which may have otherwise held up the completion of those contracts.  Under that Act, a contractor who has undertaken either to carry out construction work or to supply goods or services related to construction work, may, when payment is due, issue a “payment claim” to the party said to be obliged to make that payment (“the respondent”).  The respondent has ten days to explain any refusal to pay all or part of the payment claim.  If the respondent disputes only part of the payment claim or fails to reply within the time allowed, the contractor may commence legal proceedings, claiming as a debt the undisputed part of the payment claim.  Alternatively, with or without a response from the respondent, a contractor may make an application for adjudication of the payment claim.  Whilst an adjudicator may call a conference with the parties and carry out an inspection, generally, an adjudication is decided on the papers within about 20 days of the date of the application.  An adjudicator can only decide the amount of the progress claim due; when it was due; and the amount of any applicable interest.  In reaching a determination, an adjudicator may only consider the provisions of the Security of Payments Act, any contract between the parties, the payment claim, any payment schedule, submissions and other documents provided by the parties within the time allowed and the results of any inspection.  An adjudicator must ignore counterclaims against the contractor which may have otherwise been set off against the amount due as a payment claim.  If an adjudicator decides that all or part of the payment claim is due, an adjudication certificate may be issued and, if filed with a court, enforced as if it were a judgment of that court.

Whilst a respondent may be required, at the completion of the adjudication process, to pay a contractor all or part of a progress claim, this process does not affect any rights arising out of, or from anything done or omitted to be done under, the relevant construction contract.  The adjudication process, however, places the onus on the respondent, not the contractor, to commence legal proceedings to enforce its rights.  In the interim, the contractor has the benefit of payment.  In this way, the Security of Payments Act is said to operate under the rubric of “pay now, argue later”.

Davenport’s unquestioning faith in the adjudication process blinds him, and his loyal readers, to the potential for irremedial injustice by that process or, in fact, any problems with that process.  In Bouygues UK Ltd v Dahl-Jensen UK Ltd (2000) BLR 49, referring to the adjudication process, Dyson J noted:

“It is inherent in the scheme that injustices will occur, because from time to time, adjudicators will make mistakes.  Sometimes those mistakes will be glaringly obvious and disastrous in their consequences for the losing party.  The victims of mistakes will usually be able to recoup their losses by subsequent arbitration or litigation, and possibly even by subsequent adjudication. Sometimes they will not be able to do so, where, for example, there is intervening insolvency, either of the victim or of the fortunate beneficiary of the mistake.”

If an adjudicator has made a mistake, whether that mistake be of fact or law, the respondent is limited to seeking review of that determination on the ground that: (a) there was a failure to comply with the basic and essential requirements of the relevant statute (e.g. there was no “construction contract”); (b) the determination was not made bona fide; or (c) there was a substantial denial of the measure of natural justice required under that Act.  Whilst there is scope for a respondent to seek a stay of execution of any judgment based on an adjudication determination or to seek an order for the payment claim to be paid into court until the finalisation of a related proceeding, these are discretionary remedies and a court considering any such application would, properly, take into account the policy of the Security of Payment legislation.

If the adjudication process has revolutionised construction claims, it has only been with respect to the interim financial position contractors and respondents find themselves in, pending the ultimate resolution of their dispute.  The “traditional means” of resolving construction disputes remains an essential part of the review process and is the ultimate avenue for a respondent seeking to enforce a counterclaim against a contractor.

Davenport’s failure to deal with problems with the Security of Payment legislation and, thus, to provide an objective analysis of that legislation has resulted in a discussion of Security of Payment legislation with many shortcomings.  Really, this book contains a mere summary of the provisions of each Security of Payment statute in Australia and in New Zealand; practical comments about its workings; the occasional plug for Adjudicate Today; and Davenport’s peculiar view about the significance of adjudication.  Unfortunately, in this respect, this book presents far too narrow a view about adjudication and is thus unhelpful for anyone seeking to understand applicable principles.

On the topic of the occasional plug for Adjudicate Today, Davenport, unashamedly, notes that, while some adjudicators “charge tens of thousands of dollars for determining relatively simple claims …, Adjudicate Today do not charge a fee for an adjudication application and have adjudicators who, if requested, are prepared to adjudicate a claim for a fixed fee”.

In addition to adjudication, this book discusses many, so-called, categories of construction claims under the chapters entitled: Variation Claims; Interest and Hungerfords Damages; Time-related Claims; Quantum Meruit Claims; Claims after Termination by Frustration; Defective Work Claims; and Licensing and Building Claims. In each chapter, Davenport draws upon his experience to provide an overview of the many types of construction claim covered by the book, with an emphasis on industry practice and observations rather than principle. Whilst he refers to key statutes and cases, he, regularly and unapologetically, states propositions without authority and, generally, cites and discusses the facts and outcomes of cases without further analysis. This could have been because of the book’s intended audience except that Davenport regularly refers to legal articles and litigation practices which, having been made without explanation, unduly complicates the subject for a student not already familiar with fundamental legal principles and practice.

The second edition of “Construction Claims” was clearly not written for lawyers and, as a consequence, many lawyers will become frustrated with the way Davenport presents this topic.  This is unfortunate and one can not help but feel Davenport has missed an opportunity to add to every litigant’s library with a book that clearly and concisely addresses and explains, in an objective manner with emphasis on principle, claims arising out of construction contracts.  Despite these flaws, there remains some value in this book for those interested in acquiring some background and practical insight into construction claims generally.  I have in mind junior counsel, learned in the law, but lacking experience advising in, or running to trial, these types of claims.

This report completes the first stage of the Queensland Law Reform Commission’s (Commission) review of the Guardianship system in Queensland. (The second stage addresses the balance of the guardianship laws.)

The Commission undertook an extensive consultation program with advocacy groups, service providers, media and statutory officers such as the Adult Guardian, Public Advocate and Guardianship and Administration Tribunal members.1  The Commission also informed itself of similar legislative concepts and issues from other courts and tribunals, such as the Commonwealth Administrative Appeals Tribunal and the Family Court.

In order to understand the importance of this review, one needs to have some awareness of the scope of the jurisdiction and the impact of the decisions upon the lives of people.   The report attempts to convey this, succinctly, in the following excerpt from Appendix 1 in the accompanying “companion” paper to the Confidentiality Report:

The report openly acknowledges that there is a “balancing act” required to respond sensitively in this jurisdiction. People with impaired decision making are often the most vulnerable members of our society and confidentiality has often been characterised as a protective mechanism to minimise publicity and, thereby, reduce exposure to undue influence or exploitation or, simply, to afford basic privacy regarding discussion of the adult’s health, welfare and financial matters.

Essentially, the Commission found that there was a need for greater openness in this jurisdiction.   This view was based on the following reasons:

• The general community must have confidence in the guardianship system and there were indications that the imposition of confidentiality can operate to minimise accountability and transparency.
• Traditionally it has been considered that the operation of confidentiality worked to protect the interests of an adult with impaired capacity.  However, the Commission considers that insufficient weight has been given to the role that “open justice and procedural fairness play in promoting and safeguarding the rights and interests of adults with impaired capacity”3

The key recommendations of the Commission for legislative reform are the introduction of limitation orders that include:

• Adult evidence orders (allowing adult to speak with the Tribunal in the absence of others);
• Closure orders (to exclude some or all people from all or part of a hearing);
• Non-publication orders that prohibit publication of information concerning Tribunal proceedings; and
• Confidentiality Order — this permits the Tribunal to withhold a document or information from an active party to the hearing.

In order to underscore the intention of the Commission that these limitation orders are only to be utilised in exceptional circumstances, the Commission has recommended that the criteria for making these orders be significantly narrowed.   The primary consideration of the Tribunal is that the order would be necessary to avoid serious harm or injustice. In order to “tip the balance” in favour of open justice, the Commission sought to adopt provisions from the Administrative Appeals Tribunal Act 1975 (Cth)4.   This would require that the Tribunal operate from the following bases:

• Hearings are held in public;
• Hearings may be publicly reported; and
• Active parties have an entitlement to information that is credible, relevant and significant to an issue in the proceeding.5

The Commission saw a greater role for the media in publishing information about Tribunal proceedings as likely to promote greater accountability and transparency so long as the information published could not identify the adult concerned.

The general duty of confidentiality has been recommended to be retained. However, the duty should be re-characterised as a duty to use information responsibly, rather than a blanket prohibition.   There were many submissions that highlighted the difficulty of families, carers and officials being unable to disclose appropriate and relevant information that is necessary for the adult to receive the care and protection they require.   The Commission has recommended a wider range of exceptions to the confidentiality provisions permitting disclosures to the police, guardianship agencies and also for the purposes of legal and financial advice.

During the course of its consultations, the Commission became aware of a range of practical difficulties that operated against open and transparent decision making by the Tribunal.   It is to the Commission’s credit that these difficulties were also reported as it makes the report less theoretical and in accord with the real difficulties that have confronted those affected by the jurisdiction.

Some of these practical issues include a lack of public information of when and where Tribunal hearings are being held. They also include a practice of all prospective attendees being requested to complete an attendance form. The Commission found that this practice can create a presumption by attendees that this is a precondition to being able to attend the hearing. The practical issues include the practice of using locked doors in some hearing rooms, thereby, preventing access.

Another practical difficulty that came to the attention of the Commission was the inspection of documents by active parties. Prior to February 2007, the Tribunal file contained inaccessible material that was unable to be inspected by the parties, as its existence and, therefore, content was known only to Tribunal members during a hearing. The Tribunal has now revised the structure of its files and this section of the file has been removed. Another practical difficulty regarding accessing the file is the viewing of the file at the registry prior to a hearing and the likely arrival of subsequent documentation between the viewing and the hearing with no notice of this information being received.

A further obstacle is that there is currently no provision for access of information after a hearing has concluded, such as the transcript or file. The consequence of this difficulty was noted by a submission to the Commission:

The Commission received many submissions concerning confidentiality provisions being used to diminish the rights of the vulnerable rather than to protect them.

Some service providers and government departments submitted that information be kept confidential so that working and therapeutic relationships would be more easily maintained with clients. In response, advocacy groups countered this argument with the suggestion that the issue of the maintenance of therapeutic relationships was raised by service providers when they did not wish an aspect of their service or treatment discussed.8

The Commission’s report provides a sophisticated and comprehensive evaluation of administrative, legal and practical ramifications of promoting open justice within the protective jurisdiction of the Guardianship and Administration Tribunal. The recommendations for legislative reform are all contained in Volume 2. These reforms would tip the balance to promote open justice by increasing accountability and transparency in this protective jurisdiction.

Basically, I consider this jurisdiction to be in evolution (as people increasingly become aware of the breadth and scope of this system) and these suggested reforms do promote the balance that was previously lacking regarding issues of procedural fairness. This jurisdiction is accessible and informal and these recommended reforms toward more open justice should not disturb these existing strengths.

1 As a result of this extensive consultation process, the Commission received a record number of submissions. 

2 This power extends to decisions about withholding or withdrawal of life sustaining measures, such as artificial nutrition and hydration, see Re HG ….

3 Preface, Public Justice Private Lives: A New Approach to Confidentiality in the Guardianship system, Volume 2.

4 Section 35(3)(a).

5 Queensland Law Reform Commission, Public Justice Private Lives: A New Approach to Confidentiality in the Guardianship system, Volume 1, p 159

6 As above p 479

7 As above p 213

8 As above p 221

Land Contracts In Queensland, Second Edition

Authors: Christensen, S., Dixon, B., Duncan, W.D. and Jones, S.E. Published by The Federation Press Reviewed by Shaun Gordon of Counsel

The second edition of Land Contracts in Queensland is a welcome addition to the resources available to lawyers involved in the field of property law.

The book is clearly written and well structured.  Indeed, the preface to the book notes that it is written with the same format and chapter divisions found in the first edition.  In this regard, it will be familiar to those practitioners who already rely on the first edition.

This edition provides an update on relevant legislative changes and recent developments in case law impacting on land contracts (particularly the Standard REIQ contracts) in Queensland.  One of the changes trumpeted by the publisher on its web site is an extensive exposition of decisions of the High Court on time of the essence.  This is a welcome addition since time being of the essence is one of the more complex issues come settlement time in a land contract, especially, when extensions of time are being negotiated and peace and goodwill are not, necessarily, in abundant supply between the parties to the contract.

Chapters covered include:

• The role of the Real Estate Agent;
• Seller Disclosure before Contract;
• Formation of Contract and Deposit;
• Subject Matter of Sale;
• Time of the Essence and Completion;
• Special Conditions;
• Remedies; and
• Stamp Duty and GST in Real Estate Transactions.

As can be seen, the book maps the typical “lifecycle” of a land contract — from pre-formation, to formation, to taxation issues, to breaches and remedies.

It is important to remember that this book is not a general text on property law per se.  Its focus is targeted at the standard contracts commonly used by practitioners and lay people when entering into freehold land transactions in Queensland – and it is here that the book provides its real value.  There are few other resources (especially updated ones) available which deal with this specific topic so comprehensively.

Given the wide usage of these types of contracts, this work is a very handy reference tool.  The analysis delivered is concise and, unsurprisingly given the experience (both academic and practical) of the authors, insightful. It quite seamlessly considers and integrates current case law developments, its impact on many common contractual issues, and the legislative framework that, increasingly, circumscribes so many aspects of this area of law.

If your work takes you into this area, the second edition of Land Contracts in Queensland is a worthwhile investment.1

1 At a recommended retail price of $85 paperback, it is also good value.