Black & Ors v Garnock & Ors

[2006] HCATrans 619

[2006] HCATrans 619

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S212 of 2006

B e t w e e n -

STUART ALEXANDER BLACK

First Applicant

VAUGHAN LEE CHAPMAN

Second Applicant

ANDREW PHILIP CARTER

Third Applicant

and

BRYCE LACHLAN GARNOCK

First Respondent

SARAH JANE GARNOCK

Second Respondent

ROBERT LEONARD LUFF

Third Respondent

LYNETTE ANNE LUFF

Fourth Respondent

SHERIFF OF NEW SOUTH WALES

Fifth Respondent

MARYLIN CLAIRE SMITH

Sixth Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 NOVEMBER 2006, AT 10.54 AM

Copyright in the High Court of Australia

__________________

MR J. STOLJAR:   May it please the Court, I appear with my learned friend, MS K.W. DAWSON, for the applicants.  (instructed by SBA Lawyers)

MR G.C. LINDSAY, SC:   May it please the Court, I appear with MR A.J. GRANT for the first four respondents.  (instructed by Capon & Hubert)

GLEESON CJ:   Yes, Mr Stoljar.

MR STOLJAR:   Your Honours, the issue of public importance in this case is whether an unregistered interest in Torrens land ranks in priority ahead the rights of a judgment creditor.

GUMMOW J:   You will have to slow down a bit, Mr Stoljar.  The moment one hears the word “priority” one has to slow down.  What is the sequence of events that ‑ ‑ ‑

MR STOLJAR:   The sequence of events was that in about July the respondents exchanged contracts with the judgment debtor selling a parcel of land in southern New South Wales.  Settlement of that contract was scheduled to take place on 24 August 2005.  On the morning of that day, following some discussions between my instructing solicitors and solicitors for my friend, a writ was recorded against the title to the land the subject of the sale following judgment having been obtained earlier in time against the judgment debtor.  At about 2.00 pm on the same day, 24 August ‑ ‑ ‑

GLEESON CJ:   Before you go further, was your client aware of the contract of sale when it was entered into?

MR STOLJAR:   Yes, it was, your Honour.  Then the recording of the writ having taken place at about 11 o’clock in the morning of 24 August 2005, settlement then took place at about 2.00 pm on the afternoon of the same day when, in due course, the transfer having been received by the purchasers, if I can call them that, on settlement was lodged at Land and Property Information.  The Registrar‑General declined to register it on the basis of the earlier recording of the writ.  The issue of public importance in the present case, therefore, is whether the unregistered ‑ ‑ ‑

GUMMOW J:   What is the current state of the registered title?

MR STOLJAR:   As of today, as I understand it, the impediment to the registration of the transfer having been removed, in the ordinary course, that transfer would have been registered.

GUMMOW J:   But as of today what is shown on the register as the registered proprietor?

MR STOLJAR:   I do not have a search as of today, your Honour.  The registration has taken place and the purchasers are shown as the registered proprietor.

CALLINAN J:   What about the writ of execution?  Is it endorsed anywhere on the register?

MR STOLJAR:   It will have lapsed upon registration of the purchasers.

CALLINAN J:   Is that right?  There would be a record of its having been endorsed on the register?

MR STOLJAR:   Yes, there would have been a record of it but upon the registration the writ is taken to have lapsed.  That emerges from section 105C of the Act, your Honour.

GUMMOW J:   So the registered proprietor at the moment is the purchaser?

MR STOLJAR:   The four purchasers, your Honour.

GUMMOW J:   Yes, the purchasers.  What are we supposed to do?

MR STOLJAR:   This was the live issue in dispute in the proceedings.

GUMMOW J:   To reverse that entry of registration or ‑ ‑ ‑

MR STOLJAR:   No, your Honour, to enable an inquiry to be undertaken as to the damages which may be consequent upon the undertaking as to damages given as the price for an interlocutory injunction in the court below.

GUMMOW J:   I am not sure I understand that.

MR STOLJAR:   When the proceedings were undertaken in the first place by the purchasers they obtained an injunction – we say wrongly – restraining the sheriff from executing the writ and also restraining my clients from executing the writ.  Absent that injunction, supported, as it was, by an undertaking as to damages, my clients would have executed the writ and procured a sale of the property.  We say that having been prevented by reason of the various interlocutory regimes in place from pursuing that course, they are entitled to damages on that inquiry.

GLEESON CJ:   What do you say is the measure of damages?

MR STOLJAR:   The measure of damages would be the loss suffered to our clients by reason of not being able to execute the writ and recover in satisfaction of the writ part or whole of the proceeds of sale.

GUMMOW J:   But if there are mitigation questions?

MR STOLJAR:   There are not mitigation questions directly, in my submission, your Honour.  Justice Basten raised, although the point was not argued, questions about subrogation, but that is an issue that would need to be dealt with in due course.  It has not been argued.  It was just a point raised by Justice Basten against my client.  To more fully answer your Honour Justice Gummow’s question, there are provisions in the Uniform Civil Procedure Rules which regulate the distribution of the proceeds of sale in execution of the writ.

GUMMOW J:   So the fundamental point you would be making is, is it, that you had the right to prevent what has taken place, namely, the registration?

MR STOLJAR:   Yes, your Honour.

GUMMOW J:   What should have happened?

MR STOLJAR:   What should have happened is that in the ordinary course the sheriff would have executed the writ by selling the property and the transferee from the sheriff would have obtained upon registration of the transfer from the sheriff indefeasible title and the proceeds of the sheriff’s sale would have been distributed in accordance with the Uniform Civil Procedure Rules which require, among other things, that ‑ ‑ ‑

GUMMOW J:   What would happen to the purchaser?

MR STOLJAR:   The purchaser would be left without a remedy, at least as against my clients, in the sense that they would have whatever remedies they might have against the judgment debtor.

GUMMOW J:   But none in respect of the land, no rights in respect of the land?

MR STOLJAR:   Save, your Honour, that after ‑ ‑ ‑

GUMMOW J:   They could not get on the register, could they?

MR STOLJAR:   No, not on our analysis.

GUMMOW J:   The other thing I was puzzling about in this case is did section 43A of the Real Property Act play any part in anyone’s reasoning?

MR STOLJAR:   It did, your Honour, although it was certainly raised in the court below but, ultimately, it does not play any part in the argument that we seek to propound and, as I understand it, in the way that my friend takes issue with the argument as we now put it.  The question, your Honours, is at its heart one of statutory construction.  If I could take your Honours to the relevant provisions of the Real Property Act, they are attached to the bundle of authorities which we forwarded to the Court yesterday.

Your Honours, there is no authorised reprint including the amendments which were made in August last year and we have included in our bundle a version of the Act which incorporates those amendments.  If I could take your Honours to page 16 of the bundle, your Honours will see that the relevant statutory scheme begins with section 105.  Section 105(1) provides firstly that:

A writ, whether or not it is recorded in the Register, does not create any interest in land –

Subsection (3) is the next salient subsection, your Honour, at least to the extent that Justice Ipp in the court below attached weight to that subsection.  It records that:

Where an application is made under subsection (2) for the recording of a writ and it appears to the Registrar‑General that the land to which the application relates is held by the registered proprietor in a fiduciary capacity the Registrar‑General may refuse to record the writ unless it is proved to the Registrar‑General’s satisfaction that the writ was issued pursuant to a judgment against the registered proprietor in that fiduciary capacity.

I will come back to that in a moment, your Honours.  Then a further subsection of 105 that I draw your Honours’ attention to is subsection (6) which provides that:

Where, at the time of lodgement of an application for the recording of a writ, a dealing for valuable consideration affecting the land identified under subsection (2)(a) in the application is awaiting registration and is in registrable form, the Registrar-General shall not record the writ ‑ ‑ ‑

GUMMOW J:   That was not this case, was it?

MR STOLJAR:   No, it was not, your Honour

GUMMOW J:   Because the purchaser came later.

MR STOLJAR:   Yes.  Could I then take your Honours to page 19 of the bundle and in particular to section 105A(2) which is an important provision in the statutory scheme – we would submit the central provision.  It provides, as your Honours can see:

Where a writ is recorded under section 105 –

pausing there, that is what of course occurred on the morning of 24 August 2005 –

and a dealing (other than a dealing to which, by the operation of subsection (1), this subsection does not apply) –

I will take your Honours back to subsection (1) in a moment –

that affects the land to which the recording relates is lodged for registration –

pausing there, that is, as your Honour Justice Gummow indicated, what did occur in the present case in that subsequent to the recording of the writ the dealing affecting the land was lodged –

within the protected period –

that is a period of six months from the date of recording of the writ –

the Registrar‑General shall not, during the protected period, register the dealing unless the writ is referred to in the dealing as if it were a prior encumbrance.

Taking your Honours briefly back to 105A(1) on the previous page, your Honours will see that subsection (2) does not apply to defined dealings, the most significant one of which being “(a) a transfer giving effect to a sale under the writ”.  Could I take your Honours also to section 105B(2) on page 23.  Your Honours will see that, as I indicated earlier:

Upon the registration of a transfer referred to in subsection (1), the transferee holds the land transferred free from all estates and interests except such as:

(a)are recorded in the relevant folio of the Register or on the relevant registered dealing –

which might be by the lodgement of a caveat, or:

(b)      are preserved by section 42 –

In other words, the transferee obtains indefeasible title in the ordinary course.  Your Honours, if I could before leaving the scheme just point out some other features of the scheme and in particular take your Honours back to 105A on page 19 of the bundle.  Subsections (3) and (4) regulate circumstances in which relevant consents have been obtained and are not relevant here.  Subsection (6) is significant.  It provides that:

Where a writ recorded under section 105 has not, within the protected period, been executed by sale of the land to which the recording relates, a dealing with that land lodged for registration before the writ is so executed may be registered notwithstanding the recording of the writ.

In our submission, what that subsection contemplates is that if after the recording of the writ a transfer affecting the land is lodged for registration and is awaiting registration, it waits its turn until the protected period has expired, after which time the registration of that transfer may proceed in the ordinary course. 

Subsection (7) deals with another circumstance arising after the expiration of the protected period.  Again, after that time two things may happen, if at that time on expiration no transfer has been lodged.  The first thing that could happen is that (a) the sheriff executes the writ by selling the land, in which case a transferee will seek to have the transfer registered.  The other thing that may happen is that the judgment debtor may engage in some dealing with the land, in which case a transferee from the judgment debtor may seek to have its transfer registered. 

Subsection (7) and following of 105A regulates, in effect, priorities questions as between those two competing interests.  Thus, to give one example – and I will not take your Honours through the whole section – at (a) on page 20 your Honours will see that in that event, namely, where a transfer is lodged, the Registrar‑General shall register the transfer under section 105B(1) if certain preconditions are fulfilled, one of which is that no dealing expressed to be for valuable consideration has already been lodged.  The section draws a distinction between dealings for valuable consideration and otherwise. 

That, in a nutshell, is the statutory scheme, your Honours.  I have already taken your Honours to section 105A(2) and indicated to your Honours that it regulates the registration of an unregistered interest.  The real issue for present purposes is whether the holder of an unregistered interest can obtain some other protection in respect of that interest falling short of registration and, in particular, can, as occurred in the present case, the holder of the unregistered interest obtain an injunction restraining the judgment creditor or the sheriff from forcing the writ pending expiry of the protected period.

The statutory scheme expressly does not regulate that issue one way or the other, save that 105A only refers to registration.  We would say that is decisive but it does not in its terms preclude the course taken by the Court of Appeal in the court below.  However, our submission, your Honours, is that taking the scheme as a whole it has been drafted on the basis that ‑ ‑ ‑

GUMMOW J:   By “the scheme” you mean the 1976 amendments?

MR STOLJAR:   Yes, I do, your Honour, incorporating the latest amendments in August 2005 which are neither here nor there, in effect, for the present purposes.  But our submission is that the scheme has been drafted on the basis that a judgment creditor will have a protected period of six months in which to enforce the writ.  Prior to the application for the recording of the writ, if a dealing for valuable consideration has been lodged, as your Honours saw from 105(6), then the writ will not be recorded.

Assuming no such dealing has been lodged and the writ is recorded, there is then a six month protected period in which the sheriff can sell the land, at the end of which, if there is no sheriff sale, a dealing lodged during that time may then be registered and after that time the scheme makes specific provision for the priorities disputes that may arise in respect of contests between transferees from the sheriff and from the judgment.

GLEESON CJ:   Is it irrelevant to any question of priorities that the judgment creditors knew of the sale to your opponent’s clients?

MR STOLJAR:   We would say not on the operation of the statutory scheme any more than it is in the ordinary case in the Torrens when one obtains registration of an interest under Torrens land, your Honour.

CALLINAN J:   You also say that there was no unconscionable conduct established, that that was not an issue; is that right?

MR STOLJAR:   That is also so, your Honour.

GUMMOW J:   There was no unregistered dealing, was there, until the sheriff executed the writ?  We are not talking about competing unregistered dealings, are we?

MR STOLJAR:   No.  The sheriff has not executed the writ, your Honour.  It has been entered on the register but the competing ‑ ‑ ‑

GUMMOW J:   What is the function of the entry on the register?

MR STOLJAR:   It serves to record the writ, after which the protected period begins.

GUMMOW J:   It would be a good objection to conveyance, would it not?

MR STOLJAR:   The recording of the writ?

GUMMOW J:   You could call off the settlement, could you not?

MR STOLJAR:   Yes, your Honour.

CALLINAN J:   There used to be a practice in other places – I do not know about here – for settlements to be made at the registration office and a search made immediately before when the money and documents are exchanged, within seconds of the completion of the search, which was a way of protecting everybody.

MR STOLJAR:   Yes.  That was certainly a practice in this State as well, your Honour.  It does not seem to be a practice that was adopted in the present case but it ‑ ‑ ‑

CALLINAN J:   It seems to have fallen into disuse in lots of ‑ ‑ ‑

GUMMOW J:   Or they have gone electronic, if that is the word.

CALLINAN J:   Yes.

MR STOLJAR:   Yes.  Your Honours, the scheme, in addition to the submissions I have made about it, needs to be considered in its context and your Honours will have seen from the written submissions the statutory mischief to which the scheme was directed, namely, that prior to 1976 sheriff’s sales had become unworkable, if you were to acquire land from a sheriff and face the risk of acquiring an interest burdened by any unregistered interest which might have existed at the time of the entry of the writ, and we say that the approach taken by the court below in effect reintroduces that uncertainty because no longer can one proceed as one should be able to, on the faith of the register alone.  One would need to be certain in one’s dealings with either a judgment creditor or a sheriff to know what unregistered interests might or might not have been created by the judgment debtor.

We would say that our submission in respect of the reasoning of Justice Ipp, very briefly, is that the comparison he drew between section 35 of the Queensland Act, to which he had regard, and section 105B of the scheme in force in New South Wales is not to the point.  Justice Ipp gave undue prominence to 105B and applied law and reasoning in cases that were referrable to similar provisions in other States, effectively to the statutory scheme, by means of that route.

CALLINAN J:   Justice Basten distinguished the two provisions, did he not?

MR STOLJAR:   Yes, and we would most respectfully submit, your Honour, that the flaw in the reasoning – I note the time – is that he failed to consider the scheme as a whole.  Those are my submissions.

GLEESON CJ:   Thank you, Mr Stoljar.  Yes, Mr Lindsay.

MR LINDSAY:   May it please the Court.  We would submit that the substantial question in practical terms for these proceedings would end up being a resolution of questions of costs because at the time the writ was recorded on the register of the land the judgment debtor had virtually no equity in the land so that even if the applicant’s case were to succeed in this Court and it were to obtain an inquiry as to damages on an undertaking as to damages, the probability is that there would be no damages or could be no damages that would be awarded.

CALLINAN J:   Is there any evidence of that, Mr Lindsay?

MR LINDSAY:   I do not think there is.

CALLINAN J:   Should not there be?  It is a relevant matter to special leave.  Evidence could have been adduced as to that because it goes to the question whether special leave should be granted.  I mean, I am not suggesting that you are misleading us in any way but we have no figures before us.

MR LINDSAY:   No, that is a fair criticism.

GLEESON CJ:   But is what you say correct on Mr Stoljar’s analysis?  I realise that that is what follows from your argument, but on his analysis is that correct?

MR LINDSAY:   I believe it to be so.  His argument, as I understand it, is that notwithstanding the fact that we had paid the full purchase price, $1 million, and we had no notice of any writ coming, he is in a position to stop the registration of any transfer on our part and to have the sheriff go on and sell to another party, leaving us to ‑ ‑ ‑

CALLINAN J:   Was there a mortgage there that had to be discharged?

MR LINDSAY:   Yes, there were a series of mortgages and the like.

GUMMOW J:   That is the point, is it, that there was nothing there independently of Mr Stoljar’s involvement because there were secured creditors ahead of the unsecured judgment creditor?  Is that your point?

MR LINDSAY:   That is correct.  Yes, there were two mortgages at least and two caveats, so that would a live question.

GUMMOW J:   So if Mr Stoljar had never appeared on the scene and there had been a sale, he could not have overreached the mortgages.

MR LINDSAY:   Correct.

GUMMOW J:   So when you say there is no equity in the land, that is what you are talking about, is it?

MR LINDSAY:   That is correct, and there is no dispute about the ‑ ‑ ‑

CALLINAN J:   It means, really, an exercise of the power of sale under the pressure from the mortgagee in any event.

MR LINDSAY:   Yes, that certainly could have occurred.  So at the end of the day we submit that in practical terms that is where we would end up.

GUMMOW J:   But the judgment creditor was not a secured creditor?

MR LINDSAY:   No, that is correct.  If one moves to a more abstract level, we would submit that the majority judgment in the court below was correct, or at least not sufficient doubt would attend to it.  In our submission, the construction of the legislation by the majority is one which is both correct and practical, whereas the construction advanced by the minority judge, Justice Basten, gives rise to real difficulties.  Now, in submitting that, we certainly accept that there is room for debate about the way various sections of the legislation operate and there is a degree of tension between various sections, but at the end of the day, in our submission, the existence of that room for debate should not attract a grant of special leave.

In referring to those tensions may I just mention what we would submit are the primary provisions.  On the one hand, tending to favour our side of the record, it is clear that the recording of a writ on the register does not create any interest in land.  That is explicitly stated in section 105(1).  Secondly, it is also clear that a purchaser from the sheriff – and because of the way this case unfolded there is no purchaser from the sheriff – that a purchaser from the sheriff obtains indefeasibility of title only upon registration of a transfer from the sheriff.

We submit that that is significant and that appears in section 105B(2) and we submit that the legislation, for example, in section 105(3), recognises that equitable interests might be the subject of protection.  Section 105(3) empowers the registration and the Registrar‑General to refuse to register or record a writ if it appears that the registered proprietor holds some property as ‑ ‑ ‑

GUMMOW J:   Is it a consequence of your submission that if I am a solicitor acting for a purchaser and on the morning of completion I find out that there is this writ that has been entered I cannot refuse to complete until that has been removed, that that is not an objection to conveyance?

MR LINDSAY:   No, I am not submitting that.

GUMMOW J:   Why is it not then?

MR LINDSAY:   I am sorry?

GUMMOW J:   What is the point?  If it achieves nothing but obstructs my registration, how is it an objection I can take to conveyance?

MR LINDSAY:   I suppose the point we are at is this, that by that time ‑ ‑ ‑

GUMMOW J:   I mean, it does not matter where it is an unregistered interest or whether it is a proprietary interest or not.  I just want to get on the register and if the presence of this writ can stop that happening that seems to me a significant matter.

MR LINDSAY:   It is a significant matter but the ‑ ‑ ‑

GUMMOW J:   But you say it does not stop it happening?

MR LINDSAY:   Subject to the intervention of the court, which is what happened here, the recording of a writ would stop the settlement effectively.

GUMMOW J:   But why should the court remove it?

MR LINDSAY:   The court did not remove it.  What the court did was effectively say that it could grant an injunction to restrain the sale by the sheriff under the writ to enable then the protected period to expire so that in the ordinary course the transfer from my client could be lodged.

GUMMOW J:   I know, but what is the equity to get that injunction?  That is what is mystifying me at the moment.

MR LINDSAY:   Let me say this, first of all, in relation to this particular case the writ was recorded against the register after we had settled, so after we had paid across our $1 million, so in those circumstances we had – I may be not entirely right, but we had no notice if it and it was lodged very quickly.

GLEESON CJ:   No knowledge of it?

MR LINDSAY:   We had no knowledge of the writ until such time as after ‑ ‑ ‑

GLEESON CJ:   The reason you had no knowledge of it was because you did not search.

MR LINDSAY:   No, the search was done ‑ ‑ ‑

CALLINAN J:   On the morning but some hours before, that is why I raised the question of searching immediately and instantaneously before the exchange.

MR LINDSAY:   That is right, and the quirky thing about what happened here is that the judgment creditor’s solicitor was in touch with our solicitors and revealed that there had been, I think, a charging order that enabled the judgment creditors to attach the deposit moneys that we had paid but there was no reference made to an intention to lodge a writ or to the lodgement of the writ, so that my client’s proceeded, having made a search during the course of the morning, to attend settlement and pay across their money.  They found out about the recording of the writ only later when the memorandum of transfer following upon settlement was lodged for registration and at that point it was stopped.

GLEESON CJ:   What was the basis on which you persuaded a judge to postpone further proceedings on the writ until the expiration of the protected period?

MR LINDSAY:   We said we had an equitable interest in the land arising from, first of all, the fact that we had a contract that we had fully performed.

GUMMOW J:   That rather begs the question:  an equitable interest subject to what?

MR LINDSAY:   That does beg the question in this sense ‑ ‑ ‑

GUMMOW J:   And around you go ‑ ‑ ‑

MR LINDSAY:   The Real Property Act provisions do not in terms exclude the jurisdiction of the court to protect an equitable interest in land, nor ‑ ‑ ‑

GUMMOW J:   But the equitable interest in land is an equitable interest to get on the register.  That is what it is all about.

MR LINDSAY:   That is true, at the end of the day, but nevertheless, in our submission, there is an equitable interest that my clients had arising from the contract and the performance of the contract.  They had paid across ‑ ‑ ‑

GUMMOW J:   Equitable interests only exist to facilitate the correct state of affairs on the register.

MR LINDSAY:   And the issue ultimately was whether or not, as my friend submitted, the effect of the legislation was to stop that registration taking place and to exclude the jurisdiction of the court to protect our position and we successfully submitted to the court that because we had an equitable interest in land and the legislation expressly establishes that there is no interest in land created by the registration of a writ that we were entitled to be protected and that protection took the form, in effect, of maintaining the status quo until the expiry of the protected period.  So that is how we were able to do that.

So one can talk about priorities or one can talk about the protection of our interest, but there is nothing in the scheme of the legislation, in our submission, that stands in the way of the court stepping in to protect the interests that we had from the completion of the contract.

CALLINAN J:   But it does not give much effect or utility to the registration of a writ of execution, does it, if what you say is correct?  This is the situation in which you would really want the writ to bite, otherwise you would not be bothering with a writ if you could recover the debt in any other way.

MR LINDSAY:   The writ puts in train a process or machinery that enables a sheriff to sell the land.  The difference between us, at the end of the day, is whether the mere lodgement of the writ means that the writ procedure can be used to ‑ ‑ ‑

CALLINAN J:   But you would not need to get on the register for that.  I mean, getting on the register is not a necessary condition precedent to the sale of the land by the sheriff, unless and except to the extent that the legislation requires it.

MR LINDSAY:   At that point the legislation specifically provides that the recording of the writ does not provide for the judgment creditor an interest in land ‑ ‑ ‑

CALLINAN J:   I understand that.

MR LINDSAY:   ‑ ‑ ‑ and that the judgment creditor only obtains an interest in land – or at least the purchaser from the sheriff only gets it later.

CALLINAN J:   The point I am trying to make is that all of that could have been achieved without a requirement for registration of the writ on the register, so there must have been some purpose in providing that it would be noted on the register, the writ.  The legislation could have provided that, for example, the sheriff or court officer could sell within six months of the issue of the writ, but it does not do that.  It provides more than that.  It makes provision for entry of the writ on the register for some purpose, one would think.

MR LINDSAY:   Yes, in order to allow a breathing space, if you like, for the sheriff to go off and attempt to sell, but the critical question is whether the recording of the writ in itself, though it does not create any interest in land, defeats the ‑ ‑ ‑

CALLINAN J:   I understand the argument.  I am just trying to see what the purpose is of actually having a requirement that the writ be noted on the register and you can make the applicant’s argument, whether it is a good one or not, you can make an argument on that basis.

MR LINDSAY:   I am not suggesting that there is not scope for us to have an argument.  What I am submitting ultimately is that if one looks at the competing views what one sees is that the construction of the legislation preferred by the majority enables the interests of everybody to be protected and be fairly protected, whereas the construction of the minority judge actually leads to substantial difficulties because what the minority position contemplates is that if you settle a conveyancing transaction you have, perhaps unbeknown to you, a defeasible title at best.

CALLINAN J:   Do you not have to include in there if you settle without making a search immediately before you settle?

MR LINDSAY:   If you settle in circumstances in which somebody between the time of your payment of money and your lodgement of the transfer lodges a writ, then ‑ ‑ ‑

CALLINAN J:   That cannot happen if you search and settle almost simultaneously.

MR LINDSAY:   I suppose that is one possibility, but the question is where that does not happen, bearing in mind that we are dealing, for example, with country practitioners, what flows from that?

CALLINAN J:   It might be easier now if it can be done electronically.  It could be done in one of the offices.  It might be a lot quicker.

MR LINDSAY:   We would submit that the oddity and the unworkable aspect of what flows from the minority view is that all conveyancing settlements are of doubtful legal effect because the minority view proceeds on the basis that a purchaser of land who pays the entire purchase price only obtains defeasible title in circumstances in which there might simply be no notice or no reasonable opportunity to obtain notice of a writ.  That would, we would submit, render the whole process impractical and, indeed, it is not clear from Justice Basten’s judgment whether a purchaser could protect himself in these circumstances by lodging a caveat upon entry into a contract, so that there is that question as well.

GLEESON CJ:   Did I understand you to say at the beginning of your submissions that at the time you settled there were mortgages on the title and substantially the whole of the proceeds of sale went to the mortgagees?

MR LINDSAY:   That is correct.  I am reminded that there were two mortgages, one lease and two caveators.

GLEESON CJ:   But if what you said about the direction of the proceeds of sale on settlement was correct, that is only another way of saying, is it not, that the writ of execution never was worth anything anyway because, if the land was sold pursuant to the writ of execution, the proceeds of sale were going to go, not to the judgment creditor, but to the secured creditors.

MR LINDSAY:   That is correct.  That is so.

GLEESON CJ:   That always was so.

MR LINDSAY:   Yes.

GUMMOW J:   So why do we have this litigation?

MR LINDSAY:   From our side of the record, that is a bit of a puzzle because, apart from anything else, on the other side of the record advantage was taken by the applicants of the fact that there had been a settlement because they had a charging order over the deposit, so they get $100,000 from the deposit moneys that we had paid over and then they say that we really should lose the whole of our purchase price, which is $1 million.

GLEESON CJ:   But if you were going to lose the whole of your purchase price, you are only going to lose it to the secured creditors, were you not?

MR LINDSAY:   We did – yes, when we lost, that is so.  That raises a question about whether we could ever get it back from anybody and that is where Justice Basten said there may be questions in a different situation about whether there were rights of subrogation or whatever, but the short

point is that we are left without any practical remedy in circumstances in which we submit the court could protect us and did so.  May it please the Court.

GLEESON CJ:   Mr Stoljar.

MR STOLJAR:   On the matters which were just most recently the subject of argument, namely, the amounts outstanding to the various secured creditors, the first point is that my clients were able to obtain for a charging order the bulk of the deposit moneys paid on exchange which suggests of itself that the judgment debtor did at least have some equity in the property, to use that expression, but my friend says in submissions that the bulk of the purchase moneys were paid to secured creditors.  There is no clear evidence or finding of fact as to precisely how much was paid to secured creditors and it was not an issue ventilated in any detail in the court below.

The reason for that, your Honours, is that the way that my friend has put the case in the court below, or at least at first instance, was that on payment of moneys to the judgment debtor they acquired an equitable interest in the land which they were able to protect in the way that they proceed to do.  Precisely how much the judgment debtor paid of that money to the secured creditors in order to procure a discharge of the securities was simply not established on any finding of the court.

GLEESON CJ:   But your clients must have thought that they knew that otherwise they would not know whether it was worthwhile conducting a court case.  Somebody must know what the size of a bone is.

MR STOLJAR:   I am not in a position to answer your Honour’s question at the minute, but it may be the case that someone knows.  The fact is that in the courts below the way the case was put did not enliven that as a specific issue.  Coming to the points raised by your Honour Justice Callinan in some of the discussion about whether or not there is any efficacy or purpose to a recording of the writ, we would respectfully agree with some of the points that your Honour was putting on a tentative basis in the sense that, in our submission, the approach taken by the majority in the court below renders the statutory scheme and therefore the recording of the writ otiose because a holder of an unregistered interest can achieve a result in practice the same as effecting a removal of the writ, namely, delaying execution of the writ for the period of six months.

Lastly, your Honours, I would simply draw attention to the affidavit in the books that we have put on in this application which indicates that some 369 writs are lodged each year in New South Wales, indicating that the issue is a widespread one and one of public importance.  Those are my submissions.

GLEESON CJ:   Thank you.  We will adjourn for a couple of minutes to consider the course we will take in this matter.

AT 11.35 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.39 AM:

GLEESON CJ:   There is a certificate from the Deputy Registrar that no appearance has been filed on behalf of the fifth and sixth respondents.  An affidavit of service has been sworn on behalf of the solicitor for the applicant on 3 July 2006 deposing that all respondents, including the fifth and sixth respondents, were served with the documents by express post on 28 June 2006.

In this matter there will be a grant of special leave to appeal.

We will adjourn for a short time to reconstitute.

AT 11.40 AM THE MATTER WAS CONCLUDED