Case: Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd [1999] HCA 20 ; (1999) 196 CLR 245
Outcome: cited
s 56(1) the proprietor of an estate or interest in land under the provisions of the RP Act intended to be charged with or made security for the payment of a debt must execute a mortgage in the approved form. By force of s 57(1) the mortgage has effect as a security but does not operate as a transfer of the land mortgaged or charged (unlike the position at common law: see too Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd [1999] HCA 20 ; (1999) 196 CLR 245 at 262 [22] per Gaudron, Gummow and Callinan JJ). Importantly, where a mortgagee wishes to exercise a power of sale based on default in payment under, or compliance with, the mortgage, the mortgagee must first serve on the mortgagor a notice under s 57(2)(b). If no notice is duly served under s 57(2)(b), then ss 57, 58 and 58A do not permit the mortgagee to exercise the power of sale. But, the RP Act is silent as to the remedy of a mortgagee that has not served a notice that authorises it to exercise a power of sale prior to a disclaimer by the registered proprietor's trustee in bankruptcy. The current problem The obligations to pay the amounts secured by the mortgagee were personal to the mortgagors, here, the bankrupts. Thus, the State, as the present registered proprietor of the land cannot be given a notice under s 57(2)(b) by the bank. This is because the State has no obligation under the mortgage even though its estate or interest is subject to the charge created by the bank's registration as mortgagee to secure repayment of what it was owed by the bankrupts. The State attended for a short time at the hearing but did not appear. However, it consented to the application made by the bank to become registered as proprietor of the land in order to sell it to a purchaser who will be entitled to be registered as proprietor of an estate in the land in fee simple. The bank intends to pay to the trustee in bankruptcy any surplus realised from the sale after the sums secured by the mortgagee have been repaid. Despite this cooperative conduct, the legal basis for achieving this simple goal requires some analysis because of the interaction between the laws of the State and the Commonwealth when property affected by the incidents of State law is disclaimed by its owner (as trustee in bankruptcy) under the Bankruptcy Act . Did the land escheat? However, as all judges since Jessel MR have recognised, the question of where the title goes after a disclaimer is as clear as mud. The device of treating the title as going to the Crown in right of the State (or Territory) in which the property is located may be convenient, so long as it respects the source whence it derives, namely (in a bankruptcy) s 133 of the Bankruptcy Act (or Div 7A of Pt 5.6 of the Corporations Act ) and the intention of the Parliament of the Commonwealth that this title in the Crown is not absolute or by escheat. This result can be accommodated by its limited interaction with Torrens title legislation, and the special position created with the (temporary) repository of the title, namely the Crown, pending the final decision of the Court as to the person in whom the title will vest: cf Figgins 196 CLR at 262-264 [22]-[27]. This is an incident of the conferral of jurisdiction on the Court to decide these questions. It is not appropriate to read provisions conferring jurisdiction on or granting powers to a court by making implications or imposing limitations which are not to be found in the express words of the legislation: Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54 ; (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ.