Australian Mutual Provident Society v Geo Myers and Co Ltd (in Liquidation) [1931] HCA 31

Australian Mutual Provident Society v Geo Myers and Co Ltd (in Liquidation) [1931] HCA 31 - HCA 1931 case summary — Zoe

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not a bill of sale. The course of legislation shows that, except in the case of debentures, the mortgages of companies are subject to the Bills of Sale Acts. These Acts are wide enough to include companies (Great Northern Railway Co. v. Coal Co-operative Sociey (1); In re Standard Manufacturing Co. (2) ). The Real Property Acts are primarily conveyancing Acts to simplify titles to land, and are not intended to interfere with the general position of mort- gagors or mortgagees, except so far as the system of titles and the method of creating mortgages are concerned. A mortgagee could make his mortgagor a tenant. If he refused to pay the rent, he could be ejected or the mortgagee could enter and receive the rents and profits (Coote on Mortgages, 9th ed., vol. 1., p. 693). The attornment clause was only justified in so far as it secured to the mortgagee the rents and profits of the land (Ex parte Jackson ; In re Bowes (3) ). words " Besides his personal remedy " in sec. 61 of the Real Property Act refer to a remedy which is personal and against the mortgagor. It is a remedy against the mortgagor in person, in contrast with areal remedy, i.e., in rem. The Act thus preserves to the mortgagee, | who now has only a charge over the land, the rights he had previously as a reversioner. A mortgagor in possession is not an occupier within the meaning of sec. 61 of the Real Property Act (Hart v. Stratton (4); In re Ross and MeNeil (5) ). It has been held that a similar clause in a transfer creates no tenancy except by estoppel, and is not binding on third parties, so that the goods of a third party on the premises cannot be seized (Jellicoe v. Wellington Loan Co. (6)). The Real Property Acts are conveyancing Acts to give better titles, but do not destroy the fundamental doctrines of the Courts of Equity (Barry v. Heider (7) ). It is a new principle of law that a mortgagee should be able to distrain on the goods of the mortgagor. Statutes which limit or restrict common law rights must be expressed in clear and unambiguous language, and such are those which introduce a new principle of law (Rolfe and Bank of Australasia v. Flower, Salting & Co. (8) ). An " occupier" is a person inferior to the mortgagor or holding under the mortgagor,

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actual or constructive, is necessary, no doubt, to complete a distre And it was said that no seizure was ever made. The facts are : On 29th November 1929 the Australian Mutual Provident Society authorized Trewerne (the receiver already mentioned) to distrain upon the goods and chattels of Geo. Myers & Co. Ltd. upon the premises mentioned in the mortgage to it; Trewerne on the same day posted a notice on the premises setting forth that he had on that day, by virtue of the warrant or authority already mentioned, distrained, subject to the rights of the Commercial Bank of Australia Ltd. as debenture-holder, certain goods and chattels of Geo. Myers & Co. Ltd. upon the mortgaged premises, for £20,000, being the principal sum due by the Company to the Society. Some interviews had taken place between the officers of the Bank, the Society, and the receiver, on the subject of the distress, but, for some unexplained reason, the details of these interviews, and the arrangement, if any, then made, were never proved. All that is certain is that Trewerne posted the notice and acted upon it, without the slightest objection from anyone, maintaining, however, his position on the premises as receiver under the debenture deed until the 9th December, when he began actively to enforce the Society's distress. The position is a confused one. The intention of Trewerne to distrain, subject to the rights of the Bank, is clear enough. The Bank was not in possession of the premises or the goods - nor, if I am right, was Trewerne, as the receiver under the debenture. Consequently, "the rights of the Bank " does not mean subject to its possession, but rather subject to the rights given to the Bank in respect of the goods under and by virtue of its debenture security. No reason oceurs to me why the Society should not so control its distress if it desired so todo. Apart from the difficulties created by the reserva- tion of the Bank's claim, there is, I think, no doubt that the acts of Trewerne on the 29th November constituted a constructive seizure of the goods and an effective distress in point of law (Cramer v. Mott (1) ).

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I do not think anything appears in the provisions up to this point which affords a reason for excluding the mortgagor from distress. When the section goes on to require that application for payment should be made to the occupier or tenant, any surprise at the mortgagor receiving so much grace is tempered by the reflection that, as the distress must necessarily be upon the land, it is not possible, without putting the mortgagee to the hazard of ascertaining precisely who is the actual occupier of the land, to differentiate between a mortgagor in occupation and other occupiers and to give occupiers and tenants who are not liable on or under the bill of mortgage an opportunity of avoiding distress by payment of interest or otherwise and at the same time to withhold the concession from the occupying mortgagor. The restriction of distress to the goods of the occupier or tenant shows a purpose of excluding the goods of strangers to the land from the liability to distress which they incurred under an attornment to a first mortgagee of the legal estate. But it does not suggest the exclusion of the occupying mortgagor. Indeed, it may be said that the policy disclosed is to render those liable to distress, and those only, who have the actual enjoyment of the mortgaged premises. The expression " occupier" is perfectly general and, apart from implications, naturally includes the person in occupation whether he be the mortgagor or hold by some deriva- tive title or otherwise. An implication excluding the goods of the person liable for the debt would scarcely be made unless necessitated by the context. The proviso appears to me to afford no such context. It takes the form appropriate for a provision which lessens in some respect the operation of the main enactment. In terms it relates to lessees and tenants in occupation and measures by the rent they owe the extent of the liability which the main enactment: would otherwise impose upon them. If any distinction was intended between lessee and tenant, it probably is that between a termor under a registered lease and one holding under a tenancy created without registration. But upon ordinary principles of

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been employed by him on behalf of the distraining Society ; (iii) that he proceeded to sell the goods in the name of the distraining Society described as mortgagees ; (iv.) that he did all this with the prior knowledge both of the debenture-holders and the mortgagee, - who were acting in consultation; and (v.) that a written notice - which he had posted up some days before, that a seizure had been made, was still exhibited on the premises. In my opinion these acts amounted to a seizure, which I think was made at 9 a.m. I agree with the Supreme Court in thinking that the burden lies upon the Company of proving that at or before that hour the petition for winding up was presented. All that is proved is that it was presented during that day, and it follows that the distress must take priority. So far, my conclusions are in accordance with those of Henchman and Douglas JJ. in the Supreme Court. They were, however, of opinion that the distress was void under the provisions of sec. 3 (3) of the Bills of Sale Act 1891 of Queensland. I agree with them in the view that this Act applies to bills of sale given by incorporated companies. But I am unable to agree with them that sec. 3 (3) operates to avoid the distress levied. Sec. 3 (3) is as follows : - " Every attornment, instrument, or agreement, not being a mining lease, by which a power of distress is given or agreed to be given by any person to any other person by way of security for any : present, future, or contingent debt or advance, and by which any rent is reserved or made payable as a mode of providing for the payment of interest on such debt or advance or otherwise for the purpose of such security only, shall be deemed a bill of sale within the meaning of this Act of any chattels which may be seized or taken under such power of distress: Provided that nothing in this enactment shall extend to any mortgage of any estate or interest in any land, tenement, or hereditament, which the mortgagee, being in possession, demises to the mortgagor as his tenant at a fair and reasonable rent." "' Two things must concur to bring an instrument _ within this section. There must be a power of distress (express or implied) to secure a debt or advance ; and rent must be reserved or made payable only in order to provide for interest or otherwise for the purpose of securing the debt" (Weir, Bills of Sale (notes to sec. 6) ). But the bill of mortgage given by the respondent Company _

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contains an attornment clause which reserves a yearly rent equal to and varying with the amount of the annual interest and to be accepted by the mortgagee in satisfaction of the interest. The mortgage was not registered as a bill of sale, and consequently this provision could not operate to give a power of distress. But the Full Court adopted the view that, because of its presence in the mortgage, the power of distress which sec. 61 of the Real Property Act 1861 would otherwise have conferred upon the mortgagee was likewise rendered inoperative. If the provision had been absent from the mortgage, the second of the two things would have been lacking which must concur to bring an instrument within the section ; there would have been no rent reserved or made payable as a mode of providing for the payment of interest or otherwise for the purpose of such security. But as the attornment clause in the mortgage supplies this requirement, the Full Court considered sec. 3 (3) of the Bills of Sale Act applied not only to the right to distrain for interest arising from the attornment, but also to the power of distress for principal and interest given by sec. 61 of the Real Property Act. In answer to this view, it is suggested that the power of distress conferred by sec. 61 is not " given or agreed to be given by the attornment, instrument or agreement" within the meaning of those words in see. 3 (3) because it is given by law and not by the instrument. But in In ve Willis (1) Lindley L.J. said "that the application of this section to attornments cannot depend upon whether the attornment clause is followed by an express power of distress, but that it applies equally if there is no such express power " (see, too, per Kay L.J. in Green v. Marsh (2) ). Possibly in the observations of Lindley L.J. which follow, a distinction may be discovered between the case of attornments where the power of distress arises from the relation created and "instruments" and. "agreements"; but the better view appears to be that, if an instrument or agreement contains provisions from which a power of distress results, it is within sec. 3 (3) although the power is not given in express terms. In my opinion, however, sec. 3 (3) should not be construed as affecting any power given by the Real Property Act 1861. That statute contains a statement of the rights and

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in full in the instruments." A bill of mortgage and a bill of encum- brance under the Act have effect only as a security for the sum of money, annuity or rent charge intended to be thereby secured and do not operate or take effect as a transfer of the land, estate or interest intended to be thereby charged with the payment of 'any money (sec. 60). The Legislature would have taken a somewhat unexpected course if, in giving the mortgagee the remedy mentioned in see. 61, it depreciated his security by excluding the goods of the mortgagor from execution under it. This view of the section does 'not result in placing an entirely novel remedy in the hands of the mortgagee. "Formerly an annuity deed usually contained express power of distress and entry upon the lands charged with the annuity, 'and a demise of the land to trustees for a term of years upon trusts to secure the annuity" (Coote, Law of Mortgages, 8th ed., p. 38). By sec. 44 of the Conveyancing and Law of Property Act 1881 (44 & 45 Vict. c. 41), a power of distress was given as a remedy for the recovery of annual sums charged on land. Sec. 6 of the Conveyancing Act 1911 (1 & 2 Geo. V. c. 36) provided that the powers and remedies conferred by sec. 44 should be exercisable, whether the charge was created before or after the Act of 1881. (See now sec. 121 of the Law of Property Act 1925 (15 Geo. V.c. 20).) In Searle v. Cooke (1) it was decided that the remedies given by sec. 44 of the Conveyancing and Law of Property Act did not prevent the owner of the rent charge from having recourse to other remedies for recovering the moneys due under his rent charge. Another criticism that may be made of the view of sec. 61, for which Mr. Macrossan contended, is that while the mortgagee could not distrain upon the goods of the mortgagor, who was in occupation, he would be empowered to distrain upon those goods in the hands of the mortgagor's personal representative, if the mortgagor died and his personal representative became the occupier of the subject lands.

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Judgment (180 paragraphs)

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