Law Partners Mortgages P/L (in Liq) v. Jeremy

[2008] QCA 10

SUPREME COURT OF QUEENSLAND

CITATION:

Law Partners Mortgages P/L (in Liq) v Jeremy [2008] QCA 10

PARTIES:

LAW PARTNERS MORTGAGES PTY/LTD (IN LIQUIDATION) ACN 068 522 261

(respondent)

v

MICHAEL ALLAN JEREMY AS TRUSTEE FOR THE TURNER PARK SHOPPING VILLAGE PROPERTY

(appellant)

FILE NO/S:

Appeal No 240 of 2008
SC No 1070 of 2003

DIVISION:

Court of Appeal

PROCEEDING:

Application to Strike Out

Application for Stay of Execution

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

8 February 2008

DELIVERED AT:

Brisbane

HEARING DATE:

30 January 2008

JUDGES:

de Jersey CJ, Keane and Holmes JJA

Separate reasons for judgment of each member of the court, each concurring as to the orders made

ORDER:

1.  Notice of appeal struck out;
2.  Appeal dismissed;

3.  Appellant to pay the costs of it and of these applications

CATCHWORDS:

APPEAL AND NEW TRIAL- APPEAL- PRACTICE AND PROCEDURE- POWERS AND PROCEDURE- where application made to strike out Notice of Appeal-  where no challenge to findings of fact- where no arguable grounds- where requiring respondent to answer appeal would be oppressive-whether notice of appeal should be struck out  

BANKRUPTCY- TRUSTEES- POSITION AND DUTIES GENERALLY- where property subject to equitable mortgage- where bankrupt claimed interest through family trust- whether property vested in trustee in bankruptcy- whether vested on discharge- whether respondent secured creditor   

MORTGAGES – MORTGAGES AND CHARGES GENERALLY – PARTICULAR MORTGAGES AND ENCUMBRANCES – EQUITABLE MORTGAGE – where mortgage documents invalidly executed- whether equitable mortgage

CONSUMER CREDIT- whether Consumer Credit Code applicable- where no evidence as to loan’s purpose

Bankruptcy Act 1966 (Cth), s 5(1), s 58(5)

Consumer Credit Code (Qld), s 6(1), s 41(1)

Leach v Leach [2007] QCA 118, cited

von Risefer & Ors v State of Queensland [2005] QCA 136, cited

COUNSEL:

The appellant appeared on his own behalf

RM Derrington SC for the respondent

SOLICITORS:

The appellant appeared on his own behalf

McCullough Robertson for the respondent

1. e JERSEY CJ: dI have had the advantage of reading the reasons for judgment of Holmes JA.  I agree with the orders proposed by her Honour, and with her reasons.

1. KEANE JA:  I agree with the reasons of Holmes JA and the orders proposed by her Honour.

1. HOLMES JA:  This appeal was the subject of cross-applications by the appellant for a stay of execution and by the respondent to strike out the notice of appeal and dismiss the appeal.  For reasons which will emerge, it has proved unnecessary to deal with the former application. As to the latter, the respondent advances two bases for striking out the notice of appeal: that the document itself is not in any proper form and, more importantly, that it discloses no arguable ground.

1. The background to the matter is that the respondent advanced some $218,000 to the appellant on the security of mortgages over property which had been held by Mr Jeremy and a Mr Morgan as trustees of the Turner Park Shopping Village Property Trust.  It was thought at the time the mortgages were given that Mr Morgan had resigned as trustee of the unit trust.  For reasons not necessary to explore here, that resignation was not effective; but in consequence of the misapprehension, the bills of mortgage were signed by the appellant on 13 April 1999 as sole trustee.  Because of that error, the respondent was unable to register the mortgages.  The appellant defaulted in his obligations under the mortgages shortly afterwards.  He and his wife were bankrupted on 30 June 1999 and were discharged five years later.

1. Both the appellant and Mr Morgan were defendants to the respondent’s action; neither gave evidence at the trial. The learned trial judge found as facts that the mortgages were executed by the appellant with the consent of Mr Morgan, the trustees having agreed to grant the mortgages to secure the advances made, and that the respondent had advanced the money in reliance on the mortgage documents. In consequence, his Honour held that execution of the mortgage document created an equitable mortgage in favour of the respondent, and made a declaration accordingly. Those findings of fact are not challenged in the notice of appeal, and nor, it appears, is the legal conclusion from them.

1. The notice of appeal is lengthy and narrative in style. It appears to raise six arguments. The first concerns the effect of the bankruptcy of the appellant and his wife.  The appellant asserts (although no evidence was called before the trial judge) that the beneficiary of the unit trust is a family trust, of which he and his wife are trustees and beneficiaries; their beneficial interests must have vested in the trustee in their bankruptcy; he should have realised the mortgaged property; and the respondent should have lodged a proof of debt in their bankruptcy in order to recover its debts.  But the trustee had failed to register a transmission by bankruptcy of the property so it had not vested in him in law and must have reverted to the appellant’s control once he was discharged. 

1. The argument overlooks some vital points: first, that there is no evidentiary or legal basis identified for concluding that legal title in the property vested in the trustee in bankruptcy; second, that whatever beneficial interests the appellant and his wife held vested in equity in the trustee and did not re-vest in them on their discharge; and, third, and most importantly, that whatever interest they may have had, the property was subject to the equitable mortgage created upon the execution of the mortgage documents in April 1999. The coming into existence of that equitable mortgage by definition[1] made the respondent a secured creditor whose rights to deal with the property were, by virtue of s 58(5) of the Bankruptcy Act, unaffected by the bankruptcy.

   [1]s 5(1) of the Bankruptcy Act1966 (Cth).

1. The notice of appeal also raises an argument under the Consumer Credit Code (Qld), relying on s 41(1), which renders void any provision in a mortgage by which the mortgagor creates or agrees to create a mortgage over a property yet to be acquired. The appellant argues that because each mortgage contained, under the heading “Additional Security”, provision of the kind, by which the mortgagor charged all freehold and leasehold interests which it had or might acquire, the mortgages were void. There is a number of complete answers to that contention: firstly, the appellant did not by his defence at first instance raise any such issue; secondly, there was no evidence that the credit was provided, even in part, for a “personal, domestic or household purpose” so as to make the Code applicable[2]; and thirdly, that at the highest, only the “Additional Security” provision would be invalidated, leaving the balance of the mortgagor’s obligations under the mortgage unaffected, and without any implication for his Honour’s unchallenged findings that the documents were executed with the intention of providing security for the advances provided by the respondent.

   [2]Section 6 (1).

1. The remaining points raised by the notice of claim can be more shortly dealt with: the first, that the respondent had lodged a caveat without notice, is irrelevant to the issues before the trial judge; the second, that the respondents did not properly serve their claim is of no moment since the appellant, notwithstanding, defended the action;  the third, an argument that the mortgages as signed were not valid because they were not signed by both trustees is beside the point in light of his Honour’s findings leading to the conclusion that there was an equitable mortgage; the fourth, a contention that only $278,000 was advanced although $280,000 was sought, is irrelevant to the conclusion as to the respondent’s interest in the property.   

1. The Court will not readily strike out an appeal[3], but this appeal has neither legal nor moral substance.  It is not said that the appellant did not have the benefit of the monies advanced; there is no challenge to his Honour’s findings of fact (a difficult exercise, given the absence of evidence to contradict the respondent’s case) and there is no point made in the notice of appeal which amounts to a rational ground of appeal. To require the respondent to answer a hopeless appeal would be oppressive. 

   [3]        von Risefer & Ors v State of Queensland [2005] QCA 136; Leach  v Leach [2007] QCA 118.

1. The notice of appeal should be struck out and the appeal dismissed, the appellant to pay the costs of it and of these applications.