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Hilton v Gray

Hilton v Gray

Case [2007] QSC 401 13 December 2007

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SUPREME COURT OF QUEENSLAND

CITATION:

Hilton v Gray [2007] QSC 401

PARTIES:

HOWARD HILTON AND KATHERINE ANNE BRISCOE
(plaintiff)

v

RODERICK CHARLES GRAY
(first defendant)
REGISTRAR OF TITLES
(second defendant)
THE STATE OF QUEENSLAND
(third party)
SHELLA LONERGAN
(fourth party)

FILE NO:

BS6907 of 2005

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court, Brisbane

DELIVERED ON:

13 December 2007

DELIVERED AT:

Supreme Court, Brisbane

HEARING DATE:

18, 19, 20, 21 June 2007

JUDGE:

Douglas J

ORDER:

Further submissions invited as to the form of order and costs.

CATCHWORDS:

CONVEYANCING – LAND TITLES UNDER THE TORRENS SYSTEM – INDEFEASIBILITY OF TITLE – EXCEPTIONS – FRAUD OR FORGERY - whether knowledge of the forgery, or a state of mind amounting to reckless indifference as to whether the mortgage was forged, can be imputed to the plaintiffs because of their agents’ behaviour – where failure to talk with justice of the peace is not evidence of fraud – where other agent’s careless conduct such as failure to comply with firm’s standards and procedures does not amount to actual dishonesty or moral turpitude – where mortgage when registered established an indefeasible right in the mortgagees to bring proceedings for repayment of debt

Australian Guarantee Corporation Ltd v De Jager [1984] VR 483,cited
Atlantic 3-Financial (Aust) Pty Ltd v Deskhurst Pty Ltd [2005] 1 Qd R 1, considered
Custom Credit Cooperation ltd v Lynch [1993] 2VR 469, cited
Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202, distinguished
Micarone v Perpetual Trustee (1999) 75 SASR 1, cited
Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275, cited
Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22, considered
Porter v Latec Finance Pty Ltd (1964) 111 CLR 177, cited
PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643, cited
Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, considered
Russo v Bendigo Bank Ltd [1999] 3 VR 376
Sabah Yazgi v Permanent Custodians Limited [2007] NSWCA 240, cited
Shogun Finance Ltd v Hudson [2004] 1 AC 919, cited
Young v Hoger [2001] QCA 453, considered

Land Title Act 1994, s11A, s74, s184(3)(b), s185(1A)
Real Property Act 1900 (NSW), s52(1)
Supreme Court Act 1995, s 47

COUNSEL:

I R Perkins for the plaintiffs
B J Clarke SC with him S A McLeod for the defendants and the third party
No appearance for the fourth party

SOLICITORS:

Cronin Lawyers for the plaintiffs
C W Lohe, Crown Solicitor for the defendants and the third party

No appearance for the fourth party

[1] Douglas J: This story is set in the demimonde of low finance, of high interest, short term loans granted by demanding lenders to desperate borrowers. Mr Hilton, one of the plaintiffs, is a mortgage broker, private lender and investor. He was formerly a Sydney solicitor. He and his wife, Katherine Briscoe, the other plaintiff, believed they were lending money to the first defendant, Mr Gray, to be…

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.

Continue reading Hilton v Gray

Details

AGLC: Hilton v Gray [2007] QSC 401
Case: [2007] QSC 401
Decision Date: 13 December 2007

CaseChat Overview and Summary

The case of Hilton v Gray involved a dispute regarding the validity of a mortgage registered under the Torrens system in Australia. The plaintiffs sought to challenge the registration of a mortgage due to alleged forgery. The court was required to determine whether the plaintiffs could be held liable for the actions of their agents and whether the registration of the mortgage established an indefeasible right in the mortgagees.

The legal issues before the court included whether knowledge of the forgery, or a state of mind amounting to reckless indifference as to whether the mortgage was forged, could be imputed to the plaintiffs due to the conduct of their agents. The court also had to consider whether the failure of one agent to consult with a justice of the peace constituted fraud, and whether the careless conduct of another agent, such as not complying with the firm's standards and procedures, amounted to actual dishonesty or moral turpitude. Furthermore, the court examined whether the registration of the mortgage established an indefeasible right in the mortgagees to bring proceedings for repayment of the debt.

The court found that the plaintiffs could not be held liable for the actions of their agents as there was no evidence of actual dishonesty or moral turpitude on their part. The failure to consult with a justice of the peace did not amount to fraud, and the careless conduct of another agent did not rise to the level of actual dishonesty or moral turpitude. The registration of the mortgage established an indefeasible right in the mortgagees to bring proceedings for repayment of the debt. The court concluded that the plaintiffs were not liable for the actions of their agents and that the mortgagees had an indefeasible right to proceed with their claim for repayment.

The court invited further submissions regarding the form of order and costs.

Orders

Orders of the court

Further submissions invited as to the form of order and costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Hilton v Gray [2007] QSC 401

Most Recent Citation

Barker v GE Mortgage Solutions Limited [2013] QCA 137

Cases citing this decision · 2 of 2 shown

Barker v GE Mortgage Solutions Limited
[2013] QCA 137 Para 1

…In the same vein, Douglas J observed in Hilton v Gray [2008] ASC 155-094; [2007] QSC 401 at [40]:[35]…
Royalene Pty Ltd v Registrar of Titles
[2008] QSC 64 Para 1

…‘the demimonde of low finance, of high interest [and] short term loans granted by demanding lenders to desperate borrowers’.[1] [1] Hilton v Gray [2007] QSC 401 at [1].…

View all 2 citing cases →

Cases cited in this decision · 20 of 20 shown

Yazgi v Permanent Custodians Ltd
[2007] NSWCA 240 Para 1

…that because of the forgery, the personal covenant contained in the mortgage was not enforceable”; see Sabah Yazgi v Permanent Custodians Limited [2007] NSWCA 240 at [13]. On one reading of Young CJ’s statements in the second half of [17], however, one could be forgiven for thinking that he was disagreeing with Pow…
Perpetual Trustees Victoria Ltd v Tsai
[2004] NSWSC 745 Para 1

…ach to the covenant to repay in a registered mortgage; cf. the view of Young CJ in Eq in Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281; [2004] NSWSC 745 where his Honour said:…
Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd
[2003] NSWSC 1072

…be what Giles J is saying in Maradona (above) at 681. See also what Bryson J said in Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd [2003] NSWSC 1072 at [52–53].”…
Parker v Mortgage Advance Securities Pty Ltd
[2003] QCA 275 Para 1

…His Honour’s view is also consistent with that of the Court of Appeal in Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275 at [6] that the indefeasibility obtained on registration of the mortgage included the covenant to repay the mortgage sum.…
Young v Hoger
[2001] QCA 453 Para 1

…The failure to talk to the justice of the peace is not evidence of fraud; see Young v Hoger [2001] QCA 453 at [26]. Their other conduct did not amount to fraud either for the reasons expressed by me earlier. The test is described in the similar decision of Young v Hoger at [11] (footnotes omitted):…
Russo v Bendigo Bank Ltd
[1999] VSCA 108 Para 1

…uct, at least of Mrs Capper, could be treated as fraud by the registered proprietor; see the discussion by Batt JA in Russo v Bendigo Bank Ltd [1999] 3 VR 376, 392. His Honour was in the minority on that issue and it is not necessary for me to enter into that debate because of my factual findings.…
Bank of South Australia Ltd v Ferguson
[1998] HCA 12 Para 1

…r, none of this amounted, in my mind, to actual dishonesty or moral turpitude; see Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, 192-194 where Hayne JA in usefully summarising the authorities said:…
Grgic v ANZ Banking Group Ltd
[1992] NSWCA 98 Para 1

…The view expressed in passing in Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202, 224 that the mortgagor there was not liable on the personal covenants in the mortgage does not seem to me to be consistent with the indefeasibility that should attach to the covenant to repay in a registered mortgage; cf. the view of Y…
Mercantile Credits Ltd v Shell Co of Australia Ltd
[1976] HCA 9

…“…the plaintiff's claim … can rely on the indefeasibility of the registered interest of the mortgagee under the principal mortgage, which it acquired as sub-mortgagee. That indefeasibility extends to the second defendant's covenant to pay the mortgagee under the principal mortgage the $150,000 on or…
Adamson v Hayes
[1973] HCA 6

…tly close to the mortgage to be protected ( Consolidated Trust Pty Ltd v Naylor (1936) 55 CLR 423 , 434–5) as is a personal covenant to repay ( P T Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 681; Pyramid Building Society v Scorpion Hotels Pty Ltd (1998) 1 VR 188 per Hayne JA (with whom Brooking and Tadgell JJA agreed) and Pa…
Porter v Latec Finance (Qld) Pty Ltd
[1964] HCA 49 Para 1

…Lonergan, there were no valid loan agreements or other contracts between the plaintiffs and Mr Gray; Porter v Latec Finance Pty Ltd (1964) 111 CLR 177, 195; Shogun Finance Ltd v Hudson [2004] 1 AC 919. The amount of the principal was recorded in the mortgage as $176,000.…
Consolidated Trust Co Ltd v Naylor
[1936] HCA 33

…1 BPR 9496 per M McLelland J. [15] Ordinarily a guarantee is sufficiently close to the mortgage to be protected ( Consolidated Trust Pty Ltd v Naylor (1936) 55 CLR 423 , 434–5) as is a personal covenant to repay ( P T Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 681; Pyramid Building Society v Scorpion Hotels Pty L…
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-Operative Assurance Co of Australia Ltd
[1931] HCA 53

…r the Plaintiffs’ benefit: Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 48 per Dixon J; and…
Butler v Fairclough
[1917] HCA 9

…sets Co., Ltd. has stood for many years and it is clear that for the purposes of s. 42 "fraud" means actual dishonesty or moral turpitude: see, e.g., Butler v Fairclough (1917) 23 C.L.R. 78 at 90 and 97; Stuart v Kingston (1923) 32 C.L.R. 309 at 329 and 356; Bahr v Nicolay (No. 2) at 614 per Mason C.J. and Dawson J. and at 6…
Derry v Peek
[1889] UKHL 1

…nd "wilful blindness" are useful shorthand expressions to describe some kinds of cases of fraud. As the classical exposition by Lord Herschell in Derry v Peek (1889) 14 App. Cas. 337 at 374 shows, fraud can be proved by showing that a false statement has been made without belief in its truth or, "recklessly, careless…
Stuart v Kingston
[1923] HCA 17

…r that for the purposes of s. 42 "fraud" means actual dishonesty or moral turpitude: see, e.g., Butler v Fairclough (1917) 23 C.L.R. 78 at 90 and 97; Stuart v Kingston (1923) 32 C.L.R. 309 at 329 and 356; Bahr v Nicolay (No. 2) at 614 per Mason C.J. and Dawson J. and at 631-2 per Wilson and Toohey JJ.; Grgic v Australian a…
[1999] SASC 265
[1999] SASC 265 Para 1

…Were it necessary, I would conclude that Mr Sultan was not the plaintiffs’ agent; see also Micarone v Perpetual Trustee (1999) 75 SASR 1, 123 at [632] where Debelle and Wicks JJ said:…
[1904] AC 423
[1904] AC 423

…993] 2 VR 284 at 308 and that is so notwithstanding that the broker may receive a commission from the lender: Custom Credit Corp Ltd v Lynch [1993] 2 VR 469 at 486 to 487; Octapon Pty Ltd v Esanda Finance Corp (unreported, Supreme Court NSW, 3/02/89). The position may, of course, differ according to the ind…
[2004] 1 AC 919
[2004] 1 AC 919 Para 1

…r contracts between the plaintiffs and Mr Gray; Porter v Latec Finance Pty Ltd (1964) 111 CLR 177, 195; Shogun Finance Ltd v Hudson [2004] 1 AC 919. The amount of the principal was recorded in the mortgage as $176,000.…
PT Limited v Maradona Pty Limited
33 ER 978 Para 1

…ition which delimited or qualified the estate or interest of the mortgagee or was otherwise necessary to assure their estate or interest; see PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643, 678-679. In respect of a mortgage, validation of the personal covenant to pay in New South Wales was supported by the provisions of s 52(1) of…

Legislation cited in this decision · 4

Land Title Act 1994 (Qld)
11A 2 mentions
Real Property Act 1900 (NSW)
52(1) 2 mentions (from Para 1)
Supreme Court Act 1995 (Qld)
47 2 mentions (from Para 1)
Land Titles Act 1994 (Qld)
1 mention

CITATION:	Hilton v Gray [2007] QSC 401
PARTIES:	HOWARD HILTON AND KATHERINE ANNE BRISCOE (plaintiff) v RODERICK CHARLES GRAY (first defendant) REGISTRAR OF TITLES (second defendant) THE STATE OF QUEENSLAND (third party) SHELLA LONERGAN (fourth party)
FILE NO:	BS6907 of 2005
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court, Brisbane
DELIVERED ON:	13 December 2007
DELIVERED AT:	Supreme Court, Brisbane
HEARING DATE:	18, 19, 20, 21 June 2007
JUDGE:	Douglas J
ORDER:	Further submissions invited as to the form of order and costs.
CATCHWORDS:	CONVEYANCING – LAND TITLES UNDER THE TORRENS SYSTEM – INDEFEASIBILITY OF TITLE – EXCEPTIONS – FRAUD OR FORGERY - whether knowledge of the forgery, or a state of mind amounting to reckless indifference as to whether the mortgage was forged, can be imputed to the plaintiffs because of their agents’ behaviour – where failure to talk with justice of the peace is not evidence of fraud – where other agent’s careless conduct such as failure to comply with firm’s standards and procedures does not amount to actual dishonesty or moral turpitude – where mortgage when registered established an indefeasible right in the mortgagees to bring proceedings for repayment of debt Australian Guarantee Corporation Ltd v De Jager [1984] VR 483,cited Atlantic 3-Financial (Aust) Pty Ltd v Deskhurst Pty Ltd [2005] 1 Qd R 1, considered Custom Credit Cooperation ltd v Lynch [1993] 2VR 469, cited Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202, distinguished Micarone v Perpetual Trustee (1999) 75 SASR 1, cited Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275, cited Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22, considered Porter v Latec Finance Pty Ltd (1964) 111 CLR 177, cited PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643, cited Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, considered Russo v Bendigo Bank Ltd [1999] 3 VR 376 Sabah Yazgi v Permanent Custodians Limited [2007] NSWCA 240, cited Shogun Finance Ltd v Hudson [2004] 1 AC 919, cited Young v Hoger [2001] QCA 453, considered Land Title Act 1994, s11A, s74, s184(3)(b), s185(1A) Real Property Act 1900 (NSW), s52(1) Supreme Court Act 1995, s 47
COUNSEL:	I R Perkins for the plaintiffs B J Clarke SC with him S A McLeod for the defendants and the third party No appearance for the fourth party
SOLICITORS:	Cronin Lawyers for the plaintiffs C W Lohe, Crown Solicitor for the defendants and the third party No appearance for the fourth party