HST Building Group Pty Ltd v Naudi - [2020] SASC 15

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
HST BUILDING GROUP PTY LTD v NAUDI & ANOR
[2020] SASC 15
Judgment of Judge Dart a Master of the Supreme Court
6 February 2020
REAL PROPERTY - GENERAL PRINCIPLES - INCIDENTS OF ESTATES AND INTERESTS IN LAND - POSSESSION
Plaintiff lent to a company - defendants' land mortgaged to secure payment - default - first defendant becomes bankrupt - trustee does not oppose the making of an order for possession - second defendant says first defendant's interest in the land held on trust for him - plaintiff says should have possession of the land so far as it represents the first defendant's interest - joint tenancy - plaintiff prepared to undertake not to take any steps that would impair the second defendant's claim to hold all of the land beneficially - appropriate to make an order for possession.
Held: Appropriate to make an order for possession of the first defendant's interest in the land.
Real Property Act 1886 Part 17, s 74, s 170; Bankruptcy Act 1996 s 58, referred to.
Albany Home Loans Ltd v Massey & Anor [1997] 2 All ER 609; Cirillo & Anor v City Corp Australia Ltd & Ors (2004) 2 ABC(NS) 525; Director of Public Prosecutions for the State of Victoria v Le (2007) 232 CLR 562; National Australia Bank v Stirk [2009] NSWSC 184; Quennell v Maltby [1979] 1 All ER 568; Wright v Gibbons (1949) 78 CLR 313, considered.

HST BUILDING GROUP PTY LTD v NAUDI & ANOR
[2020] SASC 15
JUDGE DART:

The plaintiff in this action is the registered second mortgagee of land situated at North East Road, St Agnes. The land is comprised of five separate Certificates of Title. The first registered mortgagee is Australia and New Zealand Banking Group Ltd (“ANZ”). The two defendants are registered proprietors of the land.
In this action the plaintiff seeks an order for possession. The action is brought pursuant to Part 17 of the Real Property Act 1886 (SA) (“the Act”). Ordinarily such matters proceed summarily, but pleadings have been filed because of the defences raised.
The plaintiff advanced monies to a company for the purpose of developing the land. The first defendant was director of the company, Softec Homes Pty Ltd. Since the commencement of these proceedings, the company has been wound up by order made in the Federal Court. The defendants agreed to mortgage the land to secure the advance. On 21 March 2019 a sequestration order was made against the first defendant in the Federal Circuit Court of Australia. Mr Naudi was appointed the first defendant’s Trustee in Bankruptcy. The Trustee has been joined as the first defendant in lieu of the bankrupt.
Upon the making of the sequestration order, the property of the bankrupt vests in the Trustee in Bankruptcy.[1] A bankrupt who remains the registered proprietor of land has a bare legal interest only, which he holds for the benefit of the trustee in bankruptcy.[2] A bankrupt…

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

Case: [2020] SASC 15
Decision Date: 6 February 2020

CaseChat Overview and Summary

In HST Building Group Pty Ltd v Naudi, the dispute involved the possession of land that had been mortgaged by a company to secure a debt owed to the plaintiff. Following a default, the first defendant became bankrupt, and the trustee did not oppose the making of an order for possession. The second defendant claimed that the first defendant's interest in the land was held on trust for him, and as a result, the plaintiff should not have possession of the land to the extent that it represented the first defendant's interest. The plaintiff, however, argued that it should have possession of the land to the extent of the first defendant's interest and was prepared to undertake not to take any steps that would impair the second defendant's claim to hold all of the land beneficially.

The court was required to determine the appropriate legal position regarding the possession of the land, given the bankruptcy of the first defendant and the claim by the second defendant that the first defendant's interest in the land was held on trust for him. The court needed to assess the nature of the interest held by the first defendant and whether the plaintiff was entitled to possession of the land to the extent of that interest. Furthermore, the court had to consider whether it was appropriate to make an order for possession, taking into account the second defendant's claim and the plaintiff's undertaking.

The court determined that the first and second defendants held their interests in the land as joint tenants, and the plaintiff was entitled to possession of the land to the extent of the first defendant's interest. The court found that the second defendant's claim that the first defendant's interest in the land was held on trust for him did not affect the plaintiff's entitlement to possession. The court concluded that it was appropriate to make an order for possession, given the plaintiff's undertaking not to take any steps that would impair the second defendant's claim to hold all of the land beneficially.

The final orders made by the court included an order for possession of the land to the extent of the first defendant's interest in favour of the plaintiff, subject to the plaintiff's undertaking not to take any steps that would impair the second defendant's claim to hold all of the land beneficially. The court also made orders for the costs of the proceedings.

Orders