Federal Court of Australia|1991-07-19|Before: Neaves J, Mr J

The applicant pay the respondent's costs of the application.

Note: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

David William Sistrom ("the applicant") is the trustee of the estate of Ivan Urh ("the bankrupt") against whom a sequestration order was made on 27 March 1987. He has applied to the Court, by application filed on 20 April 1990, for certain declarations and orders as against Vera Urh ("the respondent"), the widow of the bankrupt. The declarations sought are as follows:

"1. A declaration that the Respondent holds her

interest in the property described in Crown

Lease Register Book Volume 224 Folio 93 (ACT

Land Titles Office), being Block 14 Section 96

Division of Ainslie in the Australian Capital

Territory ..., as to one undivided half (or such

other proportion as the Court may determine) on

trust for the benefit of the Applicant as

trustee of the bankrupt estate of Ivan Urh;

2. A declaration that the Applicant is entitled to

dispose of or otherwise deal with the said undivided

share pursuant to his powers as such trustee."

The orders sought include orders for the sale of the property pursuant to s.4(1)(b) of the Partition Act 1900 (NSW) in its application in the Australian Capital Territory and the distribution of the proceeds of sale. In the alternative the applicant seeks an order that his interest in the property be recorded as a legal interest on the title to the property at the Australian Capital Territory Land Titles Office as a tenant in common.

2. When the application came on for hearing, the making of the declarations and orders sought by the applicant was opposed by the respondent. Counsel for the applicant sought to have the matter adjourned. That application was opposed by counsel for the respondent and, it being made plain that there was no dispute as to any factual matter, counsel for the applicant agreed to the matter proceeding on the basis that the oral argument might be supplemented by written submissions. After hearing oral submissions the matter was adjourned, the parties being given liberty to lodge written submissions. No timetable for lodging such submissions was fixed, the parties being encouraged to do so as soon as possible. In the event, there was substantial delay before all of the written submissions which the parties wished to make were received.

3. The facts are within a narrow compass and may be shortly stated.

4. At the date of the making of the sequestration order the bankrupt and the respondent were registered under the Real Property Ordinance 1925 (A.C.T.), since 11 May 1989 cited as the Real Property Act 1925 (A.C.T.), as the proprietors as joint tenants of the Crown lease (Register Book Volume 224 folio 93) of the property in question. The Crown Lease had been granted pursuant to the City Area Leases Ordinance 1936 (A.C.T.) on 17 January 1968 and was for a term of 99 years commencing on 15 June 1966. At all material times the property has been, and is, subject to a mortgage, registered dealing number 78541 (Australian Capital Territory Land Titles Office), to the Commonwealth of Australia.

5. On 17 July 1987 a caveat (numbered 579762) was lodged at the Australian Capital Territory Land Titles Office on behalf of the applicant claiming an estate or interest in the land pursuant to the sequestration order made against the estate of the bankrupt on 27 March 1987. The caveat was expressed to forbid -

"the registration of any memorandum of transfer or

instrument affecting the said Land until this Caveat is by

me or by order of the Court or the Judge thereof withdrawn,

or until after the lapse of fourteen days from the date of

the service of notice of such intended registration at the

following address:- Messrs Barrads, Solicitors, Unit 1, 65

Dundas Court, Phillip, in the Australian Capital Territory."

Particulars of the caveat were entered in the Register Book on 20 July 1987. The applicant took no step to have his name entered in the Register Book as the proprietor of an interest in the Crown lease.

6. On 18 September 1989, the bankrupt, who remained undischarged from his bankruptcy, died. On 14 November 1989, the respondent lodged at the Australian Capital Territory Land Titles Office a Memorandum of Notice of Death and applied to become the sole registered proprietor of the Crown lease.

7. By letter dated 24 November 1989, the Deputy Registrar of Titles wrote to the applicant care of Messrs Barrads, Solicitors, in the following terms:

"I have to inform you in terms of Section 106 of the Real

Property Ordinance 1925 that the registered proprietor in

Crown Lease Volume 224 Folio 93, Ivan Urh and Vera Urh of 36

Hawdon Street Ainslie has applied for registration of

Memorandum of Notice of Death numbered 673806 lodged 14th

November 1989 from the said Vera Urh to Vera Urh.

Your Caveat numbered 579762 will lapse so far only as it

would operate to prevent registration of the above dealing.

The said dealing will be duly registered unless an order to

the contrary, made by the Court or Judge thereof, be served

on or written notice thereof be given to me before the

expiration of fourteen days from the service of this notice."

It appears that the words "from the said Vera Urh" in the first paragraph of the letter should have read "from the said Ivan Urh and Vera Urh".

8. The applicant took no steps to obtain an order of the Supreme Court of the Australian Capital Territory or a Judge thereof preventing the registration of the Memorandum of Notice of Death. He has said on oath that, when the letter first came to his attention, he interpreted it as saying "that Vera Urh had died and that a Memorandum of Notice of Death was to be lodged on the title".

9. On 18 December 1989, the respondent became registered as the sole proprietor of the Crown lease.

10. Part IX of the Real Property Act deals with "Crown Leases". It comprises ss.70-72C inclusive. Section 70 requires the Registrar of Titles to register in the Register Book every Crown lease for a term of not less than 12 months granted by or in the name of the Commonwealth. Section 71(1) provides:

"(1) Every Crown lease, upon registration, shall be subject

to the provisions of this Act, and (subject to the provisions of

the Act in pursuance of which the Crown lease was granted and to

the provisions of the Crown lease) may be transferred, mortgaged

and dealt with for the same purposes, and in like manner, as if it

had been granted by a proprietor of land under this Act and

registered in the Register Book."

Section 72 provides that, except where the context is inconsistent therewith, the provisions of the Act, where applicable, apply to registered Crown leases.

"(1) Every certificate of title, duly authenticated under

the hand and seal of the Registrar, shall be received in all

Courts as evidence of the particulars therein set forth, and of

their being entered in the Register Book, and shall be conclusive

evidence that the person named in the certificate of title, or in

any entry thereon, as seized of or as taking estate or interest in

the land therein described, is seized or possessed of or entitled

to the land for the estate or interest therein specified, and that

the property comprised in the certificate of title has been duly

brought under the provisions of this Act."

Section 55 provides that upon the death of any person registered together with any other person as joint proprietor of the same estate or interest in any land, the Registrar may, upon the application of the person entitled and proof to his satisfaction of such occurrence, register that person as proprietor of the estate or interest in manner prescribed by the Act for the registration of a like estate or interest upon a transfer or transmission.

"(1) No instrument entitled by this Act to be registered

shall, until registered in manner prescribed in the preceding

provisions of this Act, be effectual to pass any estate or

interest in any land under the provisions of this Act or to render

the land liable as security for the payment of money, but upon the

registration of any instrument in manner prescribed in the

preceding provisions of this Act, the estate or interest specified

in the instrument shall pass, or as the case may be, the land

shall become liable as security in manner and subject to the

covenants, conditions and contingencies set forth and specified in

the instrument, or by this Act declared to be implied in

instruments of a like nature."

"Notwithstanding the existence in any other person of any

estate or interest, whether derived by grant from the Crown or

otherwise, which but for this Act might be held to be paramount or

to have priority, a person becoming registered as proprietor of

land or of any estate or interest in land under the provisions of

this Act shall, except in the case of fraud, hold the land, estate

or interest, subject to such encumbrances, liens, estates or

interests as are notified on the folium of the Register Book

constituted by the grant or certificate of title of the land, but

absolutely free from all other encumbrances, liens, estates or

interests whatsoever except as to -

(a) the estate or interest of a proprietor claiming the

same land under a prior certificate of title or under

a prior grant registered under the provisions of this

Act; and

(b) any right of way or other easement created in or

existing upon the same land which is not described, or

is misdescribed in the relative certificate of title;

and

(c) any portion of land that may by wrong description of

parcels or of boundaries be included in the grant,

certificate of title, lease or other document or

instrument evidencing the title of the registered

proprietor, not being a purchaser or mortgagee thereof

for value, or deriving from or through a purchaser or

mortgagee thereof for value; and

(d) any prior tenancy from year to year or for any term

not exceeding three years; and

(e) any leases, licences or other authorities granted by

the Territory and in respect of which no provision for

registration is made; and

(f) any unpaid rates, taxes or other moneys which are

expressly declared by any Act or law to be a charge

upon land:

Provided that the land which is included in any certificate of

title or registered instrument shall be deemed to be subject to

the reservations, exceptions, conditions and powers (if any)

contained in the grant thereof."

13. The Registrar is not to make any entry in the Register Book of any notice of trust, whether express, implied or constructive (s.124(1)).

14. Section 68 provides that, whenever, by the operation of any law either directly or by reason of anything done in pursuance thereof, any land under the provisions of the Act has become or becomes vested in some person other than the registered proprietor either alone or jointly or in common with the registered proprietor, or some such person has become or becomes entitled to have any such land so vested, the Registrar may, at the written request of a person in whom there has been such a vesting or who has become so entitled, on such evidence as appears to the Registrar to be sufficient, and after such notice (if any) to such person as the Registrar deems proper, register the person in whom any such land is vested or who has become so entitled as the proprietor of the estate therein as is appropriate, and for that purpose may make every such entry, cancellation or correction in the Register Book and issue every such certificate of title as appears to the Registrar to be necessary or proper.

15. Section 104(1) provides that any person claiming any estate or interest in the land by devolution of law or otherwise may by caveat in the prescribed form forbid the registration of any instrument affecting the estate or interest either absolutely or until after notice of the intended dealing given to the caveator as is required and enjoined in the caveat. Upon the receipt of any such caveat, the Registrar is required to notify the receipt to the person against whose application to be registered as proprietor or, as the case may be, to the registered proprietor against whose title to deal with land under the provisions of the Act the caveat has been lodged (s.105(1)). Every such caveat lodged against a registered proprietor is, unless an order to the contrary is made by the Court or the Judge thereof, to be deemed to have lapsed upon the expiration of fourteen days after notice given to the caveator that the registered proprietor has applied for the registration of any transfer or other dealing with the land, estate or interest (s.106).

16. Section 58(1) of the Bankruptcy Act 1966 (Cth) relevantly provides that, subject to the Act, where a debtor becomes a bankrupt, the property of the bankrupt vests forthwith in the Official Trustee in Bankruptcy or, if at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of s.156A of the Act, in that registered trustee. Section 58(2) provides:

"(2) Where a law of the Commonwealth or of a State or

Territory of the Commonwealth requires the transmission of

property to be registered and enables the trustee of the estate of

a bankrupt to be registered as the owner of any such property that

is part of the property of the bankrupt, that property,

notwithstanding that it vests in equity in the trustee by virtue

of this section, does not so vest at law until the requirements of

that law have been complied with."

17. Section 132 of the Real Property Act provides:

"(1) Upon the bankruptcy or insolvency of the registered

proprietor of any land, estate or interest under the provisions of

this Act, the assignee or trustee of the bankrupt or insolvent

shall be entitled to be registered as proprietor in respect of the

land, estate or interest.

(2) The Registrar, upon the receipt of an office copy of the

appointment of the assignee or trustee, accompanied by an

application in writing under his hand to be so registered in

respect of any land, estate or interest of the bankrupt or

insolvent therein specified and described, shall enter in the

Register Book, upon the folium constituted by the grant or

certificate of title of the land affected, a memorandum notifying

the appointment of the assignee or trustee.

(3) Upon the entry being made, the assignee or trustee shall

be deemed and taken to be the registered proprietor of the estate

or interest of the bankrupt or insolvent in the land, and shall

hold the land, estate or interest subject to the equities upon and

subject to which the bankrupt or insolvent held the land, estate

or interest, but for the purpose of any dealings with the land,

estate or interest under the provisions of this Act the assignee

or trustee shall be deemed to be the absolute proprietor thereof."

18. Section 63 of the Bankruptcy Act should also be noticed. It provides that where a bankrupt dies before he is discharged from the bankruptcy, the proceedings in bankruptcy are, unless the Court otherwise directs, to be continued, so far as they are capable of being continued, as if he were alive.

19. Section 4(1)(b) of the Partition Act 1900 (NSW) in its application in the Australian Capital Territory provides:

"4(1) In a suit for partition, where, but for this Act or the Act

hereby repealed, a decree for partition might have been made -

(a) ....

(b) if parties interested collectively to the extent of one

moiety or upwards, or some persons as hereinafter provided

on their behalf, request the Court to direct a sale of the

property and a distribution of the proceeds instead of a

division of the property between or among the parties

interested, the Court shall, unless it sees good reason to

the contrary, order a sale of the property accordingly; and

(c) .... "

It is no bar to the making of an order under that provision that the order is sought in respect of a Crown lease granted under the City Area Leases Ordinance (Witchard v Witchard (1975) 6 ACTR 31; Squire v Rogers [1979] FCA 48; (1979) 27 ALR 330; Sovova v Ojvan (1987) 72 ACTR 10).

20. To entitle the applicant to an order of the Court directing a sale of the Crown lease, the applicant must establish that he is a party interested in that lease to the extent of one moiety or upwards. The case for the applicant is that upon the making of the sequestration order on 27 March 1987 the beneficial interest of the bankrupt in the Crown lease passed to the applicant by operation of law, namely s.58(1) of the Bankruptcy Act; that the making of the sequestration order also operated to sever, in equity, the joint tenancy under which, immediately prior to the making of that order, the bankrupt and the respondent had held that lease (Re Francis; Ex parte Official Trustee in Bankruptcy (1988) 82 ALR 335); that the applicant thereby became an equitable tenant in common in equal shares with the respondent of the Crown lease; and that the applicant's interest in the Crown lease as equitable tenant in equal shares with the respondent is a sufficient interest for the purposes of s.4(1)(b) of the Partition Act.

21. Alternatively, it was submitted that, immediately upon the making of the sequestration order, the bankrupt and the respondent held the legal title to the Crown lease in trust for the applicant and the respondent as equitable tenants in common in equal shares and that, upon the death of the bankrupt, the respondent, as the surviving joint tenant at law, continued to hold the legal title to the Crown lease in trust for the benefit of the applicant and herself as equitable tenants in common in equal shares. In such circumstances, it was said, those provisions of the Real Property Act that are commonly referred to as the indefeasibility of title provisions do not affect the entitlement of the applicant to the orders sought. In the further alternative, it was submitted that the respondent was not entitled to rely upon the indefeasibility of title provisions of the Real Property Act because the case fell within the recognised exception relating to "personal equities". The circumstances were said to give rise to fiduciary obligations in the respondent to which the Court should give effect by requiring the respondent to deal with the Crown lease in such manner as to preserve the applicant's equitable interest.

22. It may be accepted that, upon the making of the sequestration order on 27 March 1987, the applicant became entitled to an equitable interest in the Crown lease, an interest which he now seeks to enforce. The situation with which he is faced, however, is that, before that equitable interest was fulfilled by registration pursuant to s.132 of the Real Property Act, the respondent, by virtue of the registration on 18 December 1989 of the Memorandum of Notice of Death lodged on her behalf of which prior notice was given to the applicant, became the sole registered proprietor of the Crown lease free of encumbrances other than the mortgage in favour of the Commonwealth of Australia of which a notation appeared on the folium of the Register Book constituted by the relevant certificate of title. It is well established (see Frazer v Walker (1967) 1 AC 569 and Breskvar v Wall (1971) 126 CLR 376) that, under a system of title by registration such as that embodied in the Real Property Act, the act of registration vested that title in the respondent and that, subject to certain limited exceptions to which it will be necessary to come, the certificate of title in the name of the respondent is conclusive evidence that she has a valid title to the Crown lease. The certificate will not have that conclusive effect where registration as proprietor was obtained by the proprietor's own fraud (see Assets Co. Ltd v Mere Roihi (1905) AC 176), where one of the exceptions referred to in pars (a) to (f) inclusive in s.58 of the Real Property Act is made out, or where there is a "personal equity" affecting the registered proprietor.

23. In Corin v. Patton [1990] HCA 12; (1990) 169 CLR 540, Deane J. said at pp 574-5:

"There are circumstances in which equity will impose a trust for

tenants in common of land held by legal joint tenants

notwithstanding that there has been no relevant mutual agreement,

understanding, dealing or intention between or on the part of the

joint tenants. The only example of such circumstances which would

seem to be relevant for present purposes is the voluntary or

involuntary alienation in equity (i.e. the creation of a trust) of

one legal joint tenant's interest in the land. Where such

alienation has occurred, equity will, subject to any overriding

competing equities, enforce a trust not only of the alienated

interest but of the whole of the land under which the legal joint

tenants hold it as trustees for tenants in common in equity. The

explanation of why that is so is not free of difficulty.

Ultimately, it must be found in the nature of joint tenancy and

the manner in which equity acts in such a case."

In the course of examining the nature of joint tenancy, his Honour referred to the case where one joint tenant effectively alienates his interest in the subject property to a third party by an "assignment" which is, as between the parties to it, effective in equity but not at law. Of such a case, his Honour said at p 576:

"In such a case, one can readily see a basis for a trust of the

'assignor's' own legal interest as joint tenant, that is to say, a

trust which did not affect the rights of accretion by survivorship

of the legal joint tenants but bound the assigning joint tenant to

hold his legal entitlement for the assignee."

"As has been indicated, however, the cases establish that the true

position in the case of such an equitable assignment by one joint

tenant is that, subject to competing equities, there will be a

trust of the whole property: the legal joint tenants will hold

the property in trust for the assignee and the non-assigning legal

joint tenant or tenants as tenants in common in equity."

His Honour did not identify any of the cases establishing that proposition. None of the other members who constituted the Court adverted to the question.

24. I have not been referred to, nor have I discovered, any authority for the proposition that, in such circumstances as pertain in the present case, the respondent is to be treated as holding her legal title to the Crown lease as trustee for herself and the applicant as equitable tenants in common.

25. There is no evidence before the Court which would support a conclusion that the respondent obtained registration by fraud within the meaning of that expression in s.58 of the Real Property Act. Nor are any of the exceptions referred to in the lettered paragraphs of that section of any assistance to the applicant. Further, the applicant has not, in my opinion, established any claim in personam against the respondent.

26. The evidence before the Court does not establish that the respondent was aware at any stage before the institution of this proceeding that the applicant was claiming, or was entitled to, an equitable interest in the Crown lease arising from the making of the sequestration order. It is not even clearly established that she received notice from the Registrar of Titles of the caveat lodged on behalf of the applicant though it may be appropriate to infer that she did so. Certainly there is no evidence that the applicant took any step to inform her of his interest.

27. The applicant's case is not advanced by any reliance on acts done by or on behalf of the respondent. All that she did, so far as the evidence goes, was to lodge with the Registrar of Titles the Memorandum of Notice of Death notifying the death of the person who until that time had been registered jointly with her as a proprietor of the Crown lease.

28. But even if that act on the part of the respondent provides some foundation for asserting a personal equity against the respondent, the conduct of the applicant is such as, in my opinion, to deprive him of the assistance of the Court which he requires in order to deprive the respondent of the benefit accruing to her by reason of her registration as the sole proprietor of the Crown lease. The applicant took no step to have his interest in the Crown lease registered between 27 March 1987, the date of the making of the sequestration order, and 18 December 1989, when the respondent became registered as the sole proprietor thereof. Even after receiving the letter dated 24 November 1989, addressed to him by the Deputy Registrar of Titles, did he take any such step. It may be accepted that that letter was not as clearly expressed as it might have been but it was, in my opinion, sufficient to put the applicant on notice that the Registrar was about to register an instrument which could well have the effect of affecting adversely the interest in the lease which he claimed. If the applicant did not understand what the letter intended, it is reasonable to expect that he would have sought clarification of its terms yet the evidence is that he did not do so. There can be no doubt that the conduct of the applicant in allowing his caveat to lapse was decisive, so far as the Registrar of Titles was concerned, in allowing the Memorandum of Notice of Death to be registered. Further, even after becoming aware that the instrument had been registered, there was a delay of some four months before the present proceeding was instituted.

29. For these reasons, the application is dismissed. The applicant must pay the respondent's costs of the application.

Partition Act 1900(NSW)

Real Property Act 1925

Real Property Ordinance 1925

City Area Leases Ordinance 1936

Property Ordinance 1925

Partition Act 1900(NSW)

Real Property Act 1925

Real Property Ordinance 1925

City Area Leases Ordinance 1936

Property Ordinance 1925

Partition Act 1900(NSW)

Real Property Act 1925

Real Property Ordinance 1925

City Area Leases Ordinance 1936

Property Ordinance 1925

Re David William Sistrom v Vera Urh [1991] FCA 315; 412 Bankruptcy 30 FCR 285 (19 July 1991)

Re David William Sistrom v Vera Urh [1991] FCA 315; 412 Bankruptcy 30 FCR 285

At a glance

Court

Decision date

Before

Source

Judgment (50 paragraphs)

Parties

Legislation Cited (15)

Cases Cited (5)

Re David William Sistrom v Vera Urh [1991] FCA 315; 412 Bankruptcy 30 FCR 285 (19 July 1991)