F & D Bonaccorso Pty Limited v City of Canada Bay Council

FOURTH RESPONDENT: Omaya Investments Pty Limited

FIFTH RESPONDENT: The Registrar General

KEY ISSUES: Practice and Procedure :- whether mortgagee should be joined as a party to the proceedings.

LEGISLATION CITED: Supreme Court Rules 1970, Pt 8 r 8(1)

CASES CITED: Fibre-Tek (Gold Coast) Pty Limited (in Liq) v Bennett [2006] NSWSC 150; News Limited v Australian Rugby Football League (1996) 139 ALR 193

APPLICANT: Mr B Coles QC with Mr J Doyle barrister SOLICITORS Thomson Playford LEGAL REPRESENTATIVES: FIRST RESPONDENT: Dr J Griffiths SC with Mr S Free barrister SOLICITORS Maddocks

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

F & D BONACCORSO PTY LIMITED v CITY OF CANADA BAY COUNCIL & ORS

EX TEMPORE JUDGMENT 1 HIS HONOUR: A question has arisen as to whether a registered mortgagee should be joined as a respondent to, or be given notice of, these proceedings.

2 There are three main issues in the proceedings. First, a challenge to the validity of a development consent granted by the first respondent, the City of Canada Bay Council, in 2002. Secondly, a challenge to the validity of a second development consent granted by the council in 2003. Thirdly, a challenge to the validity of the transfer of land known as 17 and 19 Chapman Street, Strathfield, which is referred to in the applicant's pleadings as Chapman Reserve. This challenge is based on a contention that Chapman Reserve was, from the commencement of the Local Government Act 1993 on 1 July 1993, community land and therefore that any transfer of it was prohibited.

3 It is alleged that in 2003 the council purported to sell Chapman Reserve to the third respondent and that, earlier this year, the third respondent was registered by the Registrar General as its registered proprietor. The second, third and fourth respondents have filed submitting appearances except as to costs. The fifth respondent is the Registrar General.

4 The Registrar General was joined in the proceedings when the matter came on for hearing before me two days ago on 25 October 2006. Its joinder was, I think, in response to a point raised by the council in its written submissions which were served the preceding day to the effect that the Registrar General ought to be joined. When the matter was called on for hearing, the applicant sought and was granted leave to file a second further amended application which named the Registrar General as a respondent and third further amended points of claim. After some preliminary debate I stood the matter over to the following day to enable the Registrar General to be served and to appear and indicate the position he wished to take in the proceedings.

5 Yesterday the Registrar General appeared briefly by counsel who indicated that in the time available the Registrar General had not formed a concluded view as to his position, but that he would not be interested in the resolution of disputed facts. His interest focused on the relief sought that the transfer of Chapman Reserve was of no effect and rectification of the register. Counsel for the Registrar General indicated two concerns. The first was a question of principle concerning the inter-operation of the indefeasibility provisions of the Real Property Act 1900 and the effect of alleged non-compliance with legislative requirements. The Registrar General wished to reserve his position as to whether he would make submissions in relation to that issue. He was not in a position to proceed this week. The second point of concern was that the registered first mortgagee of Chapman Reserve is not before the Court and is not represented.

6 Due, at least in part, to the course of events to which I have referred, the hearing cannot conclude in the three days allocated to it. Because of my own unavailability in this Court for the rest of the year, the matter will not be able to be concluded until next year. 7 The hearing yesterday proceeded in the absence of counsel for the Registrar General, who I excused from further attendance, and was substantially concerned only with the issue of the validity of the second development consent. The applicant acknowledged that there was no utility in proceeding with the issue of the validity of the first development consent because it had been surrendered by the developer. The respondent council has admitted in its pleading that the second development consent was invalid because of failure to comply with mandatory advertising requirements and did not plead to other grounds alleged by the applicant as to why it was invalid. The applicant proceeded on the basis that it had to put forward evidence and submissions to satisfy the Court that relief concerning invalidity of the second development consent should be granted and elected to adduce evidence in respect of nearly all its pleaded grounds. That consumed substantially the whole of the hearing day yesterday.

8 Yesterday I indicated that I wished to be addressed this morning on the question whether the registered first mortgagee should be joined as a party or should be given notice of the proceedings. This morning I have heard submissions on that point from the applicant and from the council.

9 A specific aspect of the relief sought which has given rise to the question is that in the second further amended application prayers 9 and 10 seek a declaration that the purported registration of the transfer of Chapman Reserve was, amongst other things, void and of no effect and an order that the register be rectified to show that the first respondent as the registered proprietor of the lots comprising Chapman Reserve.

10 For the applicant it was submitted that there is no necessity to join the first mortgagee as a party. Reference was made to Part 8 rule 8(1) of the old Supreme Court Rules 1970, which are incorporated by reference into the rules of this Court: (1) Where a person who is not a party: (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon, the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings.

11 It was submitted for the applicant that neither limb of Part 8 rule 8(1) is satisfied. As to the first limb, it was said that the mortgagee ought not to have been joined because no relief is sought against it. As to the second limb, it was said that there was no necessity to join the first mortgagee. It was pointed out that if the relief sought were to be granted, then the position would be that the council will be the registered proprietor of the land and the mortgagee will remain on the title as it is at the moment. It was said that in the rogue or fraudster cases where an order of the Court is sought that the land be returned to its original owner, it has not been the practice to join any mortgagee. I was taken to one case by the applicant: Fibre-Tek (Gold Coast) Pty Ltd (in Liq) v Bennett [2006] NSWSC 150. In that case it was alleged that there was a breach of fiduciary duty by company directors and officers who had used the company's money to purchase property for the defendant. It was a tracing case and an order was made that the defendant transfer property back to the company. Austin J held at [38]-[39]: [38] The defendant is in the position of a volunteer, not having provided any valuable consideration herself for the acquisition of the property. The plaintiff is entitled to assert its claim to beneficial ownership against the property in the defendant's hands. The property is subject to a mortgage in favour of the Sandhurst Trust, which is aware of these proceedings. The plaintiff does not seek to assert that its beneficial ownership has any priority over the mortgage interest of Sandhurst Trustees. I cannot see any basis for Sandhurst Trustees to object to making the Certificate of Title for the property available so as to permit the transfer of the registered proprietorship of the land to be registered in favour of the plaintiff. However, I shall grant liberty to apply should any difficulties arise. [39] It is appropriate to make the declaration sought as to the beneficial ownership of the plaintiff, and to order that the Limpinwood property be transferred to it.

12 Senior counsel for the applicant indicated that he was not aware of any analogous proceedings in which a mortgagee was required to be joined.

13 Senior counsel for the council submitted that, at the very least, notice should be given to the mortgagee so that it could elect whether to make an application to be joined or to be heard. It was pointed out that in Fibre-Tek the mortgagee had received notice of the proceedings, as is apparent from the above quotation from the judgment. It was submitted that it is impossible for anyone in this Court to know what the mortgagee's attitude might be and that, for example, the mortgagee may well wish to be heard or seek leave to be heard in relation to the question whether, as a matter of discretion, relief should be granted. I was also referred by senior counsel for the council to News Limited v Australian Rugby Football League Ltd (1996) 139 ALR 193 at 297 to 300. That case is distinguishable so far as concerns the circumstances and nature and identity of parties to be joined. However, the Full Court of the Federal Court said at 298: There are some classes of case where the ascertainment of the necessary parties who ' ought to have been joined ' is not difficult. Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest. Grosvenor v Permanent Trustee Co of NSW Ltd (1966) 40 ALJR 329 is an example of this class of case.

14 Upon looking at the last mentioned case, it is not clear to me, with respect, that it is an example of that class of case. The dictum in News Limited was obiter and there was no exploration of the authorities.

15 In the present case, no-one has applied for an order that the mortgagee be joined. I have not been referred to any authority in which it has been held that in a case such as this, or in an analogous case, a mortgagee should be joined.

16 On the basis of the submissions that I have heard and the authorities to which I have been referred I have formed the opinion that it is unnecessary to join the mortgagee as a party.

17 However, I am conscious that in Fibre-Tek notice had been given to the mortgagee. It is conceivable that a mortgagee may wish to make an application to be heard.

18 Accordingly, I direct that by 2pm today the applicant's solicitor serve a letter on the registered first mortgagee informing it that these proceedings are being heard today and will most likely then have to be adjourned to early next year and noting that an order has been made today that the first mortgagee be given notice of the proceedings; and that there be enclosed with the letter a copy of the current application, pleadings and written submissions.

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