Wentworth v Rogers

Wentworth v Rogers - [2004] NSWSC 1176 - NSWSC 2004 case summary — Zoe

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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.

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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]).

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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".

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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.

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