Scallan v Registrar-General

1 The Plaintiff is the Executor of the Estate of the late Nick Angelidis (also known as "Agelidis"). The Plaintiff seeks a determination: "… pursuant to Conveyancing Act s98(1) that all amounts due under mortgage registered number J282727 with Nick Agelidis as mortgagor and Sam Giannikis and Michael Manettas as mortgagees have been paid."

No person has been made a defendant in the proceedings. 2 The facts of the matter, as appear from the affidavit of the Plaintiff's solicitor, may be summarised thus. 3 The deceased died possessed of a property at Botany. As at the deceased's death the title to the property was encumbered by a mortgage, registered number J282727, dated 18 February 1963, in favour of Savas Giannikis and Michael Manettas. The loan secured by the mortgage was £300, interest free. Clause 1 of the mortgage provided that "the mortgagor will pay to the mortgagee the principal sum, or so much thereof as shall remain unpaid, on the first day of April 1964". Clause 19 provided that "the mortgagor shall have the right to pay the whole or any part of the principal sum at any time". I construe those two clauses together as meaning that the mortgagor is to have the right to pay the whole or any part of the principal sum at any time prior to 1 April 1964, but that if any part of the principal sum is still outstanding as at that date, it becomes payable on that date. 4 The fact that the loan was interest free is explained by the fact that, according to enquiries made by the Plaintiff's solicitor, the deceased and the mortgagees were good friends. 5 Mr Giannikis died on 2 May 1989. Mr Manettas died on 7 January 1995. Both died intestate. No grant of letters of administration of either of their estates has been made and no application for such a grant is current or foreshadowed. 6 The Plaintiff's solicitor has made careful enquiries from the widows of Messrs Giannikis and Manettas, neither of whom know anything about a mortgage from the deceased. Attempts to discover something about the transaction from the solicitors who acted on the registration on the mortgage have come to nothing. 7 Notice of intention to distribute the deceased's estate was duly published on 1 May 2004. No claim on the estate has been received. 8 Endeavours have been made by the Plaintiff's solicitors to find someone amongst the next of kin on intestacy of Messrs Giannikis and Manettas willing to represent their estates for the purpose of giving a discharge of the subject mortgage. They have met with no success. 9 Amongst the deceased's personal records at the date of his death was found a deed packet in safe custody at the Commonwealth Bank. In the deed packet was the Certificate of Title to the subject property, together with a second registered mortgage on the property and an executed discharge of that mortgage. The fact that the deceased himself was holding the Certificate of Title of the subject property at his death, coupled with the fact that the loan secured by the mortgage to Messrs Giannakis and Manettas was interest free and made to good friends points strongly to the likelihood that, by the time of his death, the deceased had repaid the loan, taken back the Certificate of Title which the mortgagees or their solicitors had almost certainly been holding but, due to the relationship between the parties, the deceased had not bothered to obtain an executed Memorandum of Discharge of the mortgage which he could register. 10 In any event, as the whole of the loan secured by the mortgage was repayable at the latest by 1 April 1964, recovery of the loan and enforcement of the mortgage would have become statute barred under s.42(1)(a) Limitation Act 1969 (NSW) on 1 April 1976. There is no evidence of any confirmation of the loan for the purposes of s.54 Limitation Act after 1 April 1976. There is no suggestion that the subject property was ever in the possession of the mortgagees so that redemption of the mortgage would be barred by s.41 Limitation Act. 11 In those circumstances, can the Plaintiff obtain relief under s.98 Conveyancing Act 1919 (NSW)? 12 Section 98(1) provides: "(1) Where land is subject to a mortgage and the person empowered to reconvey the land or, where the land is under the provisions of the Real Property Act 1900, to execute in respect thereof a discharge referred to in section 65 of that Act, is out of the jurisdiction, cannot be found or is unknown, or if it is uncertain who that person is, the court may, upon the application of the person for the time being entitled to redeem the mortgaged land, determine in such manner as the court thinks fit whether or not all amounts due under the mortgage have been paid and, if not, the amount thereof outstanding." 13 In the Application of Piromalli [1977] 1 NSWLR 39 is directly in point. In that case, Waddell J (as his Honour then was) granted relief under the section ex parte in rather peculiar factual circumstances. The mortgagee was dead. Her death certificate showed that she had married only once and had died without issue. However, evidence was tendered that she had married a second time and had ten children. That allegation had not been proved at the time the application came before Waddell J. No one had applied for grant of probate or letters of administration of the mortgagee's estate and no one appeared to be interested in doing so. 14 At p.41 his Honour said: "Do these circumstances bring the application within the description in s.98 (1) of the Conveyancing Act quoted above? The relevant question is, I think, whether the person empowered to execute in respect of the mortgage a discharge thereof is unknown. The circumstances clearly could not come within any of the other descriptions. It is perhaps surprising that the subsection does not in terms extend to a situation where the mortgagee is dead, and no legal personal representative has been appointed. The corresponding provision in the New Zealand Property Law Act, 1952 , which was no doubt taken from s.93 in its previous form, added, to the circumstances there mentioned, where the mortgagee is dead. In a sense, where the mortgagee is dead, and no legal representative has been appointed, it cannot be said that the person empowered to execute a discharge is unknown, because there is no such person for the time being, and, generally speaking, it will be known who is the executor or who has applied for letters of administration or who are the persons entitled to apply. In such circumstances, it may well be thought that the section does not apply. But the present case is different from the circumstances just mentioned in an important respect. The mortgagee is apparently dead, there is a real doubt as to whether anyone is concerned to apply to be appointed her legal personal representative, and, because of the contradictions and inadequacies in the material which Smith has been able to collect, I think I should infer that it is uncertain who in fact are the person or persons who are entitled to apply for a grant of letters of administration. In these circumstances, I think it can be said that the person empowered to execute a discharge is unknown within the meaning of the subsection." 15 I respectfully agree with his Honour's reasoning. In my opinion, where a mortgagee is dead and no one has applied for a grant of probate or letters of administration, but it is known who are the next of kin who would be entitled to apply, it cannot be said that the identity of the person empowered to execute a discharge is unknown or uncertain, within the meaning of, and for the purposes of, s.98(1). In such a case, s.98(1) has no application. 16 Mr Ellison submits that the facts of this case are close enough to those in Piromalli to afford the Court jurisdiction under s.98(1). Mr Ellison says that here, as in Piromalli, the mortgagees died intestate and no one has applied for letters of administration although a considerable time has elapsed since they died. Mr Ellison submits, correctly I think, that it is a reasonable assumption that if no one has yet applied for administration of the mortgagee's estates, no one ever will, so that in a practical sense it can be said that the person "empowered to execute a discharge" of the mortgage is "unknown", for the purposes of s.98(1). 17 Willing as I am to find a means of assisting the Plaintiff to obtain discharge of a mortgage which must long ago either have been paid off or become statute-barred, I cannot strain the language of s.98(1) beyond its proper limits. 18 In referring to "the person empowered", s.98(1) is predicated upon the proposition that there is always a person in existence who is empowered to execute a discharge. The circumstances which enliven the section are simply that that person, although existing somewhere, is either not known or, if known, cannot be found. 19 The critical difference between the facts of this case and the facts in Piromalli is that in Piromalli the next of kin would have been entitled to apply for administration but because of yet-unproved allegations that the deceased mortgagee had had children by a second marriage, it could rightly be said that the identity of the person or persons entitled to apply for administration was unknown. 20 However, in the present case, it is known for certain who is entitled to apply for letters of administration of the deceased mortgagees' estates: in each case, it is the spouse of the deceased: s.63(a) Wills Probate and Administration Act 1898 (NSW). Both these spouses are still alive and their whereabouts are known. The fact that the persons entitled to apply for administration are known but are unwilling to apply does not bring the case within the provisions of s.98(1). 21 Accordingly, I am not able to say that the facts of this case enable me to arrive at the same result as did Waddell J in Piromalli. 22 Waddell J remarked that it was surprising that s.98(1) did not extend to a case where the mortgagee was dead and no legal representative had been, or was likely to be, appointed. I agree entirely in those remarks. A case such as the present demonstrates the difficulty and expense which can arise in endeavouring to clear a mortgage off a title when it is quite clear that no one in the mortgagee's interest has any concern in maintaining it. The loan secured by this mortgage is insignificant by today's standards and the legal costs incurred in trying to clear the title have doubtless exceeded the amount of the loan many times over. 23 With some regret, I conclude that I have no power under s.98(1) to grant the relief sought. 24 However, for what it may be worth, I do not think that the Plaintiff is without remedy. In my view, the Plaintiff would be entitled to apply to the Registrar-General under s.32(6) Real Property Act 1900 (NSW) for a cancellation of the mortgage on the title of the subject property. Section 32(6) provides: "The Registrar-General shall have, and shall be deemed always to have had, power to cancel in such manner as the Registrar-General considers proper any recording in the Register that the Registrar-General is satisfied does not affect the land to which the recording purports to relate." 25 In Scallan v Registrar-General (1988) 12 NSWLR 514, Young J (as his Honour then was) held that s.32(6) empowered the Registrar-General to cancel the registration of a mortgage if satisfied that the mortgage no longer affected the title. At p.516, his Honour noted that the practice of the Registrar-General had been to cancel the registration of a mortgage where the mortgagor had proved repayment of the monies secured to a mortgagee who had disappeared without executing a formal discharge. The Registrar-General also used the subsection to cancel the recording of a mortgage if the mortgagee would be barred by the Limitation Act 1969 and there was no legal personal representative of the mortgagee in New South Wales from whom a discharge could be obtained. His Honour concluded that such actions by the Registrar-General were warranted under s.32(6). 26 For the reasons I have given above, on the evidence tendered by the Plaintiff in these proceedings the Registrar-General would be justified in concluding that the subject mortgage has either been repaid in full or else it has become statute-barrred. The Registrar-General would, therefore, be justified in cancelling registration of the mortgage under s.32(6) Real Property Act. 27 The Registrar-General is not, of course, bound by these reasons as he is not a party to the proceedings. If, upon an application to the Registrar-General for cancellation of the mortgage under s.32(6), the Registrar-General disputes that the circumstances justify cancellation, the Plaintiff could commence proceedings against the Registrar-General for an appropriate declaration. 28 The order of the Court is that the Plaintiff's Summons is dismissed. ~ oOo ~

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