Davidson v Registrar of Titles

[2002] WASC 168

DAVIDSON -v- REGISTRAR OF TITLES & ANOR [2002] WASC 168

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2002] WASC 168
Case No:	CIV:1611/2002	Heard:	5 JUNE 2002
Coram:	EM HEENAN J	Delivered:	5/06/02
No of pages:	6	Judgment Part:	1 of 1
Result:	Application to continue operation of caveat dismissed
Category:	B
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Parties:	IAN KEITH DAVIDSON REGISTRAR OF TITLES TAMARA KELLY-KAY GALLOWAY
Catchwords:	Real property Torrens system Caveats Application for order to extend operation of caveat Transfer of Land Act 1893 Interest claimed by caveat later becoming registered No purpose for continuation of caveat
Legislation:	Transfer of Land Act 1893, s 68, s 134, s 138C
Case References:	Nil Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : DAVIDSON -v- REGISTRAR OF TITLES & ANOR [2002] WASC 168 CORAM : EM HEENAN J HEARD : 5 JUNE 2002 DELIVERED : 5 JUNE 2002 FILE NO/S : CIV 1611 of 2002 BETWEEN : IAN KEITH DAVIDSON

Plaintiff

AND

REGISTRAR OF TITLES
First Defendant

TAMARA KELLY-KAY GALLOWAY
Second Defendant

Catchwords:

Real property - Torrens system - Caveats - Application for order to extend operation of caveat - Transfer of Land Act 1893 - Interest claimed by caveat later becoming registered - No purpose for continuation of caveat

Legislation:

Transfer of Land Act 1893, s 68, s 134, s 138C

Result:

Application to continue operation of caveat dismissed

(Page 2)

Category: B

Representation:

Counsel:

Plaintiff : Mr K J Morgan
First Defendant : No appearance
Second Defendant : Mr H R Robinson

Solicitors:

Plaintiff : Murfett & Co
First Defendant : No appearance
Second Defendant : Haydn Robinson

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

Nil

Case(s) also cited:

Nil

(Page 3)

1 EM HEENAN J: This is an originating summons under s 138C of the Transfer of Land Act 1893, by which the plaintiff seeks orders extending a caveat which he lodged on 15 November 2000 against the title to land owned by the second defendant. The land is all that piece of land being lot 4 on strata plan 8515, together with a share in any common property as set out in the strata plan, and being the whole of the land comprised in certificate of title volume 1578 folio 356. The second defendant is the sole registered proprietor of an estate in fee simple in that land.

2 The history of the matter is that a first registered mortgage over the second defendant's interest in that land in favour of the Commonwealth Bank of Australia was registered on 17 October 2000. That mortgage remains registered on the title, but there is no evidence as to the amount of money, if any, due under that mortgage to the bank, nor is that important.

3 The next encumbrance on the title is the caveat in question, lodged by the plaintiff on 15 November 2000. By that caveat the plaintiff claims an interest in the land pursuant to an unregistered mortgage between himself and the second defendant. The mortgage is in evidence, dated 5 November 2000, by which the second defendant, as registered proprietor, mortgaged her estate and interest in the land to the plaintiff to secure a principal sum of $50,000 plus interest thereon at 5 per cent per annum. It is in a common form Transfer of Land Act registrable document.

4 The evidence in the affidavits before the Court reveals a situation in which the second defendant, as registered proprietor, entered into discussions with the plaintiff concerning the possible advance of $50,000 to her to assist in the purchase and refurbishment of the land and the unit upon it. Under those arrangements the second defendant offered to repay the advance of $50,000, if and when made, and to allow the plaintiff to lodge a caveat over the land to protect an unregistered mortgage. She also executed the mortgage which I have already mentioned for the sum of $50,000.

5 As I understand the position, while there are some allegations by the second defendant as to whether or not the obligation under that mortgage was validly incurred, there being issues of oppression, duress or misleading conduct hinted at, the main issue is whether or not any advance was ever made.

6 The second defendant's position is that the acquisition of the property was financed from other sources and that it became unnecessary for her to

(Page 4)

avail of the offer of an advance of $50,000 from the plaintiff, as had been documented. Accordingly, the second defendant maintains that, notwithstanding the agreement to borrow the money, the lodgment of a caveat and the execution of the mortgage, there is in fact nothing owing by her to the plaintiff.

7 Accordingly, this is a dispute not about whether or not there is a caveatable interest or whether or not there is some intervening interest by a third party, but simply whether there is any money due under the mortgage. In a situation where there appears to have been a dispute between the plaintiff and the second defendant over whether any money was payable under the mortgage and where steps were being taken or threatened by the second defendant to clear off the caveat lodged in November 2000, the plaintiff succeeded in having the mortgage in question registered.

8 That mortgage was registered on 8 February 2002 and is the second mortgage registered against the title, ranking after the first mortgage to the Commonwealth Bank. That being the position and the plaintiff having obtained the security of a registered second mortgagee, there appears to me to be no basis, or necessity, to justify the continuation of the caveat. The caveat does not now, and never did, claim any interest greater than was asserted by the unregistered mortgage.

9 That mortgage having now become registered, takes effect according to its terms with the priority accorded to it under the provisions of s 68 and s 134 of the Transfer of Land Act. It is simply unnecessary for the caveat to continue.

10 This being the case, I see no reason to order the extension of that caveat or to grant any other relief to the plaintiff and I propose therefore, subject to what I will say in a moment, to dismiss the application. Doing this will mean that the caveat will expire, that the plaintiff will remain as second mortgagee and that the dispute between the plaintiff and the second defendant over whether there is any, and if so what, money owing under the mortgage can be resolved in separate proceedings.

11 An application for an extension or removal of a caveat is not a suitable procedure to determine a dispute of whether any money is owing under the mortgage or whether the mortgage is valid or effective. The proper way to resolve such a dispute would be for one of the parties interested to commence proceedings, preferably by writ, in which pleadings could be delivered and oral evidence subsequently adduced.

(Page 5)

Those proceedings would decide, if it were necessary to do so, whether the mortgage was "valid" or whether there was any money owing under it. Those are not issues which can or should be determined in the present originating summons.

12 The only reason advanced by counsel for the plaintiff to justify the continuation of the caveat was a suggestion that by removing the caveat some third person might gain an advantage by tacking. It is rather difficult to understand exactly what is meant by this argument but upon investigation, it turns out that the second defendant asserts that there has been a third mortgage executed by her in favour of another creditor, Gracemount Enterprises Pty Ltd, for an amount of $150,000. A caveat giving notice of such a third unregistered mortgage was lodged by Gracemount Enterprises Pty Ltd on 23 January this year. The statutory declaration supporting that caveat does not annexe any copy of a mortgage document nor does it mention when, or under what circumstances, it was executed. We are simply left with an assertion by this caveat of the existence of an unregistered mortgage whose date is unknown. That caveat has subsequently lapsed or been discharged.

13 Accordingly, if there is a third mortgage to Gracemount Enterprises Pty Ltd for any amount, its priority must be subordinate to the first registered mortgage to the Commonwealth Bank and to the second mortgage to the plaintiff, Mr Davidson. I do not see any basis upon which such a mortgage could achieve priority over the registered mortgage in favour of Mr Davidson, except perhaps in some very unusual circumstance involving fraud by Mr Davidson. None is alleged or apprehended and that is a possibility which is so remote and unlikely that I consider I should entirely disregard it.

14 The presence of a third unregistered mortgagee lurking in the background has created anxieties for the plaintiff that, somehow, by operation of the doctrine of tacking, that mortgagee may have access to the first mortgage from the Commonwealth Bank and thus secure priority. There are very serious doubts over whether or not the doctrine of tacking, as described by the learned authors of "Sykes on Securities" in the fifth edition at page 462, applies to Torrens system land. It seems to me to be extremely unlikely that it does, but it is unnecessary to decide that point in this case because even if the third mortgagee were to take, by transfer or assignment, the Commonwealth Bank mortgage, I consider that no greater security would be obtained by that transfer or assignment than is already accorded by that first registered mortgage to the bank.

(Page 6)

15 It seems to me, accordingly, that the risk of the third mortgagee obtaining priority by this most unusual possibility of tacking on to the first mortgage can be dismissed from consideration. There is a further important point. Even if the operation of tacking were to operate in the most unusual way feared by the plaintiff, the presence of the caveat of 15 November 2000 on the register would not serve to advance or protect the plaintiff's interests. All that caveat could ever do would be to give notice of the unregistered interest so that Mr Davidson, as mortgagee, could protect his interests by preventing the registration of any intervening mortgage or charge, or secure an opportunity for himself to become registered as mortgagee, as he has, in fact, achieved in February. The resolution of the unlikely issue of tacking would need to be conducted without any regard to the effect of that caveat. Accordingly, I am satisfied that the continuation of this caveat has no bearing at all even in the remote possibility of a tacked obligation gaining priority which was suggested.

16 I must say that in explaining my reasons in this fashion I have given more recognition to the possibility that there may be a tacked obligation than I consider the argument deserves but I do that out of an abundance of caution. Nothing I say is to be taken as a recognition of the argument that a tacked obligation of that kind can arise in a Torrens system mortgage.

17 For those reasons I consider that there is no basis which requires the extension of the caveat; that the protection which the caveat was designed to secure has been achieved by the subsequent registration of the mortgage, and that these proceedings should, accordingly, be dismissed. Submissions were made by counsel on the issue of costs but I see no reason why costs should not follow the event. For those reasons, the originating summons is dismissed.