Case: Re Tulloch Ltd (in liq) and the Companies Act (1978) 8 ACLR 808
Outcome: discussed
Registrar-General (to whom execution of the RP Act is entrusted by s 4) is required to make such recordings in the Register (kept for the purposes of the RP Act as the record of all dealings registered under it (s 31B)) as the Registrar-General considers appropriate. Once aware that any land comprised in a folio of the Register has become Crown land within the meaning of the Crown Lands Act 1989 (NSW) (s 13H(1)). The Registrar-General considered that the land here was Crown land, being land vested in the Crown (in right of the State) within the meaning of the definition of "Crown land" in s 3(1) of the Crown Lands Act . This was based on the decision of Needham J in Re Tulloch Ltd (in liq) and the Companies Act (1978) 8 ACLR 808 that, on disclaimer, the land had escheated to the Crown. Importantly, s 13H(2) provides that "...the Registrar-General may record 'The State of New South Wales' as the registered proprietor of land referred to in [s 13H(1)] if it is not already so recorded". And, s 13J provides that where "...'The State of New South Wales' is recorded as the registered proprietor of land in accordance with this Act, the estate to which that recording relates is an estate in fee simple". The present provisions of Pt 3 of the RP Act and, in particular, ss 13H and 13J were first enacted in 1980 (see: Real Property (Crown Land Titles) Amendment Act No 193 of 1980 (NSW); Sch 1(3)). Once a person is recorded in a folio of the Register as the registered proprietor for the time being of an estate or interest in land in that folio, the person holds that estate or interest subject to such other estates and interests (including mortgages) and other entries as are recorded in that folio absolutely free from all other estates or interests, other than in the case of fraud or certain closely defined exceptions as provided in s 42. The position identified by Jessel MR was accepted as correct in relation to disclaimers by liquidators and trustees in bankruptcy in a series of Australian cases decided prior to the enactment of ss 13H and 13J of the RP Act , and collected by Bowen CJ in Eq in Re Middle Harbour Investments Ltd and the Companies Act [1977] 2 NSWLR 652 at 662A-G, see too at 662G-664G; and Needham J in Re Tulloch Ltd 3 ACLR at 812-813 (followed by Madgwick J in In the Matter of Woo; National Australia Bank v Leroy [2003] FCA 862 at [10] ); see too the discussions by Napier CJ in Ex parte Cleland &amp; Teesdale Smith [1960] SASR 199 at 209, Bryson J in Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556 at 563B-566A (who did discuss ss 13H and 13J) and by EM Heenan J in Rams Mortgage Corporation Ltd v Skipworth (No 2) [2007] WASC 75 ; (2007) 239 ALR 799 at 800-802 [6] - [11] . In Re Condobolin Bila CDEP Ltd (deregistered); Commonwealth v New South Wales (2006) 59 ACSR 682 , Gyles J held that where land had been purchased by a company using grant moneys from a Commonwealth body that later was wound up and the liquidator disclaimed the land, it should be ordered pursuant to s 568F of the Corporations Act 2001 (Cth) to vest in the Commonwealth, the State having submitted to any order the Court might make. Here, by force of s 133(2) the effect of the trustee's disclaimer on 29 October 2008 appears to have determined any ongoing charge on the land for subsequent liabilities that would otherwise have continued to accrue, such as future (unpaid) interest on the debt secured by the mortgage. I agree with Needham J's conclusion that a mortgagee of Torrens title land is entitled to be granted a vesting order: Re Tulloch Ltd 8 ACLR at 814. I am of opinion that the land should be vested under s 133(9) in the bank for the purpose for which it originally was mortgaged, namely to secure payment to the bank of all principal, interest and other moneys due to it notwithstanding the effect of the disclaimer. If, after a sale, there is a shortfall the bank will be able to prove for it as an unsecured creditor in the bankrupts' estate. I propose to order that the legal title of the land vest in the bank so that it may sell the estate in fee simple to a purchaser subject to conditions. I am of opinion that on a sale the bank be entitled to retain, from the proceeds of sale, all moneys to which it would have been entitled assuming that there had been no disclaimer had it sold exercising its power of sale, to the intent that the land will answer as secure for all interest, fees and other moneys that would have been secured by the mortgage. The bank should be entitled to deduct those sums from the proceeds of sale as if there had not been a disclaimer and the mortgage had continued to secure the debts and liabilities of the bankrupts or their estates. The bank should apply the sale proceeds in the manner provided in s 58(3) of the RP Act accounting to the trustee in bankruptcy for any surplus namely: "The purchase money to arise from the sale of any such land, estate, or interest, shall be applied, first, in payment of the expenses occasioned by such sale; secondly, in payment of the moneys which may then be due or owing to the mortgagee, chargee or covenant chargee; thirdly, in payment of subsequent mortgages, charges or covenant charges (if any) in the order of their priority; and the surplus (if any) shall be paid to the mortgagor, charger or covenant charger, as the case may be." I will also require the bank to provide accounts of how it has dealt with the sale proceeds to the State and the Registrar. I will direct the bank to bring in short minutes to give effect to these reasons. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 21 September 2009 Solicitor for the Applicant: DibbsBarker Counsel for the Applicant: Mr J White No appearance for the Respondent: Date of Hearing: 20, 22 May 2009 Date of Judgment: 21 September 2009 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/1066.html