BETWEEN : PERPETUAL TRUSTEES AUSTRALIA LTD (ACN 000 431 827)

Enforcement - Property, seizure and delivery order - Position of first registered mortgagee - Equitable interests in property by virtue of status as beneficiaries of a trust - Leasehold interests in the property - Transfer of Land Act 1893 (WA), s 68

Civil Judgments Enforcement Act 2004 (WA)

Transfer of Land Act 1893 (WA)

Property seizure and delivery order can be enforced

1 (This judgment was delivered extemporaneously on 14 April 2008 and has been edited from the transcript.)

2 This is an application made by Mr Michael Aaron Waugh, Ms Danelle Seanne Waugh, Mr Ashby Keith Farrell and Ms Carol Elizabeth Farrell pursuant to the Civil Judgments Enforcement Act 2004 (WA) to set aside a property seizure and delivery order made in respect of premises situated at 32 Buntine Road, Wembley Downs, Western Australia.

3 The property seizure and delivery order was made as a consequence of a judgment which I entered in these proceedings for reasons which I gave on 21 December 2007. Following this judgment, Perpetual Trustees Australia Ltd (Perpetual) applied for a property service and delivery order on 29 February 2008. The only party who appears today in support of the application is Ms Carol Farrell and she appears through her legal guardian, Mr Ronald Charles Waugh, who has put submissions in support of the application.

4 In regard to those submissions and to the materials filed in support of the application, it appears that there are two bases upon which the order is sought. The first is the proposition that because Allregal Enterprises Pty Ltd (Allregal) acquired the property as trustee for and on behalf of the C.F. Family Trust (CF Trust), the judgment which was entered against Allregal and, in particular, the order for delivery up of vacant possession of the property, does not run as against those who have an equitable interest in the property. The applicants assert that they hold such an equitable interest by virtue of their status as beneficiaries of the CF Trust.

5 The second argument is that there are leasehold interests in the property which should also take priority over the interests of Perpetual as mortgagee of the land. It is not immediately clear what those leasehold interests are or in whose favour they are. However, it appears that there are two leasehold interests referred to. The first is an interest under a lease for 20 years, perhaps in favour of Ms Farrell or perhaps in favour of one of her children, while the second is a leasehold interest in favour of a Mr Zandy, who is not an applicant before me today. That second leasehold interest is said to be in respect of a lease for a period of five years but because he is not an applicant before me today, and because I am told that there are other proceedings in relation to that claimed leasehold interest, it is unnecessary to give that claim further consideration.

6 I return then to the question of whether the property seizure and delivery order can and should be enforced notwithstanding the equitable interests of those who are said to be beneficiaries in the CF Trust. The short answer to that contention is provided by s 68 of the Transfer of Land Act 1893 (WA).

7 Allregal was the registered proprietor of the property at the time it granted the mortgage in favour of Perpetual and this is the mortgage which gave rise to the judgment which I entered on 21 December 2007.

8 The mortgage in question is the first registered mortgage against the land and has priority, therefore, over every subsequent encumbrance registered against the title to the land. The only basis upon which Perpetual's interest, as first registered mortgagee, could be defeated or frustrated is through some provision of s 68 of the Transfer of Land Act.

9 The proposition that has been advanced today is simply that the equitable interests of those who are beneficiaries override Perpetual's interest as legal mortgagee. That is a proposition that is unsustainable in law because of the principles and legal propositions created by registration of title as evident in s 68 of the Transfer of Land Act.

10 The only possibly arguable basis that I can see which could run against Perpetual so as to defeat its claim as first registered mortgagee, would be the proposition that Perpetual was a party to a fraud on the beneficiaries by knowingly assisting Allregal to breach its obligations as trustee towards those beneficiaries. That is not how the case for orders has been put today but I will nevertheless give consideration to it, because, as I say, it seems to me to be the only arguable legal basis upon which the claim of Perpetual as first registered mortgagee could be frustrated or defeated.

11 The difficulty with an argument put in those terms is that under the terms of the trust deed, by cl 7.3 and cl 7.4, power is given to Allregal to guarantee and to give indemnities and also to secure guarantees and indemnities by the grant of charges against trust property. So even if there was evidence that Perpetual had knowledge of the trustee, there would be nothing on the face of the trust deed that would sustain the proposition that by granting a guarantee (or more particularly in this case the covenant), and securing that covenant by a mortgage over the land, Allregal was in some way acting in breach of trust.

12 I also take into account the evidence of the circumstances that gave rise to the transaction to which I gave consideration at the time of entry of judgment in December. Those circumstances would suggest to any reasonable lender, such as Perpetual, that the covenant and the mortgage over the land were being given by Allregal in order to provide benefits to persons who were beneficiaries of the CF Trust at the time those covenants and securities were granted.

13 So again, even if the argument were put in those terms, which it is not, it does not seem to me that on the basis of the information available to me there is any arguable basis for the proposition that there is any relevant exception to the priority created by s 68 of the Transfer of Land Act in favour of Perpetual.

14 Similar considerations apply to the claimed leasehold interest. As the leasehold interest was for a duration of 20 years it would be required to be registered for it to take priority over the first registered mortgage. There is no evidence to suggest that it was registered. Accordingly, that leasehold interest must be subordinate to Perpetual's interest as first mortgagee over the land.

15 So for those reasons there does not seem to me to be any arguable basis for the proposition that any person has an interest in priority to the interest in favour of Perpetual as first mortgagee and therefore no reason why the property seizure and delivery order should not be enforced. For those reasons, I propose to dismiss the application.