Lane v Oakley

RANGIAH J: 1 On 14 February 2019, I delivered reasons for judgment in this proceeding: Lane v Oakley [2019] FCA 107. I will adopt the abbreviations used in those reasons. 2 I held that the Registered Mortgage and the Mortgage Agreement are void against the applicants pursuant to ss 120(1) and 121(1) of the Bankruptcy Act 1966 (Cth) (the Act). I indicated that I would hear the parties as to the appropriate form of declaratory and other orders and costs. In particular, I was concerned that the orders sought by the applicants in their amended originating application would be inadequate to achieve a release of the Registered Mortgage. 3 The applicants filed draft orders and written submissions concerning relief and costs on 22 February 2019. The respondent filed written submissions in response on 8 March 2019. 4 I then indicated that the applicants' written submissions were not adequate to persuade me to make the orders sought and asked the parties to provide further submissions by specified dates. The applicants filed further submissions on 22 March 2019. The respondent did not file any further submissions by the required date, but did so belatedly after the parties had been notified of the date for delivery of the judgment. The respondent has not explained why her submissions were filed late. 5 I am satisfied that it is appropriate to make the declarations sought by the applicants, to the effect that: (1) The Registered Mortgage is void against the applicants pursuant to ss 120(1) and 121(1) of the Act. (2) The Mortgage Agreement is void against the applicants pursuant to ss 120(1) and 121(1) of the Act. (3) No money is due under or by virtue of the Mortgage Agreement, and which is secured by the Registered Mortgage. 6 The applicants also seek orders that: (1) The respondent prepare and lodge with the Land Titles Office, the documents necessary to effect the removal of any reference to the Registered Mortgage from the Land Titles Register. (2) In the event that the respondent does not comply with the above order, a registrar of this Court execute a Form 3 Release of Mortgage. 7 In Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd (No 2) [2018] QSC 133, Henry J made orders substantially in the form sought by the present applicants. His Honour did not explain the reasons for that form of orders, or why they would be effective to secure the release of the registered mortgage. However, his Honour may have adopted that form of orders from several bankruptcy cases decided in the Federal Circuit Court of Australia. 8 The power to make such orders was considered by Judge Jarrett in Leroy as Trustee for the Bankrupt Estate of Shinton v Sun Sheet Metals (Qld) Pty Ltd [2017] FCCA 2735. In that case, his Honour had made an order declaring a registered mortgage to be void as against a trustee in bankruptcy. The trustee wished to effect the release of the mortgage, but the respondent company did not have any officers or directors, so there was no person available to execute the relevant form. The Queensland Registrar of Titles informed the trustee that, "a further order is required directing either the mortgagee or some other appropriate person, such as an officer of the Court, to execute the release". 9 Judge Jarrett considered whether s 30(1) of the Act was sufficiently broad to authorise the making of an order that a registrar execute a Form 3 Release of Mortgage form. Section 30(1) provides: 30 General powers of Courts in bankruptcy (1) The Court: (a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and (b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter. 10 His Honour concluded: 34. Subsection 30(1) of the Bankruptcy Act is a sufficient basis upon which to conclude that the Court has power to order the execution of a release of mortgage by a registrar of this court in the circumstances of this case. I note that there are a few cases where an order directing a registrar to sign documents to give effect to orders made by a bankruptcy court have been made, although those cases do not seem to examine the basis of that power: Clout (Trustee) v Anscor Pty Ltd (2003) 1 ABC(NS) 44; Harrison v Ponting & Anor [2011] FMCA 680, Reidy v Cleary Bros (Parramatta) Pty Ltd [2013] FCCA 2110 and Burness and Jess (Trustees) v Cheung [2017] FCCA 1098. 11 I respectfully agree with Judge Jarrett's analysis and conclusion. It may be observed that s 106A(1) of the Family Law Act 1975 (Cth) specifically provides that if a person has refused or neglected to comply with an order directing the person to execute an instrument, the Court may appoint an officer of the Court or other person to execute the instrument. The absence of a similar specific power under the Act does not, in my opinion, suggest a limitation upon the width of s 30(1) of the Act. I agree that s 30(1) is sufficiently broad to allow orders of the kind made in Leroy and Sino-Resource to be made. It is appropriate to make similar orders in the present case. 12 The applicants also seek an order that the respondent pay their costs of the proceeding on an indemnity basis. Rule 40.02 of the Federal Court Rules 2011 (Cth) provides that a party who is entitled to costs may apply to the Court for an order that the costs awarded in their favour be paid other than as between party and party. A note to that rule indicates that the Court may order that costs be paid on an indemnity basis. 13 The applicants' solicitors wrote to the respondent's then solicitors on 6 November 2017 offering to settle the proceeding on the basis that the applicants pay the respondent $95,000, conditional upon the respondent removing the Registered Mortgage and withdrawing her proof of debt. The letter stated that the offer remained open until 10 November 2017. The offer was expressed to be made in accordance with the principles in Calderbank v Calderbank [1975] All ER 333. 14 On 6 November 2017, the solicitors for the respondent indicated that there would be a counter-offer. However, no such counter-offer was ever provided and there was no other response to the applicants' offer. 15 In her initial submissions, the respondent accepted that costs should be ordered against her on the standard basis, but did not address the Calderbank offer. In her belated further submissions, the respondent opposes the order for indemnity costs. I will not take into account submissions filed late, without at least the courtesy of an explanation for their lateness, and without any application for an extension of time. However, before receiving those submissions, I had, in any event, reached a conclusion that I should not award costs on an indemnity basis. 16 In my reasons, I held that the Registered Mortgage and the Mortgage Agreement are void. I found that there is no amount owing to the respondent under the Deed of Charge. I found, in effect, there is no amount owing to the respondent under her proof of debt, although I have not been asked to make any declaration to that effect. Therefore, it would have been advantageous to the respondent to accept the offer of settlement made by the applicants. 17 However, it is not automatic that a Calderbank offer which is more favourable than the judgment ultimately obtained results in an order for indemnity costs. It is necessary to consider whether it was unreasonable not to have accepted the offer. That issue must be determined objectively: Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7]; Commonwealth v Gretton [2008] NSWCA 117 at [43]-[46]. 18 In this case, the offer of 6 November 2017 was expressed to remain open for four days, until 10 November 2017. That was not a reasonable time to allow the respondent to consider and respond to the offer. The applicants have not satisfied me that it is appropriate to award costs against the respondent on an indemnity basis. 19 I am satisfied, subject to one exception, that the respondents should pay the applicants' costs on a party and party basis. The exception is that adequate submissions upon the question of relief ought to have been made at the hearing of the proceeding, and adequate submissions as to costs ought to have been made in the written submissions filed on 22 February 2019. I decline to order the respondent to pay the applicants' costs of the submissions filed on 22 February 2019 and 22 March 2019. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.