Caulfield & Read
[2020] FamCAFC 127
•28 May 2020
FAMILY COURT OF AUSTRALIA
| CAULFIELD & READ AND ANOR | [2020] FamCAFC 127 |
| FAMILY LAW – APPEAL – PROPERTY – Whether a registered mortgage is subject to s 24 of the Limitation of Actions Act 1974 (Qld) – Whether the appellant’s rights under his mortgage over the husband and the wife’s property have been extinguished – Proper construction of s 24 of the Limitation of Actions Act 1974 (Qld) – Discussion of the tension between s 24 of the Limitation of Actions Act 1974 (Qld) and the Land Title Act 1994 (Qld) – Statute of limitations – Indefeasible title – Where a title arising from a mortgage can be extinguished by provisions in a statute of limitations – Appeal dismissed. FAMILY LAW – CROSS-APPEAL – PROPERTY – Appeal against final property settlement orders – Where the mortgaged properties the subject of the substantive appeal form a significant portion of the property available for division between the husband and the wife – Assessment of contributions – Consideration of s 75(2) factors – Challenges to credit and fact findings – No merit in any of the grounds of the cross-appeal – Cross-appeal dismissed. |
| Family Law Act 1975 (Cth) s 75(2) Uniform Civil Procedure Rules 1999 (Qld) r 389 Queensland, Parliamentary Debates, Legislative Assembly, 9 December 1959 Queensland Law Reform Commission, On a Bill to amend and consolidate the law relating to Limitation of Actions (Report No 14, 2 October 1972) Tyler, ELG, PW Young and CE Croft, Fisher & Lightwood’s Law of Mortgage (LexisNexis Australia, 3rd ed, 2013) LexisNexis, Halsbury’s Laws of Australia, (at 27 May 2020) 295 Mortgages and Securities, ‘14 Remedies of the Mortgagee’ [295-7305] |
| Campbell v The District Land Registrar of Auckland (1910) 29 NZLR 332 Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317 Dublin, Wicklow & Wexford Railway Co v Slattery (1878) 3 App Cas 1155 Gleeson v Gleeson [2002] NSWSC 418 Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28 Reliance Financial Services Pty Ltd v Pineiro (2017) 19 BPR 38,245; [2017] NSWSC 1739 Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550; [2016] HCA 22 Sahrawi & Hadrami (2018) FLC 93-857; [2018] FamCAFC 170 Spoor v Price [2019] QCA 297 Spoor v Price [2019] QSC 53 Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14 |
| APPELLANT/ SECOND CROSS- RESPONDENT: | Mr Caulfield |
| FIRST RESPONDENT/ FIRST CROSS-RESPONDENT: | Ms Read |
| SECOND RESPONDENT/CROSS-APPELLANT: | Mr Fry |
| FILE NUMBER: | BRC | 2772 | of | 2011 |
| APPEAL NUMBER: | NOA | 35 | of | 2019 |
| DATE DELIVERED: | 28 May 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Ainslie-Wallace, Aldridge & Watts JJ |
| HEARING DATE: | 29 October 2019 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 5 April 2019 |
| LOWER COURT MNC: | [2019] FamCA 201 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT/ SECOND CROSS-RESPONDENT: | Mr Wilson QC |
| SOLICITOR FOR THE APPELLANT/ SECOND CROSS-RESPONDENT: | C Firm |
| THE FIRST RESPONDENT/ FIRST CROSS-RESPONDENT: | In person |
| THE SECOND RESPONDENT/ CROSS-APPELLANT: | In person with the assistance of a McKenzie friend |
Orders
The Application in an Appeal filed on 28 October 2019 be dismissed.
The appeal be dismissed.
The cross-appeal be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Caulfield & Read and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 35 of 2019
File Number: BRC 2772 of 2011
| Mr Caulfield |
Appellant/ Second Cross-Respondent
And
| Ms Read |
First Respondent/ First Cross-Respondent
And
| Mr Fry |
Second Respondent/Cross-Appellant
REASONS FOR JUDGMENT
Introduction
This appeal primarily concerns the proper construction of s 24 of the Limitation of Actions Act1974 (Qld) (“the Limitation Act”) which provides:
Extinction of title after expiration of period of limitation
(1)Subject to section 17, subsection (2) of this section and the Real Property Act 1861, where the period of limitation prescribed by this Act within which a person may bring an action to recover land (including a redemption action) has expired, the title of that person to the land shall be extinguished.
(2)Where an action to recover land is brought before the expiration of the period of limitation prescribed by this Act, the expiration of that period does not affect the right or title of the plaintiff to the land—
(a)for the purposes of the action; and
(b)so far as the right or title is established in the action.
Mr Caulfield (“the appellant”) submits that his mortgage over three properties at Town B (“the Town B properties”) owned by Ms Read (“the wife”) and Mr Fry (“the husband”), which is registered under the Land Title Act1994 (Qld) (“the Land Title Act”) (the successor to the Real Property Act 1861 (Qld) (repealed)), is not subject to s 24 of the Limitation Act because that section specifically exempts registered interests under the Land Title Act from its operation. The primary judge did not find this to be the case and held that the appellant’s interest as mortgagee had been extinguished (at [108] and [161]).
The issue is of great significance to the husband and the wife because the mortgaged Town B properties form a significant portion of the property available for division between them in their property settlement proceedings.
The husband and the wife were married in late June 2000. Almost three weeks later, on … July 2000, the husband became bankrupt on the hearing of a creditor’s petition. He was discharged from bankruptcy in August 2003.
Notwithstanding his bankruptcy, the husband managed to retain his interest in the Town B properties. A further property was purchased in State K, United States of America (“USA”) (“the State K property”) in 2004.
The husband and the wife separated in August 2005.
At the time of the hearing before the primary judge, the husband and the wife agreed that the three Town B properties were worth $190,000, $18,500 and $18,500, respectively (at [164]). The State K property was agreed to be worth AUD402,500 and was subject to a mortgage in the sum of AUD108,890 (at [165]). The wife had superannuation valued at $24,740 (at [167]).
The primary judge’s finding that the appellant’s mortgage over the Town B properties had been extinguished led to a finding that the net property held by the husband and the wife, including superannuation held by the wife, was just under $575,000 (at [225]). His Honour considered that the appropriate division of this property was for the wife to receive 75 per cent and the husband to receive 25 per cent. The husband has filed a cross-appeal challenging the correctness of that outcome, which will be discussed below.
If the appellant’s rights under his mortgage have not been extinguished then the Town B properties are not available for division between the husband and the wife.
The Town B properties & the mortgage
In the middle of 1998, the husband owned the Town B properties, a property at Suburb L (“the Suburb L property”) and a healthcare business in Brisbane. The husband operated the healthcare business through a company owned and controlled by him. Another company of his provided services and owned the commercial unit property in Brisbane from which it operated.
The husband was in serious financial difficulty at this time. The company operating the healthcare business was placed into administration and then became subject to a Deed of Company Arrangement. The healthcare business was to be sold so as to realise funds to pay creditors. The other assets of the husband were provided as security for the funds payable to the administrators under the Deed of Company Arrangement.
These matters led to the husband’s financer placing pressure on him to reduce his debt to it. Consequently, the husband sold the Suburb L property and the Town B properties to a company ostensibly owned by his sister but, in fact, controlled by him. Although this sale greatly complicated matters, it may be put aside for the purpose of this appeal. For some reason, no transfers of the Town B properties were ever executed and proceedings taken by the company owned by his sister to claim an interest in the Town B properties were dismissed.
The appellant, who is a solicitor, was acting for the husband during this time. On 9 August 1999, a mortgage over all three of the Town B properties in favour of the appellant was registered. It secured a principal sum of $170,854.64 but also referred to a Deed of Loan. It contained an “all monies” clause so that all money owed by the husband to the appellant, pursuant to any agreement, was also secured under the mortgage.
It is common ground that the husband’s bankruptcy on … July 2000 was an event of default under the mortgage. In March 2003, the appellant served the husband with a Notice of Exercise of Power of Sale in respect of the Town B properties.
On 28 June 2011, the appellant commenced proceedings against the husband in the Supreme Court of Queensland seeking to enforce the mortgage and exercise the power of sale in relation to the Town B properties. No steps have been taken in those proceedings since October 2012. Any further step is now prohibited without an order from the Court (r 389(2) of the Uniform Civil Procedure Rules 1999 (Qld)).
The property settlement proceedings between the husband and the wife were commenced by the wife in October 2011. The appellant intervened in them on 14 September 2015.
The Appeal
It is useful to commence the discussion of the appeal by recording the appellant’s concession that he is now barred from bringing an action to recover the amount owing under the mortgage. The appellant said:
3.10It is not disputed in this appeal that the right of action to recover the principal sum of money said to be owing under the mortgage first accrued on … July 2000, being the date of the [husband’s] bankruptcy. That was an event of default under the terms of the mortgages. Accordingly, pursuant to s 26 [of the Limitation Act], an action to recover the principal owing under the mortgage was barred from … July 2012 and an action to recover interest payable in respect of the money secured by the mortgage was barred from … July 2006.
(Appellant’s Summary of Argument filed on 3 September 2019)
Section 13 of the Limitation Act similarly bars an action “to recover land after the expiration of 12 years from the date on which the right of action accrued to the person”.
It follows that the appellant could not now commence proceedings to recover the land or to recover the principal and interest owing.
It is true that the Supreme Court of Queensland proceedings remain on foot but the appellant did not suggest that he would or could pursue them. All parties, probably correctly, seemed to regard them as essentially defunct, although technically, still on foot (s 24(2) of the Limitation Act). The issues arising in those proceedings have been agitated in the proceedings before this Court.
The appellant’s contention was neatly put as follows:
3.11The [a]ppellant, however, relying on his position as a registered mortgagee and the rights and powers conferred on a registered mortgagee by [the Land Title Act] sought an order that the husband deliver possession of the [Town B] properties to him within 28 days of the order and an order that those three lots be sold pursuant to section 78(2)(c)(iii) [of the Land Title Act].
3.12The issue on appeal is whether that relief was barred or extinguished by operation of [the Limitation Act], sections 13 and 24.
(Appellant’s Summary of Argument filed on 3 September 2019) (Footnotes omitted)
The point raised is novel and, as far as the research of counsel and the Court go, it has not been the subject of any previous decision. This is perhaps not as surprising as it may seem, because although s 24 of the Limitation Act has counterparts in the legislation of most of the other states, New Zealand and the United Kingdom, none of those provisions are said to be subject to the local equivalent of the Land Title Act. (See s 25 of the Limitation Act 1981 (NT) and the relevant provisions applying in New South Wales, which we shall discuss shortly. Section 17(b) of the Limitation Act 1980 (UK) which subjected that Act to s 75 of the Land Registration Act 1925 (UK) (repealed) was repealed in 2003).
The present form of s 24 of the Limitation Act was originally found in The Limitation Act of 1960 (Qld) (repealed) as s 22. The “Limitation Bill” was circulated to the Legislative Assembly in December 1959 (Queensland, Parliamentary Debates, Legislative Assembly, 9 December 1959, 2007–2009). Section 22 of The Limitation Act of 1960 (Qld) (repealed) contained a reference to “Cf. U.K., 1939, s. 16. Cf. N.Z., 1950, s. 18. Cf. Vic., 1958, s. 18.” It is in the following terms:
Subject to the provisions of section fourteen of this Act and the provisions of “The Real Property Acts, 1861 to 1956,” at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.
Section 18 of the Limitation Act 1950 (NZ) (repealed) provided:
Subject to the provisions of section 10 of this Act, at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action) the title of that person to the land shall be extinguished.
Section 10 of the Limitation Act 1950 (NZ) (repealed) referred to settled land and land held on trust and is not presently relevant.
Section 18 of the Limitation of Actions Act1958 (Vic) is to the same effect. It says:
Subject to the provisions of section eleven of this Act, at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action or an action to compel discharge of a mortgage) the title of that person to the land shall be extinguished.
So too, was s 16 of the Limitation Act 1939 (UK) (repealed), which provided:
Subject to the provisions of section seven of this Act and of section seventy-five of the Land Registration Act, 1925, at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action) or an action to enforce an advowson, the title of that person to the land or advowson shall be extinguished.
(Footnotes omitted)
Section 75(1) of the Land Registration Act 1925 (UK) (repealed) stated that “[t]he Limitation Acts shall apply to registered land in the same manner and to the same extent as those Acts apply to land not registered”, but went on to provide that where the title is otherwise extinguished, the person registered as the proprietor shall be deemed to be holding the property on trust for the person who has acquired title against them.
Clearly enough, these sections of the New Zealand, Victorian and United Kingdom Acts had the effect of extinguishing the rights arising under all mortgages, registered under the Torrens system of title or not, after the expiration of the period set out in the relevant provisions (save for the provisos which are not presently relevant).
The questions are then: why did the Queensland legislature insert the words “[s]ubject to… the Real Property Act 1861” into s 24 of the Limitation Act when a similar provision was not in the counterparts in the legislation of other jurisdictions on which it was based; and what do those words mean?
The Second Reading Speech of the Limitation Bill was given on 23 February 1960. It refers to a helpful Explanatory Memorandum which had been circulated to the members of the house (Queensland, Parliamentary Debates, Legislative Assembly, 23 February 1960, 2039–2041). None of the Supreme Court Library Queensland, the Queensland Parliamentary Service, the Office of the Queensland Parliamentary Counsel, the Queensland State Archives or the Table Office has been able to provide a copy of it.
The Second Reading Speech does not refer to the terms of the proposed s 22 and they are not discussed in the ensuing debate.
In 1972, the Queensland Law Reform Commission prepared a report “On a Bill to amend and consolidate the law relating to Limitation of Actions” (Report No 14, 2 October 1972). The Bill discussed in that report became the Limitation of Actions Act 1974 (Qld).
The Queensland Law Reform Commission noted at page 3 that the enclosed Bill was based on The Limitation Act of 1960 (Qld) (repealed), which in turn was drawn from the Limitation Act 1939 (UK) (repealed) and the Limitation of Actions Act1958 (Vic) and, that “little or no alteration has been made thereto.” At page 6, the current s 24(1) of the Limitation Act is also said to follow The Limitation Act of 1960 (Qld) (repealed). This suggests that no radical departure from the United Kingdom or Victorian legislation had been intended, at least in the Commission’s view.
In the course of a discussion about the extinguishment of rights, generally and consistently with the above comment, the Queensland Law Reform Commission said:
In Queensland, as in the United Kingdom, it is only in relation to successive conversions and in actions for recovery of land that title is extinguished. In all other causes of action, unless the defendant appropriately raises the defence that the cause of action is statute barred, an action on that cause of action is not defeated by the statutory bar.
(Queensland Law Reform Commission, On a Bill to amend and consolidate the law relating to Limitation of Actions (Report No 14, 2 October 1972) p.5)
Thus, s 22 of The Limitation Act of 1960 (Qld) (repealed) was reproduced unamended as s 24(1) of the Limitation Act. Section 24(2) of the Limitation Act is new but is not relevant having regard to the concessions of the appellant as set out earlier.
In December 1997, the operation of the Limitation Act was considered by the Queensland Law Reform Commission (Queensland Law Reform Commission, Review of the Limitation of Actions Act 1974 (Qld) (Discussion Paper No 50, December 1997)). In the course of discussion about the existing legislation, at page 128, the Commission referred to s 24 of the Limitation Act and simply said “[t]he effect of the limitation period is to extinguish title to the land”.
The Land Title Act
We now turn to see what assistance can be gleaned from the Land Title Act.
Both the Real Property Act 1861 (Qld) and the Land Title Act provide for a system of title by registration.
A “registered proprietor” is defined in Sch 2 (Dictionary) of the Land Title Act as meaning “a person recorded in the freehold land register as proprietor of the lot.” A “proprietor” of a lot means “a person entitled to an interest in a lot” including a mortgagee.
Section 38 of the Land Title Act states that “[t]he indefeasible title for a lot is the current particulars in the freehold land register about the lot” (Emphasis in original). It is “created on the recording of the particulars of the lot in the freehold land register” (s 37 of the Land Title Act).
Section 184 of the Land Title Act provides:
Quality of registered interests
(1)A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests.
(2)In particular, the registered proprietor—
(a)is not affected by actual or constructive notice of an unregistered interest affecting the lot; and
(b)is liable to a proceeding for possession of the lot or an interest in the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot.
(3)However, subsections (1) and (2) do not apply—
(a)to an interest mentioned in section 185; or
(b)if there has been fraud by the registered proprietor, whether or not there has been fraud by a person from or through whom the registered proprietor has derived the registered interest.
The exclusions under s 185 of the Land Title Act do not apply in this matter.
Thus, the appellant submits that he has an indefeasible title as a mortgagee which subsists, even though he is barred from enforcing his rights to recover the principal and interest by action or to recover the land.
The fact that a title may be indefeasible, however, does not mean that it is permanent. As has been seen, a title arising from a mortgage can be extinguished by provisions in a statute of limitations. The purpose of such limits is obvious – if a person or entity who has a right to land which requires steps to be taken to enforce his, her or its title, such to enter upon the land where it is occupied by someone in adverse possession and to sell it, they must do so within a reasonable time or lose their right to do so.
There is no obvious reason why registered interests in land should be treated any differently to other interests, yet that is the effect of the appellant’s proposed construction of s 24 of the Limitation Act. It is all the more surprising a result when it is accepted that the normal and usual way of dealing with land in Queensland is through registered dealings. The appellant’s proposed interpretation means that s 24 of the Limitation Act would be of very limited operation because it would only apply to unregistered dealings.
It is to be recalled that it is only the limited interests described in s 24 of the Limitation Act that are extinguished, namely the title that gave rise to an action to recover the land.
Returning to the Land Title Act, the appellant submits that s 78 provides a mechanism by which he can obtain possession of the Town B properties that does not rely on the provisions of the mortgage, which he accepts he cannot enforce by action. It states:
Powers of mortgagee
(1)A registered mortgagee of a lot has the powers and liabilities of a mortgagee under the Property Law Act 1974, part 7.
(2)Without limiting subsection (1), but subject to the terms of the mortgage, if the mortgagor defaults under a registered mortgage, the mortgagee may—
(a)take possession of the mortgaged lot in a way that does not contravene the Criminal Code, section 70; or
(b)enter into possession of the mortgaged lot by receiving rents and profits; or
(c)by a proceeding in a court of competent jurisdiction—
(i)obtain possession of the mortgaged lot; or
(ii)foreclose the right of the mortgagor to redeem the mortgaged lot; or
(iii)obtain an order of the court for the sale of the mortgaged lot.
(3)The powers in this section are in addition to other powers exercisable by the mortgagee.
The appellant submits that any tension between s 24 of the Limitation Act and the provisions of the Land Title Act is resolved, as said earlier, by restricting the operation of the former to any unregistered dealings. This, it is said, accords with the primacy given to indefeasible titles.
It is hard to reconcile this proposition with the undoubted fact that other jurisdictions have expressly created provisions that extinguish the title to land after the expiry of the relevant time period in which to bring an action for the recovery of land and that s 24 of the Limitation Act was based on them.
It is also hard to reconcile s 13 and s 26 of the Limitation Act which bar proceedings to recover land as well as the principal and interest owing, with s 78(2)(c)(iii) of the Land Title Act, which on the appellant’s construction would permit him to commence an action to seek the sale of the land (for the undoubted purpose of paying himself the principal and interest owing under the mortgage). Neither s 13 nor s 26 of the Limitation Act is subject to the provisions of the Land Title Act. The appellant’s contention leads to a direct conflict between s 13 of the Limitation Act and s 78(2)(c)(iii) of the Land Title Act.
This is because s 5(5) of the Limitation Act defines “action” for the purposes of that Act as including a right to enter into possession of land. It states:
A reference in this Act to a right of action to recover land includes a reference to a right to enter into possession of the land or, in the case of a rentcharge, to distrain for arrears of rent and a reference to the bringing of such an action includes a reference to the making of such an entry or distress.
Thus, s 13 of the Limitation Act bars both the right to enter as well as an action seeking to enforce that right. Its sits comfortably with s 78(2)(c) of the Land Title Act, if the latter is subject to the former but not otherwise.
To put it in the terms of the submissions that were made to us, we do not accept that the appellant had two independent sets of rights to enforce his mortgage – one which arose according to the terms of the mortgage only and which are subject to the operation of the Limitation Act and another which arose under the Land Title Act which were never extinguished. Such a construction would render the Limitation Act otiose in relation to registered mortgages. In the absence of a clear intention on the part of the legislature, we would be loath to adopt such a course. We see no contrary intention.
In response, the appellant poses the question: what then do the words “subject to… the Real Property Act 1861” mean, if his contention is rejected?
The answer is perhaps what was intended was to pick up provisions akin to s 75 of the Land Registration Act 1925 (UK) (repealed).
Another answer may be found in s 40 of the Limitation Act 1969 (NSW), which although it makes it plain that an action founded on a registered mortgage is covered by the Act, the Act “does not affect the right title or remedies under a mortgage” registered under the Real Property Act 1900 (NSW). As to its operation, see for example, Gleeson v Gleeson [2002] NSWSC 418 (“Gleeson”) at [39]; Reliance Financial Services Pty Ltd v Pineiro (2017) 19 BPR 38,245 at [69]. See also ELG Tyler, PW Young and CE Croft, Fisher & Lightwood’s Law of Mortgage (LexisNexis Australia, 3rd edition, 2013) at 16.20.
The effect of the New South Wales provision is that “the mortgagee cannot obtain a judgment or other judicial remedies for the principal and interest, but on the other hand the mortgagee can continue to exercise rights specifically conferred by the Real Property Act on a mortgagee, without limitation as to time” (Gleeson at [39]). In other words, the position in New South Wales is akin to what the appellant contends the position is in Queensland.
The Limitation Act was not based on the Limitation Act 1969 (NSW) and the relevant sections of both the limitation statutes and, the Land Title Act and Real Property Act 1900 (NSW) are different. The general words used in the introduction to s 24 of the Limitation Act are, without more, insufficient for that purpose.
We consider that we do not need to find a definitive answer to the question of what the words “subject to… the Real Property Act 1861” mean. It is sufficient to find that it does not mean what the appellant contends it to mean.
Finally, we were referred to Spoor v Price where both Dalton J ([2019] QSC 53) and the Court of Appeal ([2019] QCA 297) proceeded on the basis that a registered mortgage was extinguished by the operation of s 24 of the Limitation Act. However, the issue for decision in that case was quite different and the present point was not considered. It does not assist with the determination of this matter.
The appellant relied upon the decision of the Court of Appeal of New Zealand in Campbell v The District Land Registrar of Auckland (1910) 29 NZLR 332 (“Campbell”). There, the Court of Appeal had to consider the apparent tension between s 2 and s 34 of the Real Property Limitation Act 1833 (UK), 3 & 4 Wm 4, c 27 (repealed) (“the Limitation Act 1833 (UK)”) and s 61 of the Land Transfer Act 1908 (NZ) (repealed).
The first Act contains limitation provisions concerning interests in land and was enacted in 1833.
Section 2 of that Act provides that “[n]o person shall make an entry or distress or bring an action to recover any land or rent” more than 20 years after the right to do so has accrued. Section 34 of that Act has the effect of extinguishing “the right and title of such person to the land, rent or advowson” at the expiration of the period limited by the Act for making an entry or distress or any action or suit.
Section 61 of the Land Transfer Act 1908 (NZ) (repealed) provided:
After land has become subject to this Act no title thereto, or to any right, or privilege, or easement in, upon, or over the same, shall be acquired by possession or user adversely to or in derogation of the title of the registered proprietor.
On the facts before the Court of Appeal in Campbell, more than 20 years had passed since the mortgagee’s right to enter upon the property and to sell it had accrued without the mortgagee having entered into possession of the land. By majority, the mortgagee was found to have an indefeasible title which persisted despite s 34 of the Limitation Act 1833 (UK). Williams ACJ explained this in the following manner at 337–338:
… I construe section 61 as meaning that no title to land, or to any right, privilege, or easement over it, is to be acquired by possession or user adversely to or in derogation of the title of the registered proprietor, whatever the nature of that title may be. In other words, that the term “registered proprietor” means the registered proprietor of the land or of any estate or interest in it. If that were not so, and the words were limited to the case of an absolute owner, then, although a title by possession could not be acquired against such an owner, it could be acquired against a tenant for life and a leaseholder as well as against a mortgagee. The whole policy of the Act is to make the title of the registered proprietor in respect of his registered interest paramount to all unregistered interests, and to give him an indefeasible title to that interest. No doubt in the case of a mortgage the mortgagee has a charge upon the land only for the amount actually due on the mortgage, notwithstanding that a larger amount may appear by the instrument of mortgage to have been originally advanced. But if default has been made, and any sum remains due, the mortgagee, so long as it remains due, by virtue of his being registered proprietor of the mortgage, has an indefeasible title to the possession of the land mortgaged, and to the other rights and remedies given him [sic] by the statute or the particular instrument. This title and the rights which accompany it seem to me to be preserved by section 61, notwithstanding possession in derogation of it…
The reasoning appears to be that the mortgager was in adverse possession of the land as against the mortgagee and, that if s 34 of the Limitation Act 1833 (UK) was applied, the mortgager would acquire title to the land by that adverse possession, contrary to s 61 of the Land Transfer Act 1908 (NZ) (repealed).
We consider that the particular terms of s 61 of the Land Transfer Act 1908 (NZ) (repealed), which appear to have no equivalent in the Land Title Act, play a significant part in Court of Appeal’s reasoning. In addition, the provisions of the Limitation Act 1833 (UK) were enacted well before the introduction of the Torrens system of title. Subsequently, as we have sought to emphasise, limitation statutes passed after the introduction of such land ownership schemes have had the effect of title held under registered mortgages.
For those reasons, we consider that the decision of Campbell has no application to the particular provisions before the Court and is not authority for the wider proposition that a “mortgagee’s statutory power of sale is not affected by the statute of limitations” (Appellant’s Summary of Argument filed with leave on 29 October 2019, paragraph 5.7).[1]
[1] The appellant’s Summary of Argument referenced the source of this quote as “LexisNexis, Halsbury’s Laws of Australia, (at April 2008) Mortgages: Commentary to Mortgages: Extinguishment of mortgage security, [1490].” That section of Halsbury’s Laws of Australia has been updated since the date of retrieval noted by the appellant (being April 2008). The most recent update (current to 28 June 2019) states that “[f]or as long as any part of the debt remains unpaid, the mortgagee is entitled to pursue any or all remedies available to a mortgagee in any order or concurrently… [h]owever, the right to pursue all remedies is subject to legislation that limits the mortgagee’s ability to bring certain actions by reason of the expiration of the limitation period.” A footnote then makes reference to s 26 of the Limitation Act (LexisNexis, Halsbury’s Laws of Australia, (at 27 May 2020) 295 Mortgages and Securities, ‘14 Remedies of the Mortgagee’ [295-7305]).
It follows that we consider that the appellant’s title has been extinguished by s 24 of the Limitation Act.
The Cross-Appeal
The Notice of Cross-Appeal filed by the husband on 16 May 2019 contains seven grounds of appeal. The husband’s Summary of Argument filed with leave on 29 October 2019, however, refers to eight grounds of appeal, some of which are similar to the Notice of Cross-Appeal, albeit differently numbered, but some are quite different. The wife responded to the husband’s written submissions as set out in his Summary of Argument and we shall follow the same course. We use the same headings as the husband so as to try to identify the errors asserted by him.
On 29 October 2019, at the hearing of the appeal, we granted the husband leave to file an Application in an Appeal to adduce further evidence on the cross-appeal. No submissions were made by any party in relation to the proposed further evidence, which was all material available to the husband at the time of the hearing before the primary judge. In these circumstances, the Application in an Appeal to adduce further evidence will be dismissed.
Ground 1: Wrong Principle – The primary judge erred in the assumption that the wife was the most credible witness in accepting most statements without a hard fact being adduced.
This ground of appeal commences a theme which is developed in other grounds of appeal. A significant issue between the husband and the wife was whether the wife held approximately USD700,000 including interest, in savings bonds and other retirement funds, which were used by the husband to support the start-up of his business in the USA and his costs of living there. The husband denied that this was so or that the wife had ever held such assets.
The difficulty was that the wife produced no documents in support of her own testimony or “hard fact” as the husband put it. This ground of appeal asserts that the primary judge erred in accepting and acting upon the wife’s evidence alone as to her ownership of the bonds.
The primary judge resolved the issue in the following terms:
56.The husband submitted that as the wife had produced no documentary evidence corroborating her assertions about this, she simply should not be believed. He also said that she had been bankrupt herself in her twenties after her first husband had left her, so she could not have retained savings bonds she received since her birth. In reply to that, the wife said that savings bonds are protected from bankruptcy in the USA so she was able to retain them and she said that she could not provide any such documentary evidence as she had allowed the husband to handle their joint finances right from the time of their marriage and that included giving him full access to her American assets and financial resources.
57.Neither party adduced any expert evidence about the effect of bankruptcy on the ownership of the savings bonds, but, in the circumstances, I prefer the wife’s evidence about this. Principally, this is because I considered her an honest witness whereas I was not impressed with the husband’s credibility at all. It was extremely difficult to determine at any time and on any issue whether the husband was telling the truth or just concocting evidence as he went along. I say respectfully, that the husband did not impress me as a person whose word could be trusted on anything he said. Indeed, without wanting to add further burden to the emotional impact all of the circumstances have had on the wife in this case over the years, I consider it more probable than not that the husband sought out and married an American woman principally to gain the right to live and work in the USA at the time when he saw some promising signs in respect of the … business in that country and his business interests in Australia had failed. He certainly demonstrated little ongoing commitment to the wife once he left for the USA in early 2001.
58.In the USA, [W LLC] sold and supported the [product] that the husband had been developing and selling in Australia through [G Pty Ltd] and then [L Pty Ltd]. [Y] Inc was the company that owned the rights to this [product] in the USA and continued to develop it and provide it to [W LLC] for sale. In or about 2002, [Y] Inc purchased [W] Inc’s half share of [W LLC] for $40,000, according to the husband. The husband and the wife then owned it outright through their ownership of [Y] Inc and the business relationship with Mr [V] ended.
59.The husband put some documents before the Court in the proceedings in asserted support of his position that the wife had no assets in the USA at the time he went there. These documents included some financial documents said to be documents of [Y] Inc and [W LLC] showing that Mr [V], through his company, [W] Inc, financed the establishment of the business and that [Y] Inc and [W LLC] had to repay him from their share of earnings of the business. I am not persuaded by the documents or the assertions of the husband.
The husband submits that these findings were flawed because:
·the wife used the name “L” in evidence. Whilst that might be a shortened version of the name “N”, it is not a shortened version of the name “M”, which appears on the wife’s birth certificate;
·at a hearing on 11 October 2012 before a Federal Magistrate, the husband’s counsel demonstrated that the wife had forged documents and falsified bank accounts and other information;
·the wife did not comply with orders made on 11 October 2012, which “inhibited the [husband’s] ability to disprove, at the time of trial, the existence of the supposed ‘[b]onds’” (Husband’s Summary of Argument filed with leave on 29 October 2019, paragraph 6.4.2);
·Orders made on 11 October 2012 which reserved the issue of costs were not mentioned or dealt with by the primary judge;
·according to the husband, answers given by the wife at the hearing before the primary judge as to her familiarity with a named bank account and the origin of furniture that she claimed to have purchased were wrong; and
·the primary judge did not permit the husband to rely on four affidavits which he was intending to read.
Even if these propositions were accepted, which is subject to considerable doubt, we do not see what bearing they have upon the findings made by the primary judge as set out at [75] above. They do not render them “glaringly improbable” or “contrary to compelling inferences” or contrary to “incontrovertible facts” (Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550 (“Robinson Helicopter”) at [43]).
Further, a trial judge is not obliged to accept or reject a witness’s evidence as a whole. A judge is entitled to accept some parts of it and to reject others (Dublin, Wicklow & Wexford Railway Co v Slattery (1878) 3 App Cas 1155 at 1201; Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317 at 322; Sahrawi & Hadrami (2018) FLC 93–857 at [59]).
There is no merit in this ground of appeal.
Ground 2: Mistake of Fact – The primary judge’s findings (at 55–57 and 214) that the wife contributed $700,000 in savings bonds to the marriage was plainly wrong and should be overturned.
This ground of appeal, again, relates to the issue of the bonds. In his Summary of Argument, the husband sets out, over 18 paragraphs, a number of reasons why the wife’s evidence as to her ownership of the bonds was incorrect and was merely “just a bland statement of belief” (Husband’s Summary of Argument filed with leave on 29 October 2019, paragraph 7.2). The paragraphs contain references to evidence, internet searches apparently conducted for the purpose of this appeal and submissions as to what findings should flow from them, as opposed to identifying error on the part of the primary judge.
There are a number of immediate difficulties with the husband’s submissions.
First, as we have already indicated, credibility and fact finding is a matter particularly for the trial judge. We have already referred to Robinson Helicopter. There, the High Court said:
43.The fact that the judge and the majority of the Court of Appeal came to different conclusions is in itself unremarkable. A court of appeal conducting an appeal by way of rehearing is bound to conduct a “real review” of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, or they are “glaringly improbable” or “contrary to compelling inferences”. In this case, they were not. The judge's findings of fact accorded to the weight of lay and expert evidence and to the range of permissible inferences. The majority of the Court of Appeal should not have overturned them.
(Footnotes omitted)
None of the matters raised by the husband, either alone or collectively, establishes that his Honour’s fact finding was “glaringly improbable”, “contrary to compelling inferences” or contrary to “incontrovertible facts”. At best, those were considerations that bore upon the issue of whether the wife’s evidence should have been accepted and did not compel its rejection.
Secondly, this aspect of the matter proceeded before the primary judge on the basis of written submissions only. Apart from a general reference to the wife’s bankruptcy, the particular points now raised by the husband were not put to the primary judge and it is now too late to raise them as the course of the hearing may have been different had he done so (Metwally v University of Wollongong (1985) 60 ALR 68 at 71).
During cross-examination, when the husband asked the wife about the effect of her bankruptcy on her ownership of the bonds, she replied that retirement funds were exempt from bankruptcy and that her lawyer advised her that the bonds did not need to be declared to her trustee in bankruptcy (Transcript 22 June 2015, p.82 lines 5–16). The husband did not challenge those statements at the time.
Thirdly, the husband’s Summary of Argument refers to internet searches which he submits establish that the wife’s answers were wrong. These searches, whatever status they might have (they fall well short of being expert evidence), were not put to the wife or placed before the primary judge. Had that occurred, there is likely to have been a challenge to their admissibility and accuracy.
No application was made to us to receive them as further evidence in the appeal, although the same difficulties would have attended their reception, with the additional problem for the husband that this was, as far as we can see, material that was available to him at the time of the hearing before the primary judge.
The husband is merely seeking, impermissibly, to re-run this aspect of the hearing on appeal. This ground of appeal does not succeed.
Ground 3: The delay of approximately two and a half years in the primary judge making a decision in this matter was of such a length that the primary judge denied himself the special advantage on issues of fact finding and credit.
The husband submits that because of the delay between the hearing before the primary judge and his Honour’s delivery of the reasons for judgment, the findings of the primary judge on the issue of the bonds was unsafe.
It is well established that where there has been a significant delay in the provision of reasons for judgment, the Court hearing the appeal is entitled to scrutinise the reasons of the primary judge more closely. The reasons for judgment have to clearly explain how the issues before the Court were resolved (Wallis & Manning (2017) FLC 93-759 at 77,030).
We have applied that approach in our consideration of the husband’s submissions.
Grounds 4 and 5
These grounds of appeal only arise if Grounds 1 and 2 succeeded. As they did not, no consideration of them is required.
Ground 6: The primary judge’s assessment of respective contributions of 65/35 per cent in favour of the wife was unreasonable or plainly unjust.
The husband’s assertion that this determination was “grossly unfair” because the wife had contributed $10,200 to the business and marital homes over the course of the marriage and separation does not establish error (Husband’s Summary of Argument filed with leave on 29 October 2019, paragraph 11.1).
Ground 7: The primary judge’s decision to make a further adjustment of 10 per cent in favour of the wife based on the assumption that the husband had been solely receiving income from the husband and the wife’s business over the period of separation until the hearing was against evidence.
The primary judge found that the husband and the wife’s financial and non-financial contributions to their property and the welfare of the family supported the apportionment of their property so that the wife received 65 per cent and the husband received 35 per cent (at [220]).
His Honour considered that an adjustment of 10 per cent in favour of the wife, was justified having regard to the factors raised by s 75(2) of the Family Law Act 1975 (Cth). His Honour said:
221.The husband is almost 68 years of age. He made assertions in his written submissions about his state of health, though he had adduced little, if any, evidence about this. He said he was living in [Country D] with a new partner who worked and supported him whilst he cared for their young baby. He asserted that he was, at the time the trial ended, trying to obtain an Australian Age Pension. I am not satisfied that he was not still receiving income from [Z Company] at the same time, though, if he was, I do not consider it would be much.
222.The wife is nearly 63 years of age. She has had emotional health problems over the years since her separation and 2011 divorce from the husband and has had difficulties holding and obtaining employment. She asserted that she required knee replacement surgery and some other surgery at the time of the trial, yet, she, too, did not adduce any evidence to prove that. At the end of the trial, she was in receipt of an Australian government benefit of $530 per week paid to her to support her whilst she tried to establish a new small enterprise ... She also had about $25,000 in superannuation benefits across a number of funds that she could look forward to receiving.
223.She had given up a [healthcare] career in the USA to move to Australia and marry the husband and she was unsuccessful at re-establishing that career here.
224.Again, confronting the Court as a difficulty at this point, having said that the husband’s less than frank disclosure is most appropriately considered pursuant to s 75(2)(o), is the issue of how to deal with this issue in a just and equitable manner.
225.Having said that I am not satisfied that the husband was not still receiving income from [Z Company], but that it would not be much if he was, I nevertheless consider that justice and equity requires a further adjustment in favour of the wife at this stage of the process of determining the appropriate property adjustment orders to make in this matter. As the value I ascribe to the property of the parties or either of them, including the wife’s superannuation interests, is just under $575,000 on a net basis, I consider that a further adjustment equal to 10% is appropriate to do justice and equity in the matter. The adjustment of 10% is equal to $57,500 in this matter, and given the ages, health and comparative financial positions of the parties, I consider that to be an appropriate adjustment. That would take the notional percentage division to 75/25 in the wife’s favour.
The consideration that “the [husband] had been solely receiving income from the [husband and the wife’s] business over the period of separation until the hearing” (Husband’s Summary of Argument filed with leave on 29 October 2019, paragraph 12) was not one of the matters taken into account by the primary judge in determining the adjustment of 10 per cent in favour of the wife and the ground of appeal must fail.
If the challenge was intended to be to the primary judge’s assessment of contributions, as some of the submissions might suggest, it still does not succeed. His Honour dealt with the post-separation contributions in the following paragraph:
219.Later though, for the many years between the separation and the trial, I find that the wife’s contributions to the husband’s welfare exceeded his contributions to her welfare, despite the fact that she was able to live at the [Town B] property for most of that time and despite the fact that she sold some of the items of personal property that the husband had owned and kept on that property since before the marriage, using the proceeds for her own support and for maintenance of the property itself. The husband had the distinct benefit of having unilateral access to all of the income generated by the business in that time, as well as the proceeds of sale of a motor car in the USA, to support himself and to pay a large amount of his own legal fees across the various court proceedings he has been involved in. Though he was the one still solely running the business, he contributed little, if any of that money to the welfare of the wife. He was also living in the [State K] property for most of that time. Photographs of that property adduced into evidence reveal it to be a comfortable looking home. Income the business was generating was being contributed towards repaying the mortgage debt utilised to purchase the property in the first instance.
The husband’s submissions do not explain why these findings were not available on the evidence. Further, it appears that the primary judge did take into account the husband’s contributions of the Town B properties and the wife’s use of them to justify the finding of a 35 per cent contribution by the husband.
Ground 8: The primary judge failed to consider the future needs of the husband compared to the wife.
The husband submits that the primary judge failed to take into account the following:
·the respective ages of the husband and the wife, the husband’s lack of employment and qualifications and the fact that the husband receives a pension of only $1,300 per month;
·the wife owns a house in State P, USA (although, her sister is registered as the owner);
·the husband has a wife and two young children to support; and
·the husband has no car or other ancillary equipment and has a credit card debt of $187,909.
We consider that these matters, save for the house in State P, were addressed in the passages of the primary judge’s reasons for judgment that we have already quoted. His Honour clearly had each of these considerations in mind, even if the detail of them was not expressed in the manner now put by the husband.
There was no finding that the house in State P was beneficially owned by the wife.
This ground of appeal fails.
It follows that the cross-appeal will be dismissed.
Costs
Orders for written submissions on the issue of costs were made on 29 October 2019.
I certify that the preceding one hundred and four (104) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Aldridge & Watts JJ) delivered on 28 May 2020.
Associate:
Date: 28 May 2020
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