Colquhoun v Registrar-General of NSW

Judgment 1HIS HONOUR: This is an application under s 70 of the Community Land Development Act 1989 (NSW) to terminate a community lands scheme with consequential orders. The community lands are in Albury and the scheme consists of Lot 1 (which has now been dedicated as a road), and Lots 2 and 3 (which are vested in Mr and Mrs Colquhoun). The Colquhouns are the only members of the community association, which was established by the Act when the community plan was registered. There is little information available to the court as to whether that association has assets or liabilities. 2The real mover of the present application is the mortgagee, Suncorp (Suncorp-Metway Ltd). The Colquhouns, and people in their camp responsible under the mortgage, have defaulted. Suncorp considers that the best way of realising its security is to take the lands out of a community lands scheme and re-subdivide it as ordinary freehold land. They have prepared an acceptable deposited plan and all technicalities (other than termination of the community lands scheme) seem to have been covered. 3Suncorp has appointed Messrs Harris & Cronin, who are registered liquidators, as receivers and managers of the property. They have done that under powers granted by the relevant mortgage. The relevant mortgage gives Suncorp fairly extreme powers should there be any default, including a power to act under power of attorney, which the mortgagor gives in pt 12 of the relevant mortgage. 4Messrs Harris & Cronin have proceeded to prepare and seek registration of a new deposited plan, and they have also, in the name of the mortgagors, sought this application to terminate the community lands scheme. 5Essentially, s 70 of the Act provides that if this court is satisfied of various matters - and the relevant one here is that contained in 70(1)(b) that continuation of a scheme has become impracticable - then the court may vary or terminate the scheme. It is rather odd that the legislature has conferred so limited a power on the Court when one compares the powers of the court to terminate a strata scheme. That can be done on much more general grounds, and it would be a good idea, in my opinion, whenever the Act is next under review, for the responsible authorities to give attention as to whether the jurisdiction to terminate a scheme should be widened. However, there have been three cases at least under the Act which have considered the scope of the word "impracticable". In Community Association DP 270212 v Registrar General (NSW) [2004] NSWSC 961; (2004) 62 NSWLR 25; (2004) 12 BPR 22,337, Palmer J said that "impracticable" in this context means that the scheme cannot continue as a matter of practicality, rather than it being absolutely stymied. That was followed by Biscoe AJ, when sitting in this Court, in Neighbourhood Association DP 285249 v Watson [2008] NSWSC 876; 162 LGERA 322, and by Rein J in Community Association DP 270064 v Registrar General Department of Lands [2010] NSWSC 1558 (about to be reported in 16 BPR [98588]). I follow that view. 6In the instant the case, the scheme has become impracticable under that definition because of the apparent inability to fund the development and the failure to be able to deal with the mortgage. This has meant that the mortgagee has had to appoint a receiver and that the development of the land is now impracticable within the definition. Accordingly, the jurisdiction to make an order has been made out. 7Section 71 of the Act sets out some procedural matters which must be attended to, including the requirement under subs 2 that the Registrar General be joined as a party. The Registrar General has been joined and has been very helpful in assisting resolution of the problem. The court also may join as a party, under subs 3 of s 71, any other person. This was considered at an earlier stage of these proceedings. Notice was given to the Colquhouns and to the Community Association, and indeed, for more abundant caution, to Suncorp itself. There has been no reaction. In these circumstances, it is not necessary to join any further parties. 8I now need to refer to s 70(3) of the Act as to what orders should be made in addition to an order terminating the scheme. 9The application seeks that the Community Association DP270590 be wound up. It seems that that is the appropriate order. It covers what is mentioned in s 70(3)(b) of the disposal of the assets of the association and may also deal with the vesting of the estate (s70(3)(c)) because that can be dealt with by a liquidator. There does not seem to be any mention in previous cases as to how one winds up a community association but it would seem to me that the appropriate order is that it be wound up and liquidators be appointed. That, of course, can be costly but in the instant case the receivers are registered liquidators and it would seem to me to be commonsense to appoint them as liquidators of the Community Association. It does not seem to me that there is any other matter in section 70(3) which needs attention, but as experience shows, in this case there is often many a slip between cup and lip and I will give liberty to apply 10The only other point that has been raised is just how far the authority of a receiver goes to act as agent of the mortgagor. Both the mortgage in this case and also section 115(2) of the Conveyancing Act 1919 (NSW) make it clear that the receiver shall be deemed to be the agent of the mortgagor. Section 115(3) says: "The receiver shall have power to demand and recover all the income of the property ... by action or otherwise." However, because it specifically mentions such actions, there must be doubt under the rather weak rule of construction known as "expressio unius exclusio alterius" whether the receiver's powers are only limited in that way and that the power to terminate a statutory scheme is not within 115(3). 11It is not often sufficient to find that a person has been appointed an agent, as the High Court said in Petersen v Moloney [1951] HCA 57; (1951) 84 CLR 91; [1951] ALR(CN) 1057; (1951) 25 ALJ 566. The question is often not whether the propositus is an agent but rather, agent for what and what are the ambits of authority of the appointment. Generally speaking, the law is fairly clear that the receiver and manager does not have power to commence litigation in his or her own name (see Wilton v Commonwealth Trading Bank of Australia [1974] 2 NSWLR 96, especially at 99). However, again generally speaking, receivers do have authority to commence litigation generally in the name of the mortgagor. There is no actual authority on the point but it does seem to me that, in the light of the wide words of the mortgage, the present receivers did have authority to bring this application in the name of the mortgagors. However, I also think that, even if one put aside the mortgage, despite the particular words of s 115(3) the general law applies, the receiver has authority to commence litigation and the present litigation is sufficiently closely associated with realising the property, that the action was properly brought. 12The only other matter I need deal with is that the Registrar General, through Ms Jeavons (its solicitor) has brought to my attention the fact that there is a restriction on user which was imposed by a section 88B instrument and that that should be removed. It is clear that this must be so. Indeed, what will happen when I make the order terminating the scheme is that the existing folios will be cancelled and a new folio issued under the new deposited plan, so that it may be that this right will go in any event, but it is wise to make doubly sure. 13I am indebted to Mr O'Mahoney of counsel for the thorough way in which he has presented this difficult case. 14The formal orders are: