Bank of Western Australia Ltd v Studman

[2004] WASC 242

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BANK OF WESTERN AUSTRALIA LTD -v- STUDMAN & ANOR [2004] WASC 242

CORAM:   MASTER SANDERSON

HEARD:   25 OCTOBER 2004

DELIVERED          :   23 NOVEMBER 2004

FILE NO/S:   CIV 1588 of 2000

BETWEEN:   BANK OF WESTERN AUSTRALIA LTD

Plaintiff

AND

MARGARET ANN STUDMAN
First Defendant

CHARLES PHILIPPE LOUIS NILAND as Administrator of the Estate of RONALD VICTOR STUDMAN (DEC) in Bankruptcy
Second Defendant

Catchwords:

Mortgagee action - Application for sale in lieu of partition by mortgagee entitled to one half of the property - Turns on own facts

Legislation:

Property Law Act, s 126

Result:

Sale ordered

Category:    B

Representation:

Counsel:

Plaintiff:     Mr G M Abbott

First Defendant             :     Mr D Wallace

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     BankWest Legal

First Defendant             :     Ginbey & Co

Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

English, Scottish and Australian Bank Ltd v Phillips (1937) 57 CLR 302

Martin‑Smith v Woodhead (1990) WAR 62

Robert Reid & Co v Minister for Public Works (1902) 2 SR(NSW) 405

Zafiropoulos v Recchi (1978) 18 SASR 5

Case(s) also cited:

Davenport v King (1883) 49 LT 92

Garcia v Williams [1988] 194 CLR 395

Guthrie v Australian and New Zealand Banking Group Ltd (1991) 23 NSWLR 672

McMahon v AF Wade Pty Ltd [1983] WAR 152

Sandgate Corporation Pty Ltd v Ionnou Nominees Pty Ltd [2000] 22 WAR 172

Yerkey v Jones (1939) 63 CLR 649

1. MASTER SANDERSON:  This matter has quite a history.  The nature of the present application can be best understood when set against the background of the relevant facts.  Those facts can be briefly summarised.  The first defendant and Ronald Victor Studman, deceased, were the joint registered proprietors of a property at 36 Parnell Avenue, Marmion ("the Property").  The first defendant is now deceased and his estate is bankrupt.  The named second defendant is trustee of the bankrupt estate.  On 9 April 1990 the deceased executed a mortgage over the property in favour of the plaintiff.  The mortgage was registered against the title to the property on 26 April 1990.  The marriage of the deceased and the first defendant was dissolved by decree nisi on 2 November 1992.  By order of the Family Court dated 16 October 1995, the deceased was ordered to transfer to the first defendant all his right, title and interest to the property.  The deceased died on 4 December 1995.  All these facts are pleaded in the reamended statement of claim.  The plaintiff in these proceedings is attempting to obtain possession of the property pursuant to the provisions of the mortgage.

2. The first defendant has, by counterclaim, alleged that the mortgage should be set aside insofar as it relates to her interest in the property.  Further, the counterclaim seeks against the second defendant an order that the second defendant deliver a properly executed transfer of the deceased's interest in the land to the first defendant.  There is no issue about the validity of the mortgage insofar as it charges the moiety previously held by the deceased.

3. The first defendant had argued that as a consequence of the Family Court order and the death of the deceased, the deceased's former moiety passed to the first defendant free from the encumbrance of the mortgage.  A trial of preliminary issues was heard by Hasluck J on 11 February 2003.  By consent, orders were made to the effect that:

   (1)the Family Court order severed the joint tenancy of the deceased and the first defendant in the property;

   (2)the Family Court order resulted in the deceased and the first defendant holding an equal share in the property as tenants in common in equal shares subject to the deceased complying with the Family Court order;

   (3)the death of the deceased caused his share in the property to become part of his deceased estate;

   (4)the first defendant is entitled to have the deceased's interest in the property transferred to her; and

   (5)notwithstanding any transfer of the deceased's interest to the first defendant, the transferred moiety remains subject to the mortgage in favour of the plaintiff.

4. It follows that the plaintiff is entitled to enforce its mortgage against the moiety formerly held by the deceased in the property.  This is irrespective of whether the deceased's interest in the property is held by the second defendant, or whether it is transferred to the first defendant.

5. Against that background the plaintiff seeks an order for sale in lieu of petition under s 126 of the Property Law Act. Section 126(1) reads as follows:

   "(1)Where in an action for partition the party or parties interested, individually or collectively, to the extent of a half share or upwards in the land to which the action relates request the Court to direct a sale of the land and a distribution of the proceeds, instead of a division of the land between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale accordingly."

6. Clearly what the section allows is a person who is "interested … to the extent of a half share … in the land" to seek an order for sale in lieu of petition.  It is well established that a mortgage registered under the Transfer of Land Act is a statutory charge and creates an interest in the land which may be dealt with quite apart from the fee simple or other estate or interest mortgaged:  see English, Scottish and Australian Bank Ltd v Phillips (1937) 57 CLR 302 at 321; RobertReid & Co v Minister for Public Works (1902) 2 SR(NSW) 405 at 416; Zafiropoulos v Recchi (1978) 18 SASR 5 and Sykes Law of Securities, 5th ed, page 227. Counsel for the first defendant accepted during the course of the argument that the plaintiff as mortgagee did have an interest in the land within the meaning of s 126 of the Property Law Act and that its interest was in a moiety.

7. That being the case, the plaintiff is, as of right, entitled to an order for sale in lieu of partition:  see Martin‑Smith v Woodhead (1990) WAR 62. In this case, of course, there is no question of the property being partitioned. Sale then is the only option. Generally speaking, an order for sale should follow common form 38. That is what the plaintiff has proposed in this case. It is entitled to judgment substantially in accordance with the draft order.

8. At the conclusion of the hearing I indicated to the parties that I would give them the opportunity to be heard as to the precise nature of the orders and as to costs.  For present purposes then, it is sufficient if I say that the plaintiff is entitled to an order for sale of the subject property.