Davidson v Suncorp-Metway Limited (No 4)

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FEDERAL COURT OF AUSTRALIA

Davidson v Suncorp-Metway Limited (No 4) [2021] FCA 25

File number: QUD 18 of 2020
Judgment of: JACKSON J
Date of judgment: 28 January 2021
Catchwords:

HIGH COURT AND FEDERAL COURT - federal jurisdiction - originating application seeking preliminary discovery in respect of alleged breaches of federal legislation - prospective applicant seeking to raise further claim based on state legislation regarding enforceability of mortgage - consideration of whether federal and non-federal claims are part of same 'matter' - scope of the justiciable controversy found to encompass both claims - Federal Court of Australia has jurisdiction to determine non-federal claim

REAL PROPERTY - prospective applicant seeking declaration that mortgage he had granted is not enforceable - prospective applicant alleges that mortgage document does not adequately describe the amount of the debt or liability owing - prospective applicant prevented from arguing this point on the basis of issue estoppel - mortgage not void for uncertainty - consideration of s 73(1)(c) of the Land Title Act 1994 (Qld) - mortgage compliant with legislative requirements - application dismissed
Legislation:

Competition and Consumer Act 2010 (Cth) s 131, 138, Part XI, Schedule 2 (Australian Consumer Law) ss 18, 20, 21

Judiciary Act 1903 (Cth) s 39B

Acts Interpretation Act 1954 (Qld) s 14B

Land Title Act 1994 (Qld) ss 3, 72, 73, 74

Land Title Amendment Bill 1994 (Qld)
Cases cited:

Breskvar v Wall (1971) 126 CLR 376

Davidson v Suncorp-Metway Limited (No 3) [2020] FCA 1593

Davidson v Suncorp-Metway Ltd [2020] QSC 315

Deguisa v Lynn [2020] HCA 39; (2020) 384 ALR 209

Elroa Nominees Pty Ltd v Registrar of Titles [2003] QCA 165

Fencott v Muller (1983) 152 CLR 570

Hooper v Kirella Pty Ltd [1999] FCA 1584; (1999) 96 FCR 1

Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457

Polar Aviation Pty Ltd v Civil Aviation Safety Authority [2010] FCA 367

Printy v Provident Capital Ltd [2007] NSWSC 287; (2007) 13 BPR 24,603

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Rana v Google Inc [2017] FCAFC 156; (2017) 254 FCR 1

Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511

Small v Tomassetti [2001] NSWSC 1112; (2001) 12 BPR 22,253

Suncorp-Metway Ltd v Nagatsuma [2019] QSC 16

SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362

Yazgi v Permanent Custodians Ltd [2007] NSWCA 240; (2007) 13 BPR 24,567
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 36
Date of last submissions: 16 November 2020
Date of hearing: 2 July 2020
Counsel for the First Prospective Applicant: The first prospective applicant appeared in person
Counsel for the Second Prospective Applicant: The second prospective applicant did not appear
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Details
Case
[2021] FCA 25
Decision Date

CaseChat Overview and Summary

In the case of Davidson v Suncorp-Metway Limited (No 4), the applicant, Mr Davidson, sought preliminary discovery and a declaration that a mortgage he had granted over several properties was not enforceable. The mortgage was registered with the Queensland Land Registry, and Mr Davidson argued that the mortgage document was void for uncertainty as it did not adequately describe the amount of the debt or liability owing. Additionally, the applicant sought to raise a claim based on Queensland state legislation regarding the enforceability of the mortgage. The bank, Suncorp-Metway Limited, argued that the Federal Court of Australia did not have jurisdiction to determine the state law claim and that the mortgage was enforceable.

The court first considered whether the federal and non-federal claims were part of the same "matter" and thus fell within the Federal Court's jurisdiction. The court found that the scope of the justiciable controversy encompassed both claims and that the Federal Court had jurisdiction to determine the non-federal claim. The court then examined the enforceability of the mortgage under Queensland state legislation. Mr Davidson argued that the mortgage was void for uncertainty, which would render it unenforceable. However, the court held that issue estoppel prevented Mr Davidson from raising this argument, as the judgment of Ryan J in Suncorp-Metway Ltd v Nagatsuma necessarily entailed the conclusion that the mortgage was enforceable. Furthermore, the court found that the mortgage was not void for uncertainty and complied with s 73(1)(c) of the Land Title Act 1994 (Qld), which requires a description of the debt or liability secured by the mortgage.

Based on the above findings, the court dismissed the application and ordered that paragraph 4 of the applicant's interlocutory application dated 11 June 2020 be dismissed. The court also reserved the issue of costs pending a determination of whether they should be awarded on an indemnity basis. This decision highlights the importance of understanding the jurisdiction of the Federal Court of Australia and the application of issue estoppel in determining the enforceability of a mortgage under state legislation.

Orders

Orders of the court

1. Paragraph 4 of the first prospective applicant's interlocutory application dated 11 June 2020 is dismissed.

2. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons that follow I agree that the court has jurisdiction and have proceeded to determine the Mortgage Claim. My determination is that the Mortgage Claim must be dismissed.Background I have described the background to the disputes between the parties at length in Davidson No 3 and it is not necessary to repeat that description here. For present purposes, it is enough to note the following:(1)In 2013 Mr Davidson's company, Far North Queensland Cattle Company Pty Ltd (FNQ), refinanced its business activities by borrowing money from the bank. Mr Davidson granted a guarantee of FNQ's liabilities and granted as security a mortgage over a number of properties he owned.(2)Mr Davidson and the bank fell into dispute. Mr Davidson alleged that officers of the bank had defrauded him. The bank alleged that FNQ was in default under the loan facilities. In 2014 the bank appointed receivers of assets of Mr Davidson and FNQ. Mr Davidson commenced proceedings in the Supreme Court of Queensland to overturn the appointment of the receivers. The parties settled the proceeding by way of a comprehensive deed of settlement executed on or about 28 May 2014 (Settlement Deed).(3)Nevertheless, the disputes between Mr Davidson and the bank were far from over. It is not necessary to recount the many events which took place between May 2014 and the commencement of this proceeding in early 2020. By the proceeding, Mr Davidson sought preliminary discovery for the purpose of a number of claims he wanted to bring against the bank. They are summarised in Davidson No 3 at [38]. The Mortgage Claim was not among them.(4)Relevantly for present purposes, however, they did include a proposed claim that the bank engaged in misleading, deceptive and unconscionable conduct by either allowing the bank officers to carry out their alleged frauds without any oversight or by knowingly or recklessly turning a blind eye to the frauds. I single that claim out because it is the one which most clearly engages the jurisdiction of this court. But before turning to the subject of jurisdiction, it is necessary to describe the Mortgage Claim in more detail. It concerns mortgage number 715361425 (Mortgage) over various properties in Mr Davidson's name. The Mortgage was registered on 11 October 2013 with the Queensland Land Registry using standard Form 2 employed by that registry. One of the numbered lines that needs to be filled in in that form is titled '5. Description of debt or liability secured'. The description given in the form as lodged is 'The Moneys Secured as defined and specified in Document No. 714418432'. Document No 714418432 is a 'General Request' for the Queensland Registrar of Titles to approve and register a 'Memorandum of Common Provisions for a General Purpose Mortgage' which the bank has lodged with the Queensland Land Registry. The common provisions contain a very broad definition of 'Moneys Secured'. The precise terms of the definition are not relevant; it suffices to say that the mortgage is of a kind which is commonly known as an 'all moneys' mortgage.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In Small at [9] Campbell J went on to say, 'Notwithstanding that registration confers indefeasibility on a mortgagee, there is still a question "indefeasibility for what?"'. Mr Davidson relies on this and on three cases to submit that the uncertainty as to what liabilities are secured by the Mortgage means that it is not indefeasible and therefore not enforceable in relation to his liabilities to the bank. The three cases are: Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745; (2004) 12 BPR 22,281 at [13], [21]; Yazgi v Permanent Custodians Ltd [2007] NSWCA 240; (2007) 13 BPR 24,567 at [33]; and Printy v Provident Capital Ltd [2007] NSWSC 287; (2007) 13 BPR 24,603 at [40]. But these are all cases where there were no effective liabilities secured by the registered mortgages, so the indefeasibility of the mortgage as an interest in land did not permit it to be enforced in respect of any extant liability. As I have explained above in connection with the second reason why Mr Davidson's arguments fail, that is not the situation here. Mr Davidson does have a liability to the bank and the Mortgage is enforceable as security for that liability.Conclusion Paragraph 4 of the interlocutory application of 11 June 2020 must be dismissed and Mr Davidson must pay the bank's costs. There is an outstanding issue in the proceeding as a whole as to whether the costs should be awarded on an indemnity basis, so the appropriate order at this point is costs reserved.

Ratio Decidendi

Legal Principle Established

As I have said, Mr Davidson relies on s 73(1)(c) of the Land Title Act. In so far as they are relevant, s 72, s 73 and s 74 are as follows:72 Mortgaging lot etc. by registration(1)A lot or an interest in a lot may be mortgaged by registering an instrument of mortgage for the lot or interest.…73 Requirements of instrument of mortgage(1) An instrument of mortgage must -(a)be validly executed; and(b)include a description sufficient to identify the lot to be mortgaged; and(c)include a description of the debt or liability secured by the mortgage; and(d)include a description sufficient to identify the interest to be mortgaged.…74 Effect of registration of a mortgageA registered mortgage of a lot or an interest in a lot operates only as a charge on the lot or interest for the debt or liability secured by the mortgage. I have set out the description of the secured liability given in the Mortgage. Mr Davidson made the following arguments about it: because of the generalised description of the debt or liability secured, and the absence of any specification of the amount owing, the Mortgage instrument is void for uncertainty, meaning there was no agreement when he signed it; this also means that the Mortgage did not comply with s 73(1)(c); as a result, s 74 does not operate in respect of the liabilities of Mr Davidson to the bank because there is no 'debt or liability secured by the mortgage'; the appearance of the words 'not applicable' in the General Request form that was used to lodge the bank's common mortgage provisions also makes the Mortgage void for uncertainty. There are four reasons why these arguments cannot succeed. The first reason is that issue estoppel prevents Mr Davidson from relying on them. I laid out the principles and how they applied in this case in Davidson No 3 at [62]‑[67]. For reasons I gave there, I held that the judgment of Ryan J in Suncorp-Metway Ltd v Nagatsuma [2019] QSC 16 necessarily entails the conclusion that the Mortgage is enforceable, so that Mr Davidson is estopped from contending otherwise. The second reason Mr Davidson's arguments fail is that the Mortgage is not void for uncertainty. It incorporates, by reference, standard terms which, as I have said, provide for it to be an 'all moneys' mortgage. So it is clear that any liability of Mr Davidson to the bank is secured by the mortgage. That liability arose under a guarantee of the liabilities of FNQ, which Mr Davidson signed. FNQ's liabilities are ascertainable by reference to a facility agreement, which makes provision for the advance of principal amounts and how interest is to be calculated. There is no uncertainty about what the parties have agreed by executing the Mortgage. The third reason Mr Davidson's arguments fail is that the Mortgage did comply with s 73(1)(c). That is a question of the proper construction of the provision and its application to the instrument lodged. Section 73(1)(c) seems to be unique to Queensland. It appears that the only decided case on it is a recent decision of Bowskill J in the Supreme Court of Queensland dismissing an application by Mr Davidson for a stay of execution of a warrant for possession of a property he occupied. I will return to that decision below, but I consider it appropriate first to address the issue on the basis of principle.