Black v Garnock [2007] HCA 31 1 August 2007 S401/2006
ORDER
1.Appeal allowed with costs.
2.Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 1 June 2006 and in their place order that:
(a)the appeal to that Court be dismissed with costs; and
(b)there be an inquiry into what damages, if any, the first to third respondents in the Court of Appeal (namely, Stuart Alexander Black, Vaughan Lee Chapman and Andrew Philip Carter) suffered by reason of either the injunction granted by Campbell J by order made on 7 October 2005 or the injunction granted by Basten JA by order made on 21 December 2005 which the appellants in the Court of Appeal (namely, Bryce Lachlan Garnock, Sarah Jane Garnock, Robert Leonard Luff and Lynette Anne Luff) ought to pay.
On appeal from the Supreme Court of New South Wales
Representation
J Stoljar with K W Dawson for the appellants (instructed by SBA Lawyers)
G C Lindsay SC with A J Grant and G F Mahony for the first to fourth respondents (instructed by Capon & Hubert)
Submitting appearance for the fifth respondent
No appearance for the sixth respondent
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Black v Garnock
Conveyancing – Land titles under the Torrens system – Execution against land under the Torrens system – Recording of a writ for the levy of property in respect of land under the Real Property Act 1900 (NSW) ("the Act") – Appellants obtained judgment against the sixth respondent ("judgment debtor") – Judgment debtor was registered proprietor of land – Judgment debtor agreed to sell land to the first to fourth respondents ("purchasers") – Prior to settlement, a writ for the levy of property was recorded in respect of the land – Following settlement, Registrar-General refused to register transfers – Purchasers sought interlocutory injunction restraining appellants and Sheriff of NSW from executing the writ – Nature of interest of purchasers in land – Whether person claiming estate or interest not recorded in the Register and not preserved by the Act is entitled to an injunction to prevent execution of a writ for the levy of property.
Practice and procedure – Enforcement – Enforcement of judgment debt by way of writ for the levy of property in respect of land – Purchasers of property sought interlocutory injunction restraining appellants and Sheriff of NSW from executing writ – Whether person claiming estate or interest not recorded in the Register and not preserved by the Act is entitled to an injunction to prevent execution of writ.
Statutes – Interpretation – Meaning and effect of s 105A(2) of the Act – s 105A(2) prohibited the Registrar-General from registering, during a "protected period", a dealing that affected…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Black v Garnock [2007] HCA 31
Case
[2007] HCA 31
Decision Date
CaseChat Overview and Summary
The High Court of Australia considered an appeal concerning the effect of registering a writ of execution against Torrens title land. The appellants, judgment creditors, had obtained a judgment against the sixth respondent, who was the registered proprietor of certain land. The sixth respondent agreed to sell this land to the first to fourth respondents (the purchasers). Prior to the settlement of the sale, the appellants registered a writ for the levy of property against the land. The Registrar-General subsequently refused to register the transfers to the purchasers. The purchasers sought an interlocutory injunction to prevent the execution of the writ.
The central legal issues before the High Court were whether the purchasers, who had a contractual interest in the land but whose transfer had not yet been registered, were entitled to an injunction to prevent the execution of the writ. This involved determining the nature of the purchasers' interest in the land under the Torrens system and the effect of the registration of the writ of execution, particularly in light of section 105A(2) of the *Real Property Act 1900* (NSW), which prohibited the Registrar-General from registering certain dealings during a "protected period" after a writ was recorded.
The High Court, by majority, allowed the appeal. The Court reasoned that the purchasers' contractual right to purchase the land, while enforceable in equity, did not constitute a registered estate or interest in the land that was preserved by the *Real Property Act 1900* (NSW) against the effect of a registered writ. The Court noted that the purchasers had not argued that the appellants' actions in procuring the recording of the writ were unconscientious, nor that their completion of the contract prior to the writ's registration placed them in a better position. The Court emphasised that the statutory scheme of the Torrens system prioritised registered interests, and the purchasers' unregistered interest, even if established by contract before the writ was recorded, did not override the appellants' right to proceed with the execution of their judgment once the writ was properly registered.
The High Court set aside the orders of the Court of Appeal of New South Wales and ordered that the appeal to that Court be dismissed with costs. Furthermore, the High Court ordered an inquiry into what damages, if any, the purchasers suffered by reason of the injunctions previously granted, to be paid by the appellants.
Orders
Orders of the court
1. Appeal allowed with costs.
2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 1 June 2006 and in their place order that:
(a) the appeal to that Court be dismissed with costs; and
(b) there be an inquiry into what damages, if any, the first to third respondents in the Court of Appeal (namely, Stuart Alexander Black, Vaughan Lee Chapman and Andrew Philip Carter) suffered by reason of either the injunction granted by Campbell J by order made on 7 October 2005 or the injunction granted by Basten JA by order made on 21 December 2005 which the appellants in the Court of Appeal (namely, Bryce Lachlan Garnock, Sarah Jane Garnock, Robert Leonard Luff and Lynette Anne Luff) ought to pay. (Gleeson CJ and Crennan J dissenting)
Background
Background to the litigation
The questions raised in this case would be unlikely to have arisen had those salutary practices not fallen into disuse, whether by reason of electronic recording of dealings or otherwise, although it is difficult to understand why some comparable prudent practice could not equally, and perhaps more easily, have been adopted here to accommodate electronic lodgment, searching and recording. The questions are as to the effect of the registration of a writ of execution, and the rights of purchasers whose transfer of Torrens title land was lodged subsequent to that.Facts On 17 September 2004 the appellants obtained judgment in the District Court of New South Wales for about $228,000 against the sixth respondent and her husband. Between 11 October 2004 and 19 August 2005 the appellants moved to bankrupt the sixth respondent and her husband, but later agreed to adjourn the hearing of the bankruptcy petition in exchange for assurances that the sixth respondent would sell property, including the Torrens title land in question here ("the land"), to raise funds to discharge their liabilities. On 15 July 2005 the sixth respondent and the first to fourth respondents ("the purchasers") exchanged contracts for the sale of the land for the sum of $1,000,000. A deposit of $100,000 was paid by the purchasers. On 19 August 2005 the sixth respondent's solicitors informed the appellants' solicitors that although settlement of the land would occur on 24 August 2005, the appellants would probably receive little of the proceeds. In consequence, on 23 August 2005, the appellants obtained a writ of execution from the District Court of New South Wales. The next day, the purchasers' solicitors made a search of the Register on which, until then, the writ of execution had not been registered. At about 9.20 am on 24 August 2005 the appellants' solicitors notified the purchasers' solicitors of the judgment in favour of the appellants, the currency of the bankruptcy proceedings, and that the appellants had obtained a charging order in respect of the deposit. To reinforce that caution, the first appellant told the principal of the purchasers' solicitors that the price of the land was less than its market value, that the purchasers were related to the sixth respondent, that there were creditors other than the appellants, and that they intended to try to prevent the sale. At the purchasers' solicitors' request, the appellants' solicitors provided, by facsimile to them, a copy of the charging order. Entry of the writ of execution on the Register was effected at 11.53 am on 24 August 2005 and settlement of the sale, without any intervening search of the Register, occurred almost two hours later.Case History The purchasers commenced proceedings in the Supreme Court of New South Wales on 28 September 2005 for orders that the appellants be restrained from executing the writ, cancellation of the recording of the writ, and related relief. On 7 October 2005 the purchasers were granted an interlocutory injunction to restrain execution, but on 2 December 2005 the Court (Lloyd AJ) dismissed the proceedings and discharged the interlocutory injunction. The purchasers appealed to the Court of Appeal of New South Wales which granted an interlocutory injunction to them subject to an undertaking as to damages:"THE COURT ORDERS THAT:1.Upon the [purchasers], by their counsel, giving the usual undertaking in accordance with rule 25.8 of the Uniform Civil Procedure Rules 2005, the [appellants] and their servants and agents be restrained from executing registered Writ for Levy on Property AB718530 (Writ No 908/03) issued on 23 August 2005 against any of the land contained in Folios 2/594272, 109/658087 and 110/658088 and known as 'Wanaka' via Bombala, New South Wales pending determination of this appeal;2.The costs of this application be the [purchasers] costs in this appeal;3.The hearing of the appeal be expedited and listed on 22 February 2006; …"
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
GLEESON CJ
(dissent)
GUMMOW AND HAYNE JJ
(dissent)
CALLINAN J
(dissent)
It also follows from this examination of the provisions of the RP Act that the bare fact that the purchasers made their contract of sale with the judgment debtor before the writ was recorded did not constitute any sufficient reason to intercept what otherwise would have been the operation of the RP Act. And, as noted earlier, it was the bare fact of making the contract before the writ was recorded that was treated as determinative by the majority in the Court of Appeal. Neither in the Court of Appeal nor on appeal to this Court did the purchasers seek to make some alternative case. In particular, it was not said that the judgment creditors' procuring of the recording of the writ was unconscientious and it was not said that the purchasers' completion of their contract with the judgment debtor put them in any better position than their making of the contract. Nor was anything said to turn on the provisions of s 43 of the RP Act[33].[33]Section 43(1) provided:"Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall be required or in any manner concerned to inquire or ascertain the circumstances in or the consideration for which such registered owner or any previous registered owner of the estate or interest in question is or was registered, or to see to the application of the purchase money or any part thereof, or shall be affected by notice direct or constructive of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding; and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud."Conclusion and orders For these reasons the appeal should be allowed with costs. The orders of the Court of Appeal of the Supreme Court of New South Wales made on 1 June 2006 should be set aside. In their place there should be orders:(a) that the appeal to that Court is dismissed with costs; and(b)that there be an inquiry into what damages, if any, the first to third respondents in the Court of Appeal (namely, Stuart Alexander Black, Vaughan Lee Chapman and Andrew Philip Carter) suffered by reason of either the injunction granted by Campbell J by order made on 7 October 2005 or the injunction granted by Basten JA by order made on 21 December 2005 which the appellants in the Court of Appeal (namely, Bryce Lachlan Garnock, Sarah Jane Garnock, Robert Leonard Luff and Lynette Anne Luff) ought to pay. It used to be the practice of careful conveyancers, acting for persons acquiring registrable estates or interests in Torrens title land, to lodge with the officials in charge of the Register, a caveat as soon as the agreement for the relevant dealing was made, in pre-emptive protection of their clients' prospective legal estates or interests pending completion of their agreements and registration of the instruments perfecting them. It was a further practice of those conveyancers to effect the actual settlement of the agreement by the exchange of all relevant instruments and funds at that office, simultaneously with a search of the Register, to verify that no other such caveat or record of dealing had been lodged as might obstruct, delay or detract from the registration of their clients' instruments to perfect their estates or interests.