IIB Global NV v Pascoe

Judgment 1HIS HONOUR : The applicant, Mr Pascoe, is the trustee in bankruptcy of the estate of Mr Arthur Linden Dyason. The bankruptcy commenced on 3 May 2007. Mr Arthur Dyason was registered as a joint tenant with his wife, Mrs Lindsey Jane Dyason, as proprietors of land at Briarfield in New South Wales. By a summons filed on 30 September 2010 and an amended summons filed on 9 November 2010 Mr Pascoe sought orders that he be appointed as trustee for sale of the property. Those orders were not made, but on 14 October 2011 orders were made appointing Mr Morgan James Chubb and Mr Gavin Thomas, chartered accountants, as trustees for sale of the Briarfield property. The orders were made pursuant to s 66G of the Conveyancing Act 1919 ( Scott Darren Pascoe As Trustee of the Property of Arthur Linden Dyason, a bankrupt v Lindsey Jane Dyason and Ors [2011] NSWSC 1217). The orders of 14 October 2011 were stayed for 21 days, but I am informed that the stay has not been extended. 2On 13 September 2011, a summons was filed in the present matter by a Mr Linden Prescott Dyason, the father of the bankrupt, for himself and purportedly for a foreign company called IIB Global NV ("IIB Global"). The relief claimed in that summons included an order extending the operation of a caveat that had been lodged by IIB Global. The summons also sought a declaration that " there is no legal impediment to the Registrar of Lands & Property Management Authority (LPMA) giving effect to the registration of the transfer of Mortgage AC403968 from The Trust Company to IIB Global NV, the First Plaintiff ... ". It sought an order that Mr Pascoe return the certificate of title to the property to IIB Global as mortgagee. 3On 23 September 2011 Black J ordered that: " The Summons be dismissed in respect of the First Plaintiff [IIB Global] and the First Plaintiff be dismissed from the proceedings. Paragraph 1 of the Summons otherwise be dismissed in respect of the Second Plaintiff. " 4His Honour made orders for costs against the second plaintiff, Mr Dyason. His Honour also gave leave to Mr Pascoe and other named defendants to file a notice of motion seeking orders striking out the balance of the relief claimed in the summons. In substance His Honour rejected the claim to the caveatable interest asserted by IIB Global in the caveat. That claim was that IIB Global was entitled to be registered as mortgagee pursuant to a transfer of mortgage executed by Trust Company PTAL Ltd (formally Permanent Trustee Australia Ltd) ("PTAL") by an instrument dated 31 March 2011. 5The first and principal ground for dismissing the application was that the proceedings had not been properly commenced or carried on by IIB Global. Mr Dyason had signed the summons purportedly as a director of IIB Global, but the evidence before his Honour was that Mr Dyason was not the director, nor a director nor officer of IIB Global. Thus no proceedings had been properly commenced by IIB Global. Hence His Honour ordered that IIB Global be dismissed from the proceedings and that the summons in respect of its claims be dismissed. 6All of the claims in the summons were purportedly made on behalf of IIB Global. 7In a judgment given on 22 November 2011 his Honour dealt with an application by Mr Pascoe for, amongst other things, orders dismissing the balance of the summons ( IIB Global NV & Anor & Scott Darren Pascoe & Ors (No. 4) [2011] NSWSC 1413). 8After dealing with each of the claims his Honour concluded that it would be appropriate to dismiss the claims for relief sought in paragraphs 2 to 5 of the summons (that is, all the remaining paragraphs seeking substantive relief other than costs). His Honour refrained from making such orders at that time because there were other substantive matters that had been raised by Mr Pascoe that sought final relief which could not be dealt with at that time. Mr Pascoe had sought, as he seeks today, orders requiring the Registrar-General to register a discharge of mortgage which had been executed by PTAL, and to reject two dealings: one being a notice of change of name, and the other being a transfer of the mortgage from PTAL to IIB Global. His Honour stood the matter over to allow the parties to make further submissions within 14 days. 9On 7 December 2011 Black J, for reasons he gave, listed the matter before the Registrar on 1 February 2012 ( IIB Global NV & Anor v Scott Darren Pascoe & Ors (No. 5) [2011] NSWSC 1505). His Honour observed that there were then several remaining issues to be addressed including any further application by IIB Global, as had been foreshadowed by Mr Dyason, to be rejoined as a party to the proceedings. His Honour referred also to the possibility of the parties obtaining further affidavit evidence as to the position of PTAL. 10There was before His Honour at that time a notice of motion filed by Mr Pascoe on 5 October 2011. In that notice of motion Mr Pascoe sought the following relief: " 1 The relief sought in paragraphs 2 - 6 and the pleadings and particulars in the Plaintiffs' Summon [s] filed on 13 September 2011 be struck out or dismissed. 2 Subject to the making of orders in paragraphs 3, 4 and 5 below, an order that the operation of caveat AG197714 lodged in relation to the land which is situated at 141 Martells Road, Brierfield NSW 2454 contained in certificate of title folio 31/707896 be extended until further order of the Court. 3 An order that the [Registrar] General register unregistered dealing AG274266 (application of record writ lodged in the LPMA by Fishburn Watson O'Brien). 4 A declaration that unregistered dealing AG426931 (change of name) and unregistered dealing AG426932 (Transfer of Mortgage AC403968) on folio 31/707896 are void and that the [Registrar] General be ordered to reject and cancel these dealings pursuant to section 138 of the Real Property Act, 1900. 5 An order that the [Registrar] General register Discharge of Mortgage AC403968 dated 9 May 2008 pursuant to section 138 of the Real Property Act, 1900. 6 The Second Plaintiff (Second Respondent on this Motion) pay the Applicant/Defendant's costs of the motion. " 11On 23 December 2011 Mr Pascoe served a further notice of motion which, to a large extent, duplicates the claims for relief sought in the earlier notice of motion. The orders sought in the notice of motion of 23 December 2011 are as follows: " 1. An order pursuant to s. 601CX(5) of the Corporations Act 2001 that service of a Notice of Motion filed on behalf of Scott Darren Pascoe on 5 October 2011 and of this Motion be effected by electronic means upon William Wai Hung of IIB Global NV, 39 Holland Road, 08.02 Singapore by sending same by email to 2. An order that service of the Notice of Motion filed on behalf of Scott Darren Pascoe on 5 October 2011 and of this Motion shall be deemed to have been served on the expiration of 14 days from the date of service by electronic means on William Wai Hung Liu of Singapore. 3. That the balance of a summons filed on 13 September 2011 by IIB Global NV be struck out. 4. That the Registrar-General:- (i) Reject and cancel unregistered dealing being Change of Name AG426931; (ii) Reject and cancel unregistered dealing being Transfer of Mortgage AG426932; (iii) Register Discharge of Mortgage AC403968 ([iv]) Register dealing AG274266 5. An order that Linden Prescott Dyason pay the costs of a Notice of Motion filed on behalf of Scott Darren Pascoe on 5 October 2011 and the costs of this Motion ". 12On 1 February 2011 the Registrar listed both notices of motion for hearing before me today. When the matter was called there was no appearance for the respondents to the motion, that is, neither Mr Dyason nor IIB Global. The Registrar-General has filed a submitting appearance. 13IIB Global was incorporated in the Netherlands Antilles as a limited liability company on 13 December 2004. Its statutory director (also called a managing director) was a Mr Liu of Hong Kong. Its registration was discontinued on 20 October 2010. Both Mr Liu and Mr Dyason are on notice of the present application. Mr Liu and Mr Dyason were aware of the present application having been returnable on 1 February 2012. 14On 23 December 2011, Mr Pascoe's motion filed on 23 December 2011 and the affidavit in support of it, together with a copy of the earlier notice of motion filed on 5 October 2011, was sent electronically to Mr Liu's email address. 15On 27 December 2011, the notice of motion of 23 December 2011 and affidavit in support were sent by email to Mr Dyason. 16On 4 January 2012, Mr Dyason responded to the service. He advised that he would be in the United Kingdom in January 2012 and that he would be seeking an adjournment. He sent an email, which appears to have been addressed to the court, asking the Registrar to adjourn the matter for 60 days. 17On 19 January 2012, Mr Liu wrote to the solicitor for Mr Pascoe, Mr Ferguson. Mr Liu stated that the company, IIB Global did not consent to the orders sought in the motion. He also said that the company would not be represented at the hearing listed for 1 February 2012 as Mr Dyason (whom he described as the ultimate controller of the company) would not be present to give instructions. 18On the same day, Mr Ferguson responded. He observed that the rules required the corporation to carry on proceedings by a solicitor or by a duly authorised officer of the corporation, and that as Mr Dyason had been found by the court not to be authorised, he could not appear on behalf of the company on 1 February 2012, even if he were in Sydney. 19Mr Ferguson advised that his instructions were to proceed with the motion listed on 1 February. 20I might add that on 14 December 2011, Mr Dyason sent an email to the Associate to Black J stating that compelling business reasons required him to be in the United Kingdom on 26 January 2012, and that for this reason he would not be able to attend a directions hearing set for 1 February 2012. His Honour's Associate replied to advise Mr Dyason that the matter was listed before the Registrar in Equity, not before his Honour, and any communication should be directed to the Registrar or made in open court in the usual way. Mr Dyason was also informed that the court usually leaves it to the parties to make such arrangements as they wish to be represented on directions or hearing dates. 21On 1 February 2012, Mr Ferguson sent a further letter and email to Mr Liu advising that the matter was listed before me for hearing today. He also sent to Mr Liu an outline of submissions prepared by counsel, together with short minutes of proposed orders. He stated that Mr Pascoe would be seeking to proceed with the hearing of the motion today. 22In my view, I should deal with the applications by Mr Pascoe. If either IIB Global or Mr Dyason seriously wished to seek an adjournment of the present application and had proper grounds for doing so, representation for them ought to have been arranged so that submissions could have been made to the Registrar on 1 February 2012. As it is, the parties have had the opportunity to prepare evidence and to make further submissions following the argument that has taken place on a number of occasions before Black J in September, October, November and December of 2011. Having regard to ss 56, 57 and 58 of the Civil Procedure Act 2005, I am satisfied that it would not be in the interests of justice further to adjourn this application. 23There are two aspects to the application. The first is to deal with the remaining claims in the summons. The fact is that those claims were never properly advanced by IIB Global, although it is clear that IIB Global understood the claims were purportedly being made in its name. The claims made by IIB Global have been dismissed for the reasons given by Black J ( IIB Global NV and Anor v Scott Daren Pascoe and Ors (No 4) ). The remaining claims in the summons should also be dismissed. Mr Dyason does not have standing to make those claims. The claims are not claims that could belong to Mr Dyason in his own right. 24The question then is whether I should make the orders sought by Mr Pascoe pursuant to s 138 of the Real Property Act 1900. That section provides: " (1) A court may, in proceedings for the recovery of any land, estate or interest from the person registered as proprietor of the land, make ancillary orders of the kind set out in subsection (3), if the court is of the opinion that the circumstances of the case require any such order to be made. ... (3) A court may order the Registrar-General to do one or more of the following: (a) cancel or amend a folio of the Register, (b) cancel, amend or make a recording in a folio of the Register, (c) create a new folio of the Register, (c1) create a new edition of a computer folio, (d) issue a new certificate of title. ... (4) The Registrar-General must give effect to any such order. (5) A court that makes an order under this section may order that a person deliver a certificate of title or other instrument to the Registrar-General for the purpose of giving effect to any such order. ..." 25The position appears to be as follows, and I take these facts from correspondence between solicitors for the respective parties. Arthur and Lindsey Dyason executed a mortgage in favour of PTAL. It is said that the mortgage was executed on 16 June 2006. Following the appointment of trustees in bankruptcy to the estate of Arthur Dyason, proceedings were taken by PTAL for possession. At some point, which is not clear to me, IIB Global paid approximately $350,000 to PTAL in satisfaction of the debt secured by the mortgage. On 2 May 2008 Egan Simpson, solicitors, requested a discharge of mortgage from PTAL. I am told that they represented Mr and Mrs Dyason. On 9 May 2008 PTAL provided an executed discharge of mortgage dated 9 May 2008. 26In his judgment of 23 September 2011 ( IIB Global NV and Anor v Scott Darren Pascoe and Ors [2011] NSWSC 1136) Black J records that a letter dated 28 April 2008 had been sent by solicitors acting for Mr Arthur Dyason, Mr Dyason and IIB Global to solicitors acting for PTAL stating that an amount had been transferred to PTAL in payment of amounts due under the mortgage and that the solicitors for PTAL had been asked to forward the certificate of title and a discharge of mortgage. As I have said, a discharge of mortgage was executed by PTAL on 9 May 2008. 27On or about 21 October 2008 IIB Global lodged a caveat claiming an interest pursuant to an oral agreement with the registered proprietors to provide a mortgage to IIB Global. That caveat has lapsed. No application was made by IIB Global for leave to lodge a fresh caveat claiming the same interest. As Arthur Dyason was a bankrupt at this time, he could not have given a fresh mortgage to IIB Global. However, a question would arise as to whether or not, notwithstanding the request for and delivery of the discharge of mortgage, IIB Global was subrogated to the position of PTAL. 28In his Honour's judgment of 23 September 2011, Black J said that it seemed likely that such a claim would fail because the presumption that a third party which pays off a mortgage intends the mortgage to be kept alive for its own benefit would be rebutted, by reason of the fact that a discharge of mortgage was requested and obtained. The question might have been a live one if IIB Global had appeared to litigate it. 29In cases such as Butler v Rice [1910] 2 Ch 277 and Ghana Commercial Bank v Chandirim [1960] AC 732 the persons that paid out the debt of the existing mortgagee intended to take substitute security, but were held to be entitled to be subrogated to the security of the mortgagees whose debts had been paid out when that intention could not be effectuated. 30As Cohen J said in Chase Corporation Australia Pty Ltd v North Sydney Brick & Tile Company Limited (1994) 35 NSWLR 1 at 15, subrogation may well be presumed when an otherwise unsecured creditor pays out the secured creditor or, as in the Ghana Commercial Bank case, where a legal mortgage given to the new creditor turns out to be invalid or unenforceable. However, if the transaction between the provider of the funds to pay out the mortgage (in this case IIB Global) and the person at whose instigation it is paid (in this case Mr and Mrs Dyason) was simply the creation of an unsecured loan, then there could be no subrogation to the security of the mortgagee who has been paid out ( Paul v Speirway Limited (in Liq) [1976] Ch 220 at 232.) 31If IIB Global had intended to assert that it was entitled by subrogation to the mortgage of PTAL then it behoved it to make that claim itself either by a summons seeking such relief, that was properly brought by a solicitor or authorised officer acting for it, or by its appearing in defence of the application made by Mr Pascoe. It has done neither. It is not open to IIB Global to defer resolution of the question merely by asserting its position in correspondence. 32Notwithstanding its execution of the discharge of mortgage, PTAL subsequently signed a transfer of mortgage in favour of IIB Global. The transfer of mortgage has been lodged for registration. The solicitor for PTAL stated that PTAL has no further legal or equitable interest in the land as it was paid out on or about 9 May 2008 when it provided the discharge of mortgage. The solicitor stated that in February 2011 PTAL received a request by email dated 25 February 2011 from Gregory Falk and Associates who stated that they act for Mr Linden Prescott Dyason requesting the provision of a transfer of mortgage. The solicitor stated that as PTAL was aware that the mortgage liability had been paid out by Linden Prescott Dyason, or an entity seemingly controlled by him, being IIB Global, it acceded to the request to provide the transfer of mortgage on the assumption that Mr Dyason had not proceeded to register a mortgage, but wished to secure his interest as provider of funds. 33It seems that it is IIB Global and not Mr Dyason who provided the funds for the discharge of mortgage. It is IIB Global who might have been entitled to be subrogated to PTAL's mortgage, which subrogation might be effected by taking a transfer. However, for the reasons I have given, if that were to be its position, it needed to advance that case properly in this litigation. 34Mr Pascoe initially sought a declaration that the transfer of mortgage dated 31 March 2011 is not a registrable instrument for the purposes of the Real Property Act . However, no question was raised about the form of the instrument. The substance of the relief then sought was a declaration that IIB Global was not entitled to claim as mortgagee of the property. 35For that declaration to be made the Court would have to be in a position to decide the question as to the intentions of the parties at the time the mortgage was paid out. The evidence does not permit of that. However, that claim was not pressed. 36It seems clear to me that the way forward is that the trustees for sale should proceed with the sale of the subject property and they should account to the co-owners, Mrs Dyason and Mr Pascoe as trustee in bankruptcy of Mr Arthur Dyason, for the proceeds of sale. 37I will not be making a declaration the substance of which is that IIB Global was not entitled to register a mortgage to secure the amounts it paid to discharge the mortgage of PTAL. However, in the absence of opposition, Mr Pascoe is entitled to the order he seeks that the Registrar-General reject the registration of the transfer of mortgage. That is because IIB Global has not taken the opportunity, that has been available to it in properly constituted proceedings, to assert a claim as mortgagee by subrogation to PTAL's interest. The parties are entitled to have the matter progress. The trustees for sale should be allowed to execute their duties as trustees for sale without hindrance. 38In so deciding, I am not to be taken as expressing any view as to who may be beneficially entitled to the proceeds of sale. 39The orders sought included orders, not only that the Registrar-General reject unregistered dealings, being the transfer of mortgage and change of name, but also that he cancel those dealings. 40I am not aware of what power the Registrar-General would have to cancel such an unregistered dealing which might embody personal claims between the parties to the dealing. The Registrar-General may be ordered under s 138(3) to cancel or amend folios of the register or recordings in the folios of the register. I do not think there is power to order him to cancel the unregistered dealing itself. However, orders can and should be made under that section to ensure the correct recording of dealings on the register. 41For these reasons, I make the following orders.