Leroy as trustee for the Bankrupt Estate of Shinton v Sun Sheetmetals (Qld) Pty Ltd
[2017] FCCA 2735
•9 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LEROY AS TRUSTEE FOR THE BANKRUPT ESTATE OF SHINTON v SUN SHEETMETALS (QLD) PTY LTD | [2017] FCCA 2735 |
| Catchwords: BANKRUPTCY – Application for order that Registrar execute release of mortgage – where mortgagee is company – where mortgagee has no directors or other officeholders – whether s.30(1) of the Bankruptcy Act 1966 (Cth) is a sufficient source of power – orders made. |
| Legislation: Bankruptcy Act 1966 (Cth), s.27, 30(1), 139D, 139DA, 139G, 139G(2) |
| Cases cited: Burness and Jess (Trustees) v Cheung [2017] FCCA 1098 CK Nominees Australia Pty Ltd v Official Receiver (WA) (2007) 160 FCR 524 Clout (Trustee) v Anscor Pty Ltd (2003) 1 ABC(NS) 44 Harrison v Ponting & Anor [2011] FMCA 680 Re Bilen; Ex parte Sistrom [1985] FCA 120 Re Simersall; Blackwell v Bray (1992) 35 FCR 584 Reidy v Cleary Bros (Parramatta) Pty Ltd [2013] FCCA 2110 Tyler v Thomas (2006) 150 FCR 357 |
| Applicant: | PAUL LEROY AS TRUSTEE FOR THE BANKRUPT ESTATE OF ROSS WILLIAM SHINTON |
| Respondent: | SUN SHEETMETALS (QLD) PTY LTD (ACN 112 852 614) |
| File Number: | BRG 560 of 2016 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 13 February 2017 |
| Date of Last Submission: | 14 February 2017 |
| Delivered at: | Brisbane |
| Delivered on: | 9 November 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Taylor David Lawyers |
| No appearance for the Respondent |
ORDERS
A registrar of the Federal Circuit Court of Australia is hereby appointed to execute all such documents on behalf of Sun Sheetmetals (Qld) Pty Ltd (ACN 112 852 614) as are necessary to secure the release of mortgage bearing the registered dealing number 713378662.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 560 of 2016
| PAUL LEROY AS TRUSTEE FOR THE BANKRUPT ESTATE OF ROSS WILLIAM SHINTON |
Applicant
And
| SUN SHEETMETALS (QLD) PTY LTD (ACN 112 852 614) |
Respondent
REASONS FOR JUDGMENT
On 12 September, 2016 I made orders in these proceedings declaring a certain mortgage bearing the registered dealing number 713378662 void as against the applicant in these proceedings.
The applicant now applies for an order directing Anthony John Watson, at one time the sole director of the respondent company, or an officer of the Court to execute a release of mortgage that can be registered on the title to the land encumbered by the mortgage.
The evidence reveals that the solicitors for the applicant attempted to effect a release of the mortgage by completing a Release of Mortgage form and lodging the document at the Land Titles Office (Queensland) pursuant to the requirements of the Land Title Act 1994 (Qld).
However, the respondent presently does not have any officers or directors and so, there is no person who is able to execute the Release of Mortgage on behalf of the company. The solicitors for the applicant have been unable to arrange for its execution by the company.
The evidence shows that upon enquiry by the solicitors for the applicant, the Registrar of Titles apparently requested that the applicant seek directions from the Court in order to have the Release of Mortgage registered. The relevant correspondence from the Registrar of Titles says:
A further order is required directing either the mortgagee or some other appropriate person, such as an officer of the court, to execute the release.
Consideration
The submissions made in support of the application depart from the relief sought by the applicant in the application. The primary order sought in the application is that Anthony Watson be directed to execute the release of mortgage. There are no submissions to support that order. That is not surprising. The evidence shows that the company is without directors. Mr Watson was once the sole shareholder of the company but he is no longer a director, shareholder or the bearer of any other office in the company. The Court’s power to authorise Mr Watson to execute documents on its behalf was neither identified nor explained.
The applicant identified two legislative provision that prima facie might have provided assistance to secure a signed release of the relevant mortgage.
First, the applicant submits that whilst s.61(1)(e) of the Public Trustee Act 1978 (Q) allows for the Public Trustee to execute a release of mortgage on behalf of a company which has ceased to exist or has ceased to function, the requirements of that subsection have not been met in this case and so it cannot be utilised to authorise the orders the applicant seeks. Relevantly, s.61(1) provides:
61. Circumstances when public trustee may release mortgage or encumbrance for another
(1) Where the mortgagee of property—
…
(e) is a corporation or company which has ceased to exist or, in the opinion of the public trustee, has ceased to function; or
(f) is, in the opinion of the public trustee, for any other reason unable or unavailable to give a discharge of the mortgage;
and the public trustee is satisfied after such inquiries as the public trustee considers reasonable that there is no person in Queensland authorised to give such a discharge, the public trustee may, if the public trustee considers it reasonable to do so, sign a memorandum of discharge (in the form approved by the public trustee) in regard to the moneys secured by the mortgage or execute a reconveyance (in the form approved by the public trustee) of any mortgaged property—
(g) if the public trustee is satisfied that the whole of the moneys payable under the mortgage have been paid; or
(h) if the whole of the moneys payable have not been paid—on payment to the public trustee of such amount as the public trustee is satisfied is the whole amount outstanding.
However, I accept the applicant’s submissions that s.61(1) is of no assistance in the circumstances of this case. The power provided by that subsection is dependent upon the Public Trustee’s satisfaction that the moneys secured by the mortgage have been paid or, if not paid, are paid to the Public Trustee (ss.61(1)(g) and 61(1)(h)). Whilst the mortgage under consideration has been declared void, that says nothing of the underlying liability secured by the mortgage. There is nothing to suggest that the underlying liability has been discharged by payment or otherwise. It is unlikely that the Public Trustee could be satisfied of the matters required to engage the power provided in s.61(1) of the Public Trustee Act.
Second, the applicant argues that s.601AF of the Corporations Act 2001 (Cth) is of no assistance for the same reason. Whilst I agree that in the present case it is of no assistance, its impotence is for reasons different to those given by the applicant. Section 601AF of the Corporations Act provides:
The Commonwealth’s and ASIC’s power to fulfil outstanding obligations of deregistered company
601AF The Commonwealth or ASIC may do an act on behalf of the company or its liquidator if the Commonwealth or ASIC is satisfied that the company or liquidator would be bound to do the act if the company still existed.
Note:
This power is a general one and is not limited to acts in relation to property vested in the Commonwealth under subsection 601AD(1A), or ASIC under subsection 601AD(2). The Commonwealth or ASIC has all the powers that automatically flow from the vesting of property under that subsection (see subsections 601AD(3A) and (4)) and may exercise those powers whether or not the company was bound to do so.
The applicant submits that “where a mortgagee is a corporation that has ceased to function the Australian Securities and Investment Commission (ASIC) may execute a release of mortgage if it is satisfied that all money owing under the mortgage has been repaid”. I do not accept that submission. That is not what s.601AF provides.
However, s.601AF only applies in respect of defunct companies. It appears in “Chapter 5A—Deregistration, and transfer of registration, of companies” and “Part 5A.1—Deregistration” of the Corporations Act. That part deals with deregistered companies. Having regard to the context in which s.601AF appears and the text of that section, it is clear that the reference in s.601AF to “the company” is a reference to a deregistered company. The respondent here is not deregistered. Section 601AF is not engaged on the facts.
Because neither identified power (s.61(1) of the Public Trustee Act or s.601AF of the Corporations Law) was engaged in this case, the applicant says that he has not approached either the Public Trustee or ASIC for assistance to secure a release of the relevant mortgage.
The applicant submits that there are two alternatives open to it in those circumstances.
The first is to move the Court for an order pursuant to s.15(1) of the Land Title Act 1994 (Qld). Subsection 15(1) of that Act provides:
15 Registrar may correct registers
(1)The registrar may correct any register kept by the registrar if the registrar is satisfied that—
(a)the register is incorrect; and
(b)the correction will not prejudice the rights of the holder of an interest recorded in the register.
(2)Without limiting subsection (1), the registrar may correct a register under the subsection if—
(a)the register is incorrect because the registrar has incorrectly recorded a particular or registered an instrument; or
(b)the registrar has held an inquiry under division 4, and has decided that the register is incorrect, including for example, because there has been fraud affecting the register.
(3)The registrar may correct a register kept by the registrar, whether or not the correction will prejudice the rights of the holder of an interest recorded in the register, if—
(a)the register to be corrected is the freehold land register, and the correction is to show, in relation to a lot, an easement the particulars of which have been omitted from, or misdescribed in, the register; or
(b)the Supreme Court has ordered the correction under section 26 .
(4)Section 185 (3), (4) and (6) applies for subsection (3)(a) in the same way it applies for section 185 (1)(c).
(5)The registrar’s power to correct a register includes power to correct a particular in the register or an instrument forming part of the register.
(6)If a register is corrected, the registrar must record in the register—
(a)the state of the register before the correction; and
(b)the time, date and circumstances of the correction.
(7)A register corrected by the registrar under this section has the same effect as if the relevant error had not been made.
(8)For subsection (1)(b), the rights of the holder of an interest recorded in the register are not prejudiced if the holder acquired or has dealt with the interest with actual or constructive knowledge that the register was incorrect and how it was incorrect.
The power to correct the register set out in s.15 is a power to be exercised by the Registrar of Titles. That power can be exercised by the Registrar of Titles on his or her own motion provided an occasion for its exercise has arisen. One of those occasions is where the Supreme Court of Queensland has ordered a correction of the register pursuant to s.26 of the Land Title Act.
Presumably, the applicant argues that this Court should make an order pursuant to s.26 for the correction of the register. That raises two issues, namely:
a)is this Court able to exercise the power given to the Supreme Court of Queensland by s.26 of the Land Title Act; and
b)if so, in the circumstances of this case, should that power be exercised in favour of the applicant?
Section 26 of the Land Title Act provides:
26 Other referrals by the registrar to the Supreme Court
In any matter under this Act, the registrar may—
(a)apply to the Supreme Court for directions; or
(b)state a case for decision by the Supreme Court; or
(c)refer a finding of an inquiry to the Supreme Court, seeking—
(i)an order for the registrar or another person to take a stated action, including for example an order for the registrar to correct a register; or
(ii)an order the court considers appropriate in the circumstances.
Plainly, s.26 is inapt to provide relief in this case. The relevant order of the Supreme Court referred to in s.15(3)(b) of the Land Title Act, is an order of the Supreme Court made upon application by the registrar, or upon a case stated to that court by the registrar or upon a reference from an inquiry under that Act by the registrar. Section 26 cannot be engaged on the facts of this case.
To the extent that the applicant seeks that the Court “makes an order directing the Land Titles Registrar to correct the register”, it has not been demonstrated that this Court has any power to make such an order.
The second alternative open to the Court, the applicant argues, is to order an officer of the court to execute the Release of Mortgage on behalf of the company so that it might be registered on the relevant title.
At the hearing of the application, I raised some concerns with the solicitor appearing for the applicant that I might not have power to make such an order. I gave the applicant the opportunity to make written submissions on the point. The applicant obliged with further written submissions that noted:
a)The Court has jurisdiction pursuant to s.10 of the Federal Circuit Court of Australia Act 1999 (Cth) in all matters in vested, expressly or by implication, in it by laws made by the Parliament;
b)In every matter before the Court, the Court must grant, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters may be avoided;
c)Section 15 of the Federal Circuit Court Act gives the Court power to:
i)make orders of such kinds, including interlocutory orders, as the Court thinks appropriate; and
ii)issue, or direct the issue of, writs of such kinds as the Court thinks appropriate.
d)Section 30 of the Bankruptcy Act 1966 (Cth) gives the Court full power to decide all questions, whether of law or of fact, in any case of bankruptcy and to make such orders as the Court considers necessary for purposes of carrying out or giving effect to the Act. Specifically, the Court may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.
e)The words of s.30 of the Act are words of extension and not limitation:
In my opinion sub-section 30(1) of the Bankruptcy Act 1966 is not a provision limiting the Court’s jurisdiction. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not of limitation but of extension.
per Neaves J in Re Bilen; Ex parte Sistrom [1985] FCA 120.
f)Subsection 30(1) of the [Act] is intended to give the court wide powers to give effect to and carry out the Act.
per Branson J in Tyler v Thomas (2006) 150 FCR 357 at [13].
g)Relief will be “necessary” if it is in the interests of justice, having regard to the purpose of the Act…
per Gummow J in Re Simersall; Blackwell v Bray (1992) 35 FCR 584 at 591;
h)In the email dated 1 November, 2016 from the Land Titles Office to the solicitors for the Applicant, it is stated that a further order is required directing either the mortgagee or some other appropriate person, such as an officer of the court to execute the release;
i)in this case, it would be futile for the Court to order the Mortgagee to execute the release as the material filed discloses that it has no directors and appears to be defunct;
j)This Court has “jurisdiction under section 30 of the Act to make what is in effect an order granting consequential relief in aid of the Order made on 12 September 2016”;
k)“… the jurisdiction given to this Honourable Court by section 30 of the Act is sufficiently wide to accommodate the suggestion put forward by the Land Titles Office that “some other appropriate person, such as an officer of the court” execute the release of the Mortgage”.
Consideration
I do not consider that the Court may make an order that authorises a registrar of this Court or “some other appropriate person, such as an officer of the court” to execute a document such as the release of mortgage in this case, unless the Court has power to do so either expressly, or by necessary implication.
There are two examples of the express conferral of such a power: s.106A of the Family Law Act 1975 (Cth) and s.139G of the Bankruptcy Act. There may be others. The applicant could identify no express conferral of power in terms like those used on s.106A or s.139G that might assist in the present case.
The Federal Circuit Court has jurisdiction in bankruptcy. It is a bankruptcy court: s.27 of the Bankruptcy Act. The issue is whether the power conferred on the Court by s.30(1) of the Act is sufficiently broad to authorise the making of the order sought by the applicant authorising a registrar of the court, or “some other appropriate person, such as an officer of the court” to execute a release of mortgage in the circumstances of this case.
Whilst s.30(1) of the Bankruptcy Act is wide, it is not without boundary. The passage from Tyler v Thomas to which I was referred by the applicant is in point. That passage, in its entirety is:
I agree with the view expressed by Bennett J that par 30(1)(b) of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’) did not authorise the Federal Magistrate to ignore the terms of subs 120(1) of that Act. Subsection 30(1) of the Bankruptcy Act is intended to give the court wide powers to give effect to and carry out the Act (Re Bilen; Ex parte Sistrom [1985] FCA 141 at [8]). It is not a source of power to override express provisions of the Act. Having concluded that the transfer of property by Mr Douglas Tyler to Mr Michael Tyler was void against the respondent, his Honour was not empowered to alter the impact of subs 120(1) by ordering, in effect, that the transfer would not be void against the respondent if Mr Michael Tyler paid to the respondent the difference between the market value of the land transferred and the consideration in fact given for its transfer.
Thus, to the extent that the orders sought might override another express provision of the Bankruptcy Act, s.30(1) will not be an apt source of power. However, there is no identified provision of the Bankruptcy Act here that might be overridden by the order sought by the applicant.
Nonetheless, if s.30(1) was broad enough to authorise the order here sought by the applicant, what purpose is to be served by s.139G of the Bankruptcy Act? That section is in the following terms:
139G Giving effect to orders under this Division
(1) Where:
(a) the Court makes an order under section 139D or 139DA vesting in a person an estate in property; and
(b) a law of the Commonwealth, of a State, or of a Territory of the Commonwealth, requires the creation, transfer or transmission of estates in that property to be registered;
that estate vests in equity in the person by virtue of the order but does not so vest at law until the requirements of that law have been complied with.
(2) Where the Court makes under section 139D or 139DA an order directing the execution of an instrument and:
(a) a person has refused or failed to comply with the direction; or
(b) for any other reason, the Court thinks it necessary to exercise its powers under this subsection;
the Court may, by order, appoint the Registrar:
(c) to execute the instrument in the name of a person; and
(d) to do all acts and things necessary to give effect to the instrument.
(3) An order by the Court under section 139E or 139EA is enforceable as if it were an order for the payment of money made by the Court when exercising jurisdiction otherwise than under this Act.
Sections 139D and 139DA give the Court express power to order the execution of documents in the circumstances prescribed by those subsections.
Arguably, that the Parliament saw fit to include a provision such as s.139G(2) suggests that s.30(1) was seen as insufficient for that purpose. If s.30(1) was wide enough to authorise a bankruptcy court to make such an order, there would be no need for s.139G(2).
But on reflection, I think there are two answers to that argument. First, the power supplied by s.139G(2) is only available when a court has made an order under ss.139D or 139DA directing the execution of an instrument. The power to make an order under one or other of those sections is limited to the circumstances prescribed in Division 4A of Part VI of the Bankruptcy Act. It is not a general power to order a person other than the bankrupt to execute a document or instrument. Section 30(1) is a broad general power to make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as a court considers necessary for the purposes of carrying out or giving effect to the Act.
Second, in CK Nominees Australia Pty Ltd v Official Receiver (WA) (2007) 160 FCR 524 Moore J commented:
The existence of more specific provisions conferring power upon the Court in particular instances is not to be regarded as diminishing the width of review available under s 30: see Re Bond; Ex parte Bond v Caddy (No 2) (1994) 11 WAR 345 at 346-347. Nonetheless in Tyler v Thomas (2006) 150 FCR 357 the members of the Full Court observed in separate judgements (at [13], [78] and [208]) that s 30(1) is not a source of power that can be exercised to override express provisions of the Act. Similarly, in Re Bayliss; Ex parte Official Trustee (1987) 15 FLR 167 at 169, the Court said that “[i]t must be a matter of construction in each case whether a particular provision of the Act negates the possibility of the court’s making an order under the general power”. The power conferred by s 30 is a discretionary power: Re Dingle at 484 - 485.
Whilst Moore J was the dissentient in that case, the majority (Gyles J, with whom Tamberlin J agreed) did not suggest that those observations were not accurate although they considered that it was unnecessary to decide if s.30(1) would provide an independent basis for an application to review an act by the Official Receiver where that act was reviewable pursuant to s.15(5) of the Act.
Conclusion
Subsection 30(1) of the Bankruptcy Act is a sufficient basis upon which to conclude that the Court has power to order the execution of a release of mortgage by a registrar of this court in the circumstances of this case. I note that there are a few cases where an order directing a registrar to sign documents to give effect to orders made by a bankruptcy court have been made, although those cases do not seem to examine the basis of that power: Clout (Trustee) v Anscor Pty Ltd (2003) 1 ABC(NS) 44; Harrison v Ponting & Anor [2011] FMCA 680, Reidy v Cleary Bros (Parramatta) Pty Ltd [2013] FCCA 2110 and Burness and Jess (Trustees) v Cheung [2017] FCCA 1098.
I make the orders set out at the commencement hereof.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 9 November, 2017.
Date: 9 November 2017
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