Jaggumantri v Registrar-General - [2023] SASC 74

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
JAGGUMANTRI v REGISTRAR-GENERAL
[2023] SASC 74
Judgment of the Honourable Justice Blue
REAL PROPERTY - TORRENS TITLE - MORTGAGES, CHARGES AND ENCUMBRANCES
The applicant is the registered proprietor of land situated at Burton. The second interested party, ASIC, is the owner of the property rights vested in the encumbrancee by an encumbrance registered on the certificate of title to the land.
The applicant seeks a declaration that the encumbrance has created no rights or obligations that are binding on her and has been inutile since the date of acceptance by ASIC of payment by her in satisfaction of money secured by the encumbrance. She seeks an order under section 64 of the Real Property Act 1886 (SA) directing the first interested party, the Registrar-General, to remove the encumbrance from the title or alternatively that the Registrar of the Court execute a discharge of the encumbrance.
It appears that Mirago Pty Ltd was the developer of a subdivision of which the applicant’s land formed part and each purchaser of an allotment in the subdivision executed an encumbrance in favour of Mirago in similar terms. The applicant’s predecessor in title, the Defence Housing Authority, executed the encumbrance over the applicant’s land.
By clause 1 of the encumbrance, the encumbrancer covenanted to pay 10 cents to the encumbrancer on 30 June each year thereafter for the next 3,999 years.
By clause 2 of the encumbrance, the encumbrancer covenanted not to do or suffer to be done various things on the land, including not to erect or suffer to be erected more than one main dwelling house or a house other than one made of brick, brick veneer or masonry with a tiled or coloured bonded metal roof.
On 12 November 2014 ASIC deregistered Mirago pursuant to subsection 601AA(4a) of the Corporations Act 2001 (Cth).
On 20 February 2023 the applicant’s solicitor sent a letter to ASIC attaching a cheque for $399.90 representing the amount that would have been paid to Mirago over the lifetime of the Encumbrance. On 28 February 2023 ASIC banked the cheque.
Held:
1By reason of ASIC’s acceptance of the payment of $399.90, the applicant’s obligations to pay the rent-charge under the encumbrance have been discharged (at [67]).
2Because there is nothing in the encumbrance or memorial that identifies that the encumbrance is provided for the benefit of Mirago as owner of any other land or for the benefit of any land or other land, the restrictive covenants contained in the encumbrance are not binding on the applicant (at [74]).
3The applicant is entitled to a declaration that at and from the date on which ASIC accepted payment by her in satisfaction of the money that the encumbrance secured, the encumbrance creates no rights or obligations that are binding on her and is inutile (at [77]).
4Because the applicant has established an entitlement to such a declaration, the giving of a direction under section 64 of the Real Property Act 1886 (SA) would…

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: [2023] SASC 74
Decision Date: 17 May 2023

CaseChat Overview and Summary

Ms Jaggumantri, the plaintiff, sought a declaration that an Encumbrance on a property had created no rights or obligations binding on her, and had been inutile since the date of acceptance by the Australian Securities and Investments Commission (ASIC) of payment in satisfaction of money secured by the Encumbrance. She sought an order under section 64 of the Real Property Act 1886 (SA) directing the Registrar-General to remove the encumbrance from the title or, alternatively, that the Registrar of the Court execute a discharge of the Encumbrance. The dispute primarily involved the interpretation and application of sections 601AD and 601AE of the Corporations Act 2001 (Cth), which deal with the vesting of company property in ASIC upon deregistration and the powers and obligations of ASIC regarding such property.

The key legal issue was whether the Encumbrance, which was secured by the Defence Housing Authority (DHA) to Mirago, continued to bind Ms Jaggumantri after Mirago's deregistration and the vesting of its property in ASIC. Ms Jaggumantri argued that the Encumbrance had become inutile following ASIC's acceptance of payment, while ASIC contended that the Encumbrance remained effective and binding on Ms Jaggumantri. The court needed to determine the effect of the Encumbrance on Ms Jaggumantri and whether ASIC was correctly joined as a party in the proceedings.

The court found that the Encumbrance had indeed become inutile upon ASIC’s acceptance of payment. The court held that all rights and obligations under the Encumbrance that were held by Mirago vested in ASIC upon deregistration, but the Encumbrance itself was discharged by ASIC's acceptance of payment. Consequently, the restrictive covenants in the Encumbrance did not bind Ms Jaggumantri or any successor in title to her. The court accepted the Registrar-General's submission that the preferable order was to direct the Registrar of the Court to execute a discharge of the Encumbrance if ASIC did not do so after being served with the court's orders.

The final orders made by the court included a declaration that the Encumbrance had created no rights or obligations that were binding on Ms Jaggumantri and had been inutile since the date of acceptance by ASIC of payment. The court ordered that the Registrar of the Court execute a discharge of the Encumbrance if ASIC did not do so after being served with the court's orders.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Ms Jaggumantri seeks a declaration that the Encumbrance has created no rights or obligations that are binding on her and has been inutile since the date of acceptance by ASIC of payment by her in satisfaction of money secured by the Encumbrance. She seeks an order under section 64 of the Real Property Act 1886 (SA) (the Act) directing the first interested party, the Registrar-General, to remove the encumbrance from the title or alternatively that the Registrar of the Court execute a discharge of the Encumbrance.Background As at 2005 certificate of title volume 5935 folio 390 related to allotment 701 in deposited plan 66494 (allotment 701). Evidence was not adduced as to the identity of the registered proprietor but, by reason of the facts below, it is likely to have been Mirago Pty Ltd (Mirago). As Ms Jaggumantri bears the onus of proof, I assume (against her) that Mirago was the registered proprietor. On 15 September 2005 a plan of division of allotment 701 was approved by the Registrar-General and became deposited plan 69113 (the Deposited Plan). The Deposited Plan created 61 allotments, including 47 residential allotments (the Subdivision). This included allotment 32 being 14 Pintillo Court Burton. On 21 September 2005 the Registrar-General issued certificate of title volume 5949 folio 503 in respect of allotment 32. Evidence was not adduced of the identity of the registered proprietor, but again I assume that it was Mirago. On 21 September 2005 the Registrar-General also issued certificates of title in respect of allotments 31 and 33. I assume that on the same date the Registrar-General issued certificates of title for all of the allotments in the Subdivision and that all certificates of title showed Mirago as the registered proprietor. On 30 June 2006 two documents were lodged with the Registrar-General for registration in respect of title to the Land. The first was a transfer (the DHA Transfer) of the fee simple to the Defence Housing Authority (DHA). Evidence was not adduced as to the identity of the transferor but it is likely to have been Mirago. The second document was the Encumbrance. The Encumbrance was dated 30 June 2006. The encumbrancer was DHA and the encumbrancee was Mirago. By clause 1 of the Encumbrance, the encumbrancer covenanted to pay if demanded 10 cents to the encumbrancer on 30 June each year thereafter for the next 3,999 years. By clause 2 of the Encumbrance, the encumbrancer covenanted not to do or suffer to be done various things on the Land, including:·not to re-subdivide the Land (clause 2.6);·not to erect or suffer to be erected more than one main dwelling house (clause 2.1.1) or a house other than one made of brick, brick veneer or masonry (clause 2.1.3.2) with a tiled or coloured bonded metal roof (clause 2.1.3.3);·not to construct a garage (clause 2.2), fence (clause 2.3), air-conditioner, solar water heating system (clause 2.11), rainwater tank (clause 2.12), clothesline (clause 2.13) or garden design (clause 2.14) other than in accordance with specified requirements.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

However, I accept the Registrar-General’s submission that the preferable order is to direct that the Registrar of this Court execute a Discharge of Encumbrance in a form approved by the Registrar-General in order to discharge the Encumbrance if ASIC does not do so after being served with the orders made by the Court.Conclusion The rent-charge secured by the Encumbrance has been discharged by ASIC’s acceptance of payment by Ms Jaggumantri. The restrictive covenants contained in the Encumbrance do not bind Ms Jaggumantri and will not bind any successor in title to her. Ms Jaggumantri is entitled to a declaration to this effect and to an order directing the Registrar of this Court to execute a Discharge of Encumbrance if ASIC does not do so after being served with the orders of the Court. I will hear the parties concerning the wording of the orders to be made.

Ratio Decidendi

Legal Principle Established

Sections 601AD and 601AE provide that all company property other than trust property vests in ASIC on deregistration and ASIC has all of the powers of an owner of such property. They relevantly provide:601AD Effect of deregistration…Other company property vests in ASIC(2)On deregistration, all the company’s property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction.Rights and powers in respect of property(3)Under subsection … (2), … ASIC takes only the same property rights that the company itself held. If the company held particular property subject to a security or other interest or claim, … ASIC takes the property subject to that interest or claim.Note: See also subsection 601AE(3)—which deals with liabilities that a law imposes on the property (particularly liabilities such as rates, taxes and other charges).…(4) ASIC has all the powers of an owner over property vested in it under subsection (2).Note: Section 601AF confers additional powers on ASIC to fulfil outstanding obligations of the deregistered company.…601AE What the Commonwealth or ASIC does with the property…Property vested in ASIC(2) If property vests in ASIC under subsection 601AD(2), ASIC may:(a) dispose of or deal with the property as it sees fit; and(b) apply any money it receives to:(i)defray expenses incurred by ASIC in exercising its powers in relation to the company under this Chapter; and(ii) make payments authorised by subsection (3).ASIC must deal with the rest (if any) under Part 9.7.…Obligations attaching to property(3)Any property that vests in … ASIC under subsection 601AD … (2) remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in …ASIC. These liabilities include a liability that:(a) is a security interest in or claim on the property; and(b) arises under a law that imposes rates, taxes or other charges.Extent of Commonwealth’s and ASIC’s obligation(4)… ASIC’s obligation under subsection (2A) or (3) is limited to satisfying the liabilities out of the company’s property to the extent that the property is properly available to satisfy those liabilities.…The hearing Ms Jaggumantri tendered her affidavits made on 2 September 2022 and 15 May 2023 and affidavits made by Mr Brohier on 19 December 2022, 30 January 2023, 6 March 2023 and 19 April 2023. ASIC did not appear. As observed above, it contended that it ought not to have been joined as a party. While ASIC was free to decide whether to oppose, not oppose or consent to the application, its contention that it ought not have been joined as a party is misconceived. All of Mirago’s rights under the Encumbrance vest in ASIC under sections 601AD and 601AE of the Corporations Act. ASIC is a person against whom final relief is sought in the action and whose interests may be directly and adversely affected by the orders sought in the action. ASIC therefore falls within the definition of respondent contained in rule 21.1(3) of the Uniform Civil Rules 2020 (SA). It ought therefore to have been joined as a respondent. In any event, ASIC falls within the definition of an interested party because it is a person who should be given the opportunity to be heard in relation to the proceeding and who must be joined to be bound by the result.