Wentworth v Rogers

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT - application for discharge of order under s 27 of the Judgment Creditors' Remedies Act 1901 1 BELL J: The applicant, Toni Rogers, moved on notice for an order pursuant to s 32 of the Judgment Creditors' Remedies Act 1901 (the Act) discharging the order made pursuant to s 27(1) of the Act by Acting Deputy Registrar Whitehead (the Registrar) on 17 September 2003. 2 The applicant and her husband, Gordon Rogers, are the registered proprietors of the property comprised in folio identifier 71/615640, known as Te Mata. They are tenants in common in equal shares. Gordon Rogers' interest is the subject of a registered mortgage in favour of the applicant. Te Mata is Torrens system land under the Real Property Act 1900. 3 The respondent is the judgment creditor of Gordon John Rogers. The judgment debt was outstanding at the date of the making of the order and remains so. 4 The respondent applied to the Court pursuant to s 27(1) of the Act, and Pt 47 of the Supreme Court Rules 1970 (the SCR), for an order that the interest of Gordon Rogers in Te Mata stand charged with the payment of the amount for which judgment had been recovered. She moved both in the present proceedings and in proceedings No. 8 of 1986 in the Court of Appeal. Both motions came on for hearing before the Registrar in April 2003. On 17 September 2003 the Registrar delivered a judgment in which he made a number of orders, including an order that: "The interest of Gordon Rogers comprising the property Te Mata, at Upper Moore Creek Road, Tamworth in the State of New South Wales, being Folio Identifier 71/615640 stand charged with an order pursuant to section 27 of the Judgment Creditors' Remedies Act 1901." (the charging order) 5 The applicant contended that the charging order is not authorised by s 27 of the Act. The respondent did not concede that to be the case. She contended that in any event the applicant was without standing to challenge it. 6 The order was purportedly made under s 27(1)(b) of the Act charging Gordon Rogers' equity of redemption or other equitable interest in Te Mata. The provisions of s 28 of the Act, that admit of the making of an ex parte show cause order, do not apply to an order under s 27(1)(b). There was an issue as to whether the applicant had received notice of the respondent's application. The Registrar found that she had. Her counsel submitted that it had not been open to the Registrar to so find. It is not necessary to determine the issue since the proceeding before me was not a review of the Registrar's decision but an application for the discharge of the charging order under s 32 of the Act. 7 Gordon Rogers did not appear on the hearing of the application before the Registrar nor did he appear on the hearing of the applicant's motion before me.

8 The applicant submitted that she had a statutory entitlement to apply for the discharge of the order under s 32 of the Act. Section 32 provides: "32 Discharging or varying order

The Supreme Court or a Judge of the District Court, as the case may be, may upon the application of the judgment debtor or any person interested discharge or vary such order and award such costs upon such application as the Supreme Court or the Judge of the District Court, as the case may be, thinks fit." 9 The question of the applicant's standing to bring an application under s 32 was focussed on whether she was a "person interested" for the purposes of the section. The question of whether the right conferred by s 32 extends to an application for the discharge or variation of a final order (as distinct from an order that has not been made absolute under s 31) was not argued. I proceed upon the basis that an order made under s 27(1)(b) may be discharged or varied on the application of the judgment debtor or any person interested. The terms of the section would appear to authorise that course. 10 I was not referred to any authority dealing with the nature of the interest that is required in order to support an application under s 32 by a person other than the judgment debtor. 11 The applicant's counsel was critical of the way in which the order is framed. It charges the interest of Gordon Rogers "comprising the property Te Mata". It does not specify the amount of the judgment debt. Accepting these criticisms, nonetheless it seems to me to be clear that is an order that attachs only to the interest of Gordon Rogers in Te Mata. He holds an undivided equal share in Te Mata and it is this share that is the subject of the respondent's charge. 12 The applicant is the registered mortgagee of Gordon Roger's undivided equal share in Te Mata. Her mortgage has priority over the respondent's charge. 13 The applicant's counsel submitted the applicant to be a "person interested" in the discharge of the charging order because it was said to interfere with the applicant's capacity to further charge or mortgage Te Mata in order to raise funds. I was not persuaded that was so. It is open to the applicant to raise funds on the security of her undivided equal share in the property. 14 Counsel placed greater emphasis on the contention that the charging order could be employed on the sale of Te Mata to frustrate or delay the applicant's receipt of the proceeds of sale. In written submissions counsel observed that the respondent had filed motions in the proceedings on 10 November 2003, and 12 August 2004 claiming an order, that an account be taken of the respective interests in Te Mata between Gordon Rogers and the applicant. It was submitted that the respondent may be expected to contend that her standing to claim such an order arises from her position as chargee and that "the charge therefore affects Mrs Rogers' proprietary rights in the property" (WS [18]).

15 Section 66F of the Conveyancing Act 1919 defines co-ownership for the purposes of Div 6 of Pt 4, which deals with statutory trusts of property held in co-ownership, to mean ownership whether at law or in equity in possession by two or more persons as joint tenants or as tenants in common; and co-owner is given a corresponding meaning and includes an incumbrancer of the interest of a joint tenant or a tenant in common. Incumbrance is defined to include a charge of a portion and incumbrancee is given a meaning corresponding with that of incumbrance and includes every person entitled to the benefit of an incumbrance. 16 Provision is made in s 66G for the court on application by any one or more of the co-owners to appoint trustees and to vest the co-owned property in them on a statutory trust for sale or for partition. It would seem that a chargee under a charge given by a co-owner may be a co-owner for the purposes of Div 6 of Pt 4 of the Conveyancing Act: In the Marriage of Pauley (1994) 17 Fam LR 448 (dealing with the like provisions of the Property Law Act 1974 (Qld)). The holder of a charge over the interest of one co-owner has been held in England to be entitled to an order for sale of the whole estate: Midland Bank plc v Pike [1988] 2 All ER 434.

17 It would seem that the respondent may exercise rights having an effect on the interest of the applicant both as tenant in common of Te Mata and as mortgagee of Gordon Roger's interest in it. The appointment of trustees for sale would convert the applicant's interest in each case into money.

18 I am of the opinion that the applicant is a "person interested" for the purposes of s 32 of the Act.

19 Section 27 of the Act provides a: " 27 Order charging stock shares and equities (1) If a judgment debtor under a judgment of the Supreme Court or a District Court: (a) has any stock or shares of or in any public company (whether incorporated or not), or any deposit in any bank, building society or credit union in New South Wales, standing in the judgment debtors name in the judgment debtors in each instance's own right, or in the name of any person in trust for the judgment debtor; or (b) has or is entitled to any equity of redemption or other equitable interest, the Supreme Court or a judge of the District Court, as the case may be, on the application of the judgment creditor may order that such stock shares or deposit, or such equity of redemption or equitable interest, or such of them or such part thereof respectively as the Supreme Court or the judge of the District Court, as the case may be, thinks fit, shall stand charged with the payment of the amount for which judgment has been so recovered and interest thereon. (2) Such order shall entitle the judgment creditor to all such remedies as the judgment creditor would have been entitled to if such charge had been made in the judgment creditor's favour by the judgment debtor. (3) Provided that no proceedings shall be taken to have the benefit of such charge until after the expiration of three months from the date of such order." 20 In Quint v Robertson (1985) 3 NSWLR 398 Young J considered whether the interest of a mortgagor under Torrens system land is an "equity of redemption" within the meaning of s 27(1) of the Act. His Honour concluded that it was neither an equity of redemption nor an equitable interest for the purposes of the provision. The interest of the mortgagor under Torrens system land is a legal interest that is the subject of a charge. His Honour observed that the equity that a mortgagor of Torrens System land has - to pay off the mortgage and have the mortgagee give a discharge - is not an equity of redemption for the purposes of s 27 of the Act. In this context his Honour said (at 402): "The plaintiff does not seek to charge, nor could it, the defendant's right to approach this Court to redeem his mortgage, what the plaintiff seeks to have charged is the legal estate in the land which the defendant has which, in my view, cannot be described as an equity of redemption".

21 In DM and BP Wiskich Pty Ltd v Saadi (unreported) NSWSC 16 February 1996 Bryson J followed Quint and observed: "On the face of s 27 of the Judgment Creditors' Remedies Act 1901 it might be thought that an order can be made by the Court giving a judgment creditor a charge over the interest of the judgment debtors. However the interest which may be charged under s 27(1) is an equity of redemption or equitable interest. Those expressions while very commonly used in relation to the interest of a registered proprietor of land under the Torrens system who has given a registered mortgage, are not strictly accurate, as they would be for the interest of a mortgagor who holds title under the general law or Old System. S 27 is traceable through a consolidation statute to legislation enacted in 1841 before the Torrens systems and its form of mortgage existed. The history was traced by Young J in Quint v Robertson (1985) 3 NSWLR 398, where his Honour held that a mortgagor's interest under the Real Property Act 1900 is not an equity of redemption within the meaning of the Judgment Creditors' Remedies Act 1901. It follows from that decision that there is no statutory authority for the Court to grant the judgment creditor in this case a charge over the land. It may be that this is a subject on which law reform could be considered." 22 The respondent submitted that I should decline to follow the decisions in Quint and Wiskich. In her submission the earlier decision in Australia & New Zealand Banking Group Ltd v Greig [1980] 1 NSWLR 112 correctly stated the law. In that case Master Allen (as he then was) concluded that the estate of a mortgagor of land under the Real Property Act is an "equity of redemption or other equitable interest" for the purposes of s 27 (1)(b) of the Act. 23 The respondent relied on the decision of Holmes J in Worrell v Issitch [2000] QSC 146 which was submitted to have followed Grieg. It is to be observed that Holmes J was not dealing with the point that is in issue in these proceedings. His Honour noted that the views expressed by the authors of Sykes and Walker, the Law of Securities, 5th ed, at p19 to the effect that a charging order confers a "proprietary" interest on the creditor had been adopted by Master Allen in Grieg (Grieg, at 118) and that he was also inclined to consider them to be correct. His Honour did not refer Quint or Wiskich.

24 In Quint Young J gave consideration to the decision of Master Allen in Grieg, observing that normally he would follow the decision just as he would follow a decision of a judge of this Court. His Honour explained that there were three reasons why he had concluded that it was necessary to examine the matter again. The first was that Master Allen had considered himself to be bound by the decision of Faucett APJ in Coleman v De Lissa (1885) 6 LR(NSW) Eq 104, albeit that he followed it with expressed reluctance. Of Coleman, Young J observed that, "The learned Master's reluctance is quite evident when one examines the decision of Faucett APJ" (at 399). His Honour analysed Coleman and the legislative history of s 27 of the Act and concluded that there was no good reason why the words "equity of redemption" should be given some special and extraodinary meaning for the purposes of s 27 of the Act. His Honour was of the opinion that there were very sound reasons for not following Grieg. 25 As I have noted, Quint has since been followed by Bryson J. While not bound by the decisions in Quint and Wiskich it is appropriate that I follow them unless I am of the opinion that they are wrong. I am not of that opinion. The decisions are directly on point. 26 The interest of Gordon Rogers in Te Mata is neither an equity of redemption nor an equitable interest for the purposes of s 27(1)(b) of the Act. I propose to discharge the order made by the Registrar. Orders

1. Discharge order 1 made by Acting Deputy Registrar Whitehead on 17 September 2003 that: The interest of Gordon Rogers comprising the property "Te Mata" at Upper Moore Creek Road, Tamworth in the State of New South Wales, being folio identifier 71/615640 stand charged with an order pursuant to s 27 of the Judgment Creditors' Remedies Act 1901.

2. The respondent, Katherine Wentworth, is to pay the applicant, Toni Rogers', costs of the motion.

Last Modified: 12/15/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.