Harmer v Armstrong

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.