Australian Eagle Insurance Company Limited v Parry

[1991] TASSC 111

110/1991
List "A"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Australian Eagle Insurance Company Limited v Parry [1991] TASSC 111; A110/1991

PARTIES:  AUSTRALIAN EAGLE INSURANCE COMPANY LIMITED
  v
  PARRY

FILE NO/S:  M52/1991
DELIVERED ON:              20 December 1991
JUDGMENT OF:                 Crawford J

Judgment Number:  A110/1991
Number of paragraphs:  17

Serial No 110/1991
List "A"
File No M52/1991

AUSTRALIAN EAGLE INSURANCE COMPANY LIMITED
v PARRY

REASONS FOR JUDGMENT  CRAWFORD J

20 December 1991

1. On 8 April 1991, in the Supreme Court at Darwin, the applicant obtained a judgment against Irene Jeanette Cryer (now Parry) for $589,352.60 together with costs and interest. I will refer to her as Mrs Parry. On 14 May 1991 a certificate of the judgment was registered in this court pursuant to the provisions of the Service and Execution of Process Act 1901 (Commonwealth).

1. The respondent and Mrs Parry have at all material times been the registered proprietors under the Land Titles Act 1980 of 2.051 hectares of land at St. Helens. The land is contained and described in Certificate of Title Vol 4084 Folio 65. On 29 May 1991 a writ of fieri facias was issued out of this court commanding the sheriff that of the lands, goods and chattels of Mrs Parry he should cause to be made inter alia the judgment sum. On 19 June 1991 there was recorded on the title Caveat No B434650 which had been lodged by the respondent. It stated that he was "claiming Estate or Interest in the whole of the property by virtue of the provisions of Section 79 of the Family Law Act in ALL the land mentioned in the schedule following." The schedule referred to the certificate of title I have mentioned. The caveat purported to forbid the registration of any dealing affecting the land. On or after 28 August 1991 the applicant lodged Caveat No B456445 claiming estate or interest as the judgment creditor of Mrs Parry by virtue of the judgment. The caveat also purported to forbid the registration of any dealing affecting the land. On or after 13 August 1991 the applicant lodged with the Recorder of Titles an application to record on the folio of the register the writ of fieri facias and the writ has been recorded on that folio.

1. Pursuant to the Land Titles Act 1980 s135 the applicant has summoned the respondent to attend before this court to show cause why his caveat should not be removed. The respondent appeared on the return of the summons whereupon it was adjourned for hearing on 31 October. On that day the respondent failed to appear and I heard the application in his absence.

1. Section 133(1) provides that where "a person claims an estate or interest in registered land under an unregistered dealing, or by devolution in law or otherwise, that ..... person may, by caveat in the prescribed form lodged with the Recorder, forbid the registration of any dealing affecting that land, estate or interest". By subs(2) the caveat is required to state "the estate or interest claimed by the caveator".

1. The respondent's caveat does not state what estate or interest is claimed and therefore does not comply with s133, nor does it comply with the prescribed form which requires that the nature of the estate or interest be stated. Assuming in favour of the respondent, although there is no reason why I should do so, that he is the husband of Mrs Parry, the Family Law Act 1975 s79 might entitle him to apply for an order altering the interests of him and Mrs Parry in the property, but the section alone does not bestow on one spouse an estate or interest in the land of the other spouse. I adopt the following propositions from the judgment of Green CJ in Martin v Official Trustee in Bankruptcy 14/1990 at pp3–4 [[1990] Tas R 65]:

"1It is only a person who has a legal or equitable interest in land, partaking of the character of an estate in it, or equitable claim to it, who can lodge a caveat.

2It is not sufficient if the interest claimed is based upon an assertion of a purely personal right: it must be an interest in the land.

3The interest asserted must be in existence at the time of the lodgment of the caveat. The assertion by a caveator, who at the time of the lodgment of the caveat does not have an estate or interest in the land, that he has commenced proceedings which may result in such an interest being vested in him does not disclose a sufficient caveatable interest."

The caveat is therefore defective and prima facie liable to be removed. Cwalinski v Cwalinski [1958] Tas SR 57.

1. But the applicant is not entitled to an order removing the caveat unless its claim is also to an estate or interest in the land. This is plain from the provisions of s135(1) which state:

"Any person, other than the caveator, who claims an estate or interest in land affected by a caveat may summon the caveator to attend before the Supreme Court to show cause why the caveat should not be removed."

The question I must determine therefore is whether the applicant "claims an estate or interest in land". The authorities support a conclusion that the applicant has no estate or interest in the land. Counsel for the applicant conceded this but submitted that they should be distinguished because of particular provisions in the Land Titles Act 1980.

1. Specific provision has been made in the Registration of Deeds Act 1935 s11, in respect of land registered under the general law system, for a judgment, upon registration, to "be a charge upon the lands of the judgment debtor." However, there is no similar legislative provision relating to land registered under the Land Titles Act 1980.

1. The Real Property Act 1862 gave no right to a judgment creditor to lodge a caveat, although a right to lodge a caveat was given by s150 to any person claiming an estate or interest in land. By the Real Property Act 1886 s22(1) it was made "lawful for the judgment creditor of any person registered as the proprietor of land under the Principal Act" (the 1862 Act) "to enter a caveat in the manner prescribed by section eighty–two thereof" and by subs(2) it was provided that "the practice, procedure, and mode of dealing with such caveat shall in all respects be the same as if such judgment creditor claimed an estate or interest in such person's land within the meaning of that section." In Hall v Richards [1959] Tas SR 58 Burbury CJ held that a judgment creditor was not by virtue of his judgment a secured creditor under bankruptcy legislation and that it did not give him a "charge or lien on the property of the debtor". He further held that a caveat lodged by the judgment creditor only protected existing rights and did not enlarge or add to the proprietary rights of the caveator. The caveat was nothing but a statutory injunction. The High Court upheld the decision of the Chief Justice (1961) 108 CLR 84. Kitto J, with whom Dixon CJ and Windeyer J agreed, said at p88:

'Thus s22 of the 1886 Act, while recognizing that a judgment creditor has not, as such, any estate or interest in the judgment debtor's land, enables the creditor effectually to forbid any disposition by the debtor which would remove the debtor's estate or interest in the land from the reach of a fi fa to enforce the judgment. In this sense the caveat may be said to 'bind' the land to answer a future execution: The Colonial Bank of Australasia v Riddel (1893) 19 VLR 280; Re Anderson Mitchell & Co Pty Ltd (1928) 23 Tas LR 35."

1. The Real Property Acts have been repealed and replaced by the Land Titles Act 1980 but no change has been made which is significant for the purposes of this case. Section 134 authorizes a judgment creditor of a person registered as the proprietor of registered land to lodge a caveat and it provides that "the practice, procedure, and mode of dealing with a caveat under this section shall in all other respects be the same as if the judgment creditor referred to in subsection (1) claimed an estate or interest in that person's land within the meaning of section 133." On the authority of Hall v Richards, I therefore hold that the applicant has no interest in the land or the interest in land of Mrs Parry by virtue of the judgment.

1. Counsel for the applicant sought to rely on the provisions of s61. It applies to writs of fieri facias and the relevant provisions of it are:

"61– (2)          No execution of any writ shall bind, charge, or affect any estate or interest in registered land except within the period of 3 months after it has been recorded in accordance with subsection (3).

(3)       The Recorder, pursuant to an application in the prescribed form which –

(a)       is accompanied by a copy of a writ;

(b)       identifies, by reference to a folio of the Register or to a registered dealing, the land sought to be affected by that writ; and

(c)       Incorporates, or is supported by, a statutory declaration that, to the Recorder's satisfaction, identifies the judgment debtor named in the writ with the registered proprietor of the land comprised in that folio or registered dealing,

shall record the writ on that folio or registered dealing.

(4)       Subject to this section, where a writ recorded pursuant to subsection (3) is executed by sale of all or part of the land to which the recording relates, and a transfer pursuant to the sale is lodged for registration within 3 months after that recording, the Recorder shall register the transfer, notwithstanding that a dealing with the land by the registered proprietor has already been lodged for registration, and for that purpose may call in the relevant certificate of title or duplicate registered dealing or use the certificate of title or duplicate if it is in his possession.

(5)       After a writ has been recorded pursuant to subsection (3), the Recorder shall not register on that folio or registered dealing a dealing executed by the registered proprietor of the folio or registered dealing until –

(a)       a period of 3 months has elapsed since the writ was so recorded: or

(b)       satisfaction of the writ has been registered.

(6)       Unless and until a writ has been recorded in accordance with subsection (3), no sale or transfer under the writ shall be valid as against a person dealing with the registered proprietor or with a mortgagee or encumbrancee exercising the power of sale contained or implied in his mortgage or encumbrance, notwithstanding the writ has issued out of a court of competent jurisdiction at the time of the dealing and notwithstanding that person had actual or constructive notice of the writ.

(7)       The Recorder, on such evidence as he considers sufficient, may record on the relevant folio of the Register or registered dealing the satisfaction of any writ recorded under this section, and upon the satisfaction of any writ being recorded that writ shall cease to bind, charge, or affect the estate or interest sought to be affected by the writ.

(8)       On the expiration of 3 months after a writ has been recorded in accordance with subsection (3), and if no transfer pursuant to a sale under the writ has within that period been lodged for registration

(a)       the writ ceases to bind, charge, or affect the estate or interest sought to be affected by the writ; and

(b)       the Recorder may cancel the recording of the writ.."

1. At the time of Hall v Richards the corresponding provision to s61 was s94 of the Real Property Act 1862. In subs (1) it stated that "no execution shall bind or affect any estate or interest in land under this Act." By subs(3) it provided for a writ of fieri facias or other direction, decree, or order of this court, or a warrant of execution issued under the Local Courts Act 1896, or any direction or order of any court of competent jurisdiction, directing or authorizing the sale of any estate or interest in land to be entered in the register book following service on the Recorder of Titles with a certified copy. By subs(3) the Recorder was required, on receiving a transfer following any sale under any such writ, direction, decree, order or warrant of execution, to enter the transfer in the register book whereupon the purchaser became the transferee and registered proprietor of the land. By subs(4) it was provided that until service of a certified copy of the writ etc. on the Recorder under subs(2) no sale or transfer under the writ etc would be valid against a purchaser or mortgagee. Finally, s94 provided that upon production of sufficient evidence that any writ etc. had been satisfied the Recorder should make an entry in the register book of a memorandum to that effect whereupon "such writ, direction, decree, or order, or warrant of execution shall be deemed to be satisfied, and the same shall cease to bind, charge, or affect any such estate or interest in such land as aforesaid, unless a transfer upon a sale thereunder shall be produced for registration, within three months from the day on which the copy was served" (subs(6)). Seemingly there was a conflict between the opening and closing words of the section. In the opening words it was stated that no execution "shall bind or affect any estate or interest in land under this Act" but in the closing words it was stated that upon the entry of satisfaction of the writ of execution it "shall cease to bind, charge, or affect any such estate or interest in such land ...."

1. For present purposes I consider that there are immaterial differences between the current legislation and that considered in Hall v Richards. In that case Kitto J said at p87 that the issue of a writ of execution did not bind or affect the land because of the provision in s94(1) of the 1862 Act although under the ensuing subsections the judgment creditor was empowered to pursue a course which for three months would ensure that a transfer on a sale under the writ of fieri facias would be registered and take effect. At p91 Kitto J said that a writ of fieri facias "binds" the execution debtor's goods, but this meant only that no dealing with any of the goods which belonged to the debtor when the writ became binding could alter the fact that they were goods which the writ required the sheriff to seize and sell. It gave the creditor neither property in the goods nor possession of them. Seizure by the sheriff under the writ of fieri facias did not give the execution creditor any property in the goods seized, but it placed the goods in custodia legis. Clearly, Kitto J considered that the position with land was the same and at p93 he said that it was implicit in s94(1) of the 1862 Act that a judgment for money did not by itself bind or affect land under the Act. Taylor J considered that the provisions of s94 operated to bind the land in the hands of the judgment debtor in the sense that he might not deal with the land but there were no words appropriate to create a charge in favour of the judgment creditor in the sense of an interest in the land.

1. Somewhat similar legislation but of course with differences, was considered by the Full Court of Queensland in Bond v McClay [1903] St R Qd 1. The Real Property Act 1861 (Queensland) said in s91(1) that:

"No judgment .... nor any writ of execution ..... shall bind or affect, or be effectual, against any land .... or any estate or interest therein ..... unless and until a memorial of such judgment or writ, as the case may be, shall have been entered in the register–book, and also upon the instrument evidencing title to the estate or interest intended to be charged or taken in execution .... Provided always that no writ of execution, although only entered in the register–book as aforesaid, shall affect any land under the provisions of this Act, or any estate or interest therein .... unless such writ be executed and put in force within three calendar months from the date of the entering of such writ."

The Full Court, at p6, stated that the section was negative in its terms and did not of itself give any additional efficacy to the writ of execution as regards the land. It was held that the execution creditor was not given any right of property in or any proprietary charge upon the land itself by virtue of the entry on the register–book of the memorial of the writ of execution.

1. In Pirpiris v Iovanella [1975] VR 129 McInerney J considered Victorian legislation which was to some extent similar to the legislation of this State and at p137 he pointed out that the legislation he was considering provided that the writ of fieri facias under which the land was sold in the case before him ceased on the expiration of three months "to bind or affect the land." He cited, with implicit approval, Higinbotham CJ in Re Shears and Alder (1891) 17 VLR 316 at p320:

"The meaning of the expression that the property in land or goods is bound is not that the property in them is altered or divested, but that the judgment debtor cannot dispose of them so as to prevent their being taken in execution, nor except as subject to the claims of the execution creditor ....."

1. That an execution creditor gains no interest in land is also supported by Hurley v Bonds (1966) 1 DCR (NSW) 193 where at p198 Cameron–Smith DCJ said that the mere entering of the writ, pursuant to the legislation he was considering, gave no proprietary estate or interest in the land. A person entering or registering a writ only obtained a mere right to sell the land or strictly the right title and interest of the judgment debtor. Hall v Richards was cited.

1. It is my opinion that if it had been intended that the provisions of the Land Titles Act 1980 s61 would create in the judgment creditor an estate or interest in the land of the judgment debtor, it would have been clearly stated and not left as an inference to be drawn from a vague indication of the possibility of that intention. There being no other way in which the creditor can claim to have gained an interest in the land my determination is that the applicant has none. Accordingly, the foundation for the making of this application by the applicant does not exist and the application will be dismissed.

1. The legislation needs amendment to prevent caveats which falsely claim estates or interests in land from hindering judgment creditors in the way which has occurred on this occasion.