Case: Hall v Richards [1961] HCA 34 ; (1961) 108 CLR 84
Outcome: considered
was a clear and unequivocal claim of a charge of the kind which s 7D(3) of the Home Building Act 1989 (NSW) specifically contemplated could be made after judgment had been made by the Local Court. However before me, Mr Cohen argued that in consequence of the fact that the debtors had caused the issue of a lapsing notice for the caveat which resulted in the caveat being removed from the title to their unit, the charge had somehow disappeared. No authority was cited for the proposition. That was unsurprising: it is unarguable. As Kitto J (with whom Dixon CJ and Windeyer J agreed) said in Hall v Richards [1961] HCA 34 ; (1961) 108 CLR 84 at 92 in the context of considering whether a person entitled to a judgment debt was a secured creditor for the purposes of the Bankruptcy Act 1924 (Cth): legal effect of the caveat, as has often been said of caveats under the ordinary caveat provisions of Torrens legislation, was that of a statutory injunction, serving merely to keep property available in case the judgment creditor should wish to have execution against it; and it is clear on the authorities abovementioned that to apply the term ' lien' or even the term ' charge' to anything which has no greater effect than that is to depart from the terminology of the Bankruptcy Act.' Mr Green's verification of the petition and his instructions to lodge the caveat were based on Mr Cohen's advice that the judgment may have created a caveatable interest. That was, in essence, correct because cl 23 operated only when s 7D(3) of the Home Building Act 1989 (NSW) permitted such an interest in land, namely the equitable mortgage, to come into existence which occurred once the Local Court or the tribunal had made an order for payment in favour of Wright Designed. But, contrary to Mr Green's and Mr Cohen's misunderstanding, the caveat did not create any equitable or other interest in land it simply sought to protect the interest which cl 23 created once the Local Court or tribunal had made the order for payment. Next, Mr Cohen argued that the charge provided for in the contracts did not create an equitable estate or interest in the land because it did not meet the definition of 'charge' in s 3 of the Real Property Act 1900 (NSW). That provided, relevantly that a charge meant 'any charge on land created for the purposes of securing the payment of an annuity, rent-charge or sum of money other than a debt'. This, he argued, meant that the judgment or order on which the petition was founded and the other judgment amount owing to Wright Designed each constituted a debt with the result that, whatever cl 23 did, it did not create a 'charge' for the purpose of the Real Property Act 1900 (NSW). However, a 'mortgage' is defined in s 3 of the same Act as 'any charge on land (other than a covenant charge) created merely for the securing the payment of a debt'. 'Charge' in the definition of 'secured creditor' in the Bankruptcy Act 1966 (Cth) has a wide connotation: cf Hall v Richards [1961] HCA 34 ; (1961) 108 CLR 84 at 89. It refers to a relationship which gives the chargee positive rights over the property of the chargor (108 CLR at 92). It is clear that cl 23 created an obligation, enforceable in equity, against the McClymonts to execute a mortgage in registrable form so as to give effect to the equitable mortgage referred to in cl 23. A court of equity could enforce that obligation, absent some unconscientious conduct on the part of Wright Designed, and no reason has been put why it would not do so.