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Harmer v Armstrong

Harmer v Armstrong

Case [1931] HCA 31 1 October 1931

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47 CLR 65

AUSTRALIAN MUTUAL PROVIDENT SOCIETY GEO. MYERS &CO. LTD. (IN LIQUIDATION) RESPONDENT.

ON APPEAL FROM THE SUPREME COURT OF

QUEENSLAND. Real Property (Q.)-Registered mortgage-Distress-DebentureReceiver under

debenture-Subsequent distress by mortgagee under Real Property Acts-Occupier -Mortgagor in possession-Receiver acting as distrainor for mortgagee- Winding-up petition presented same day as distress-Real Property Act 1861 (Q.) (25 Vict. No. 14), sec. 61. Bill of Sale Mortgage-Attornment clause-Distress-Necessity for registration

as bill of sale-Application of Bills of Sale Act to mortgages by companies- Bills of Sale Act (Q.) 1891 (55 Vict. No. 23) sec. 3 (3).

Held, by Gavan Duffy C.J., Starke, Dixon and McTiernan JJ. (Evatt J. dissenting), that under sec. 61 of the Real Property Act 1861 (Q.) a distress may be levied by a mortgagee upon the goods and chattels of a mortgagor who is in occupation of the mortgaged land.

Held, also, by Gavan Duffy C.J., Starke, Dixon and McTiernan JJ., that

47 CLR 66

of distress although the mortgage instrument attempts to confer a further power of distress by means of an attornment clause which reserves a yearly rent equal to the amount of the interest (2) the existence of an equitable charge affecting the assets of the mortgagor does not prevent them being "the goods and chattels" of the occupier within sec. 61 of the Real Property Act 1861; (3) the entry of a receiver for debenture-holders appointed under a power which provides that he shall be an agent of the company giving the debentures does not involve a change of possession, but in point of law the (IN LIQUIDA-

possession of the assets continues to reside in the company.

What amounts to a seizure under a warrant of distress considered. Decision of the Supreme Court of Queensland (Full Court): In re Geo. Myers &Co. Ltd., (1931) S.R. (Q.) 83, reversed.

APPEAL from the Supreme Court of Queensland.

George Myers &Co. Ltd., a company registered and carrying on business in Queensland, on 31st August 1927 gave to the Australian Mutual Provident Society a bill of mortgage over the premises in which the Company carried on business, to secure the sum of £20,000 and interest. The mortgage was registered under the Real Property Act 1861 (Q.). It contained a clause (clause 12) whereby the mortgagor attorned tenant to the mortgagee at a yearly rent equal to the annual interest. On 5th September 1927 George Myers &Co. Ltd. gave a debenture to the Commercial Bank of Australia Ltd. to secure advances to the extent of £10,000 repayable on demand. This debenture was registered pursuant to sec. 3 of the Companies Acts Amendment Act 1909 (Q.). The debenture was a first charge and floating security on the Company's stock-in-trade, goods and assets. It provided that after the moneys secured became payable the Bank had the right to appoint a receiver, who was to be the agent of the Company, to take possession of the property, to carry on the business, and sell the property SO charged. On 4th September…

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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Details

AGLC: Australian Mutual Provident Society v Geo Myers & Co Ltd (in liq) [1931] HCA 31
Case: [1931] HCA 31
Decision Date: 1 October 1931

CaseChat Overview and Summary

The appeal concerned a dispute between the Australian Mutual Provident Society (AMP Society), a mortgagee, and Geo. Myers & Co. Ltd. (in liquidation), the mortgagor. AMP Society sought to exercise a power of distress over the goods and chattels of Geo. Myers & Co. Ltd. on the mortgaged premises to recover principal moneys due under a registered mortgage. The company was in the process of being wound up, and a petition for its winding up had been presented on the same day AMP Society initiated its distress. The Supreme Court of Queensland had ruled against AMP Society, holding that the mortgage, in so far as it conferred a right of distress, constituted a bill of sale that was void for want of registration under the Bills of Sale Act 1891 (Q.).

The High Court was required to determine several legal issues. Firstly, whether a mortgagor in possession of mortgaged land is an "occupier" within the meaning of section 61 of the Real Property Act 1861 (Q.), thereby making their goods and chattels liable to distress by the mortgagee. Secondly, whether the existence of a debenture creating a floating charge over the company's assets, and the subsequent appointment of a receiver under that debenture, prevented the mortgagee from levying distress. Thirdly, whether the mortgage instrument, by reason of an attornment clause, constituted a bill of sale requiring registration under the Bills of Sale Act 1891 (Q.), and if so, whether this invalidated the statutory power of distress. Finally, the court considered what constituted a valid seizure under a warrant of distress.

A majority of the High Court (Gavan Duffy C.J., Starke, Dixon, and McTiernan JJ., with Evatt J. dissenting) held that a mortgagor in possession is indeed an "occupier" for the purposes of section 61 of the Real Property Act 1861 (Q.), and that the statutory power of distress is available against their goods and chattels. The Court reasoned that the purpose of section 61 was to provide an additional remedy for mortgagees to recover arrears, and that the language of the section, particularly the phrase "besides his personal remedy against the mortgagor," indicated an intention to allow distress against the mortgagor as an occupier. The Court further held that the appointment of a receiver under a debenture, where the receiver acts as an agent of the company, does not effect a change in legal possession, and therefore does not prevent a mortgagee from exercising their statutory power of distress. The attornment clause, while potentially constituting a bill of sale, was considered severable from the mortgage and did not invalidate the statutory power of distress, which arises independently of the parties' agreement. The Court found that the actions taken by the distrainor on 29th November 1929 constituted a valid seizure in law. Consequently, the appeal was allowed, and the decision of the Supreme Court of Queensland was reversed.

Orders