Logan City Council v. Locke

[2008] QSC 10

[2008] QSC 10

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

ATKINSON J

No 561 of 2008

COUNCIL OF THE CITY OF LOGAN

Applicant

and

MAXWELL GERARD LOCKE

and

MARY ELAINE ROSS AND DENIS ASHLY ROSS

Respondent

Respondents

BRISBANE

..DATE 06/02/2008

ORDER

HER HONOUR: When the matter came on for hearing this morning there were two applications before the Court. One is an application by the Council of the City Logan to remove a caveat pursuant to Section 127 of the Land Title Act 1994. That caveat has registered dealing number 711224106 and was lodged by the first respondent, the Registrar of Titles on 29 November, 2007 over the title to land described as Lot 126 on Registered Plan 73277, County of Stanley, Parish of Yeerongpilly, title reference 13303236 ("here and after referred to as the land"). The second respondents to that application were Mary Elaine Ross and Dennis Ashley Ross whose interest in the land the first respondent's caveat was lodged to protect.

Mary Ross is the applicant in another matter before me which was originally before me seeking various relief.  It was lodged originally to protect the caveat.  The matter has previously come to Court in January and was adjourned to today.  When the matter came on before me today, after the Council had made all of its submissions, Mrs Ross said she was unwell and wanted both matters adjourned. 

The question about the caveat is urgent because a contract for the sale of the land is due to settle by the end of the week and I had heard all of the argument on behalf of the Council. The Council agreed that Miss Ross' matter, that is matter number 11167 of 07, could be adjourned to a date to be fixed but pressed that the matter in their originating application be determined today.
I decided that that matter should not be adjourned.  The need for determination of that matter is urgent.  Mrs Ross has filed a large amount of material before me and Ms Noah spoke on her behalf.  Ms Noah is a self employed business person and addressed the submissions extremely comprehensively and at some length with the assistance of Mrs Ross to ensure that all the matters that Mrs Ross wanted put before me today were covered.  I should add that the medical certificate on which I was asked to adjourn the matter was certainly insufficient material for me to adjourn an important matter which does need determination.

The caveatee, the Council of the City of Logan (“Logan Council”) may apply for an order that a caveat be removed if it can demonstrate to the Court that the caveator has no caveatable interest in the land.  This it set out to do by demonstrating, in very careful submissions, that it is the registered owner of the land and neither Mr or Mrs Ross has any arguable interest in the land.

To understand the present situation with regard to the land it is necessary to go back to matters that occurred sometime ago. The Logan Council is the relevant local government for the area in which the land is situated. It levied rates on the land, as is shown in the affidavit material, on a six monthly basis and rates notices were issued. When payments are received they are recorded in a data base. The relevant data base shows that over a period rates were levied but remained unpaid. It shows that from the levy date of the 1st of January, 1992 until the levy date of the 1st of July, 1995 the rates remained unpaid in whole. At that time the relevant sections of the Local Government Act 1993 were found in Chapter 10 Division 3, Sections 635 to 654 in. Division 3 which deals with the sale of land for overdue rates starts in s 635 by saying that the Division applies if an overdue rate has remained unpaid for three years. It is clear from the affidavit material of Mr Hayden that trigger was satisfied.

I should say here that Mrs Ross put in a lot of material about how it was that the rates came to remain unpaid.  She had a large number of difficulties.  She had financial difficulties, she had a very sick husband, she had parents who were sick and she has an intellectually disabled brother.  She has also done a lot of pro bono work in the community.

All of these combined meant that she was not able to, and did not, pay the rates and then did not give the attention to what the consequences of the unpaid rates were that she needed to give in order to avoid the consequences.  That is not to criticise her but merely to put in its unfortunate social context what then occurred.

The Logan Council, it appears, did write to her a number of times about this but she felt unable to cope with dealing with it and she says - often she did not answer council mail or even open it.

So the circumstances which triggered division 3 of chapter 10 were raised.  Section 636 then gives the Local Government a power to sell the land in certain circumstances.  It may only sell the land if it decides to do so by resolution.  That resolution is now before the Court.  Mrs Ross was concerned that she had not seen that resolution but that resolution is now clearly before the Court and the affidavit of Patricia Peddy filed by leave today annexes a resolution of the council which decided to sell the land and which satisfies the requirement of section 636(3).

Section 637 requires the Local Government which decides to sell the land to give the information mentioned in subsection 2 in writing to the owner of the land and each encumbrancee as soon as practicable.  The encumbrancee in this case was the Queensland Housing Commission.  I use that term loosely since its title has changed from time to time but they were the mortgagee of the land.

The evidence shows that the information which was required to be provided was provided and the material shows that a letter was sent to Mr and Mrs Ross on 12 January 1996 advising them that the council had resolved on the 19th of December 1995 to sell the property at auction in order to recoup the unpaid rates.  The unpaid rates by that time were $4,497.03.

A notice of sale was included together with the sections of the Local Government Act which were required to be provided to the owner by section 637(1)(a) and 637(2) of the Local Government Act. Those are the sections to which I have been referring.

Section 638 of the Local Government Act provides the procedures for selling the land and provides certain time limits. It can be seen from the exhibits to Ms Peddy's longer affidavit that the appropriate action was taken within the relevant time limits and notice was given on 27 May 1996 of the intended sale of the land on 21 June 1996. The advertising procedure set out in section 639(3) was met by a newspaper advertisement a copy of which is in the material and a notice was given to the owner of the land and also to the mortgagee.

There is a requirement to place a copy of the notice on display in a conspicuous place at the council's public office and to attach a copy of the notice to a conspicuous part of the land. 

Evidence is before me of the usual practice of the council with regard to that and no evidence to suggest that it was deviated from although Mrs Ross says she thought the sign was too small and obscured by a hedge.  Nevertheless, I'm satisfied on the material before me that it appears that council did comply with its usual practice.

Under section 640 the council was obliged to place a reserve price on the land if it offered it for auction.  The reserve price must be at least the amount of all overdue rates levied on the land or the unimproved value of the land whichever was the greater.

It appears that there was a valuation done of the property at about that time.  Mrs Ross objects to the fact that she says that she did not see it although it was supposedly done for her at the time.  But that is not really the point.  The point of the advantage of having now a valuation done at the time is one can determine whether or not the reserve price put was realistic - or certainly, whether or not it was an undervalue.

The market value given by the Herriot Group Valuers, a registered valuer, was $45,000 although they said the value for a quick sale was $30,000.  Nevertheless, the council put the reserve price of $51,000 on the property which would have been sufficient to clear the mortgage and pay the rates so that the Rosses would not find themselves in the unfortunate circumstance that even if the property were sold at the reserve price they would still owe money on the property.

The putting of such a high reserve price was at some risk to the council because section 641 provides that if the reserve price is not reached at the auction, the local Government may enter into negotiations with the highest bidder to sell it by agreement, but that the sale of land by agreement must be at a price greater than the highest bid for the land at the auction.  And if the land is not sold at the auction, and no such negotiations are entered into, or the negotiations are unsuccessful, then the land is taken to have been sold at auction to the local Government at the reserve price.  So, the peril that the local Government is in for a high reserve is that it will be obliged to acquire it at that price.  And that is, indeed, what happened in this case. 

When the auction took place the highest bid was
apparently $39,000.  That bidder required vacant possession, and would have lead to a $12,000 shortfall, which would, of course, then remained a debt owing by Mr and Mrs Ross.  The fact that they were unable to pay their rates showed that they would be unable to pay, and greatly burdened by, any further debt.  So council, in my view, quite sensibly decided to forego selling it to the highest bidder, and, instead, itself acquiring the property and letting it out to Mr and Mrs Ross.

That is what occurred, and it appears that the expense sof the sale, the overdue rates and the mortgage were paid out.  Mrs Ross expressed some concern in her submissions, as I said, well put by Mrs Noah, that she did not see the source documents to provide evidence that the mortgage was being paid out.  But the mortgage has been removed from the Register.  There is no registered mortgage, there has been no demand made on her for any moneys owing, and, all of the material suggests that the mortgage has been paid out.

So, the council became, then, the unencumbered owner of the land in fee simple.  It entered into a tenancy agreement with the Rosses which allowed them to stay there for many years, but the council determined that it wished to sell the property and has given the Ross's notice to quit.

It was the intended sale of the property which lead the Rosses to lodge the caveat, but, unfortunately, I can see no basis for the Ross's having a caveat able interest in the land.  This is a most unfortunate situation as they have lived there for many years.  They are not well, either physically, and, at least, in the case of Mr Ross and Mrs Ross's brother, mentally or intellectually.  But, the fact is, they have no caveatable interest in the land, and, as such, are not entitled to maintain the caveat.

Mr Beacham, for Logan City Council, I must say, excelled himself in his submissions by going through each of the steps, which showed that the council had acquired the whole interest in the land very carefully and very thoroughly, so that Mrs Ross, who appeared for herself initially, and, then, by Mrs Noah, could understand why it was that the council argued, as I said, successfully, that she had no caveatable interest.

It is always pleasing to see when a lawyer acts in such a careful and proper way towards an unrepresented litigant, who took no advantage of his superior skills and knowledge, and, in my view, provided the submissions to the Court with a degree of impartiality that was impressive.  I have allowed Mrs Ross and Ms Noah to ventilate all the grievances they have.  They have a sense of grievance because Mr and Mrs Ross will lose a house they have regarded as their own for many years, and it is encumbent upon the council, of course, to try to find them some alternative accommodation so they do not become homeless.  It is also incumbent upon the Rosses to accept appropriate accommodation.

There were a number of complaints, and that were gone through in great detail, which will be reflected in the transcript of the hearing, and I have made careful note and listened to each and every one of them.  None of them, unfortunately, show that the Rosses have a caveatable interest, or, indeed, that the Council has behaved improperly towards them.

It is unfortunate that the market value of the house at the time it was sold by auction was not greater, and so there was no available money for the Rosses.  They are distressed that they did not receive some money from the sale of the property, but, of course, it is common experience that an amount owed under a mortgage may easily become more than the market value of the house.  That is the unfortunate effect of interest rates on properties and borrowings.

I can see no evidence of any breach of the Trusts Act, and, certainly, nothing that would suggest that there is any caveatable interest arising from any alleged breach of the Trusts Act. Far from thinking that the land was sold at an undervalue, it appears, if anything, the council appears to have paid more money at the time it bought it than it was actually worth at market value.

Mrs Ross and Ms Noah are concerned that there were a number of other properties that were resumed by council at the time, and, unfortunately, what that seems to suggest is that there were a number of other ratepayers in that local Government area who had, no doubt, for good reason, difficulty paying their rates, and, so, the council was obliged to do something to deal with the debts that had accrued as a result of it.  And it is entitled under the Statute, to take the steps which I have referred to today to quit that debt.

There has been something made of the fact that when the council first lodged the dealings to transfer the ownership to itself in October 1996, there were two dealings instead of one, and that was then consolidated into one dealing, and the bill of mortgage was not released until a few days after that. That is irrelevant to the determination of this matter.  Whether or not a form 8 should have been used instead of a form 7 is also irrelevant.  The fact is the land was properly transferred and it has been registered, and the council has, until sale of the land by it, indefeasible title to the land.
The complaints about the Logan City Council as landlord have been ventilated before me, but do not affect the question of who is the owner of the land, nor did the question of whether or not the sign put up in 2007 by the real estate agents caused the Ross's any distress.  In any event, when that distress was pointed out to the council the sign was removed.

It is also irrelevant to the question of whether or not there is a caveatable interest that the caveat was initially removed by the registrar on the application of the council, and then a caveat was reinstated when the registrar decided that he should not have removed it, and he used his power under the Act to put that in his own name.  The question before me is the interest of the Rosses and whether or not they have a caveatable interest, and, as I have said, they do not.

Mrs Noah listed before me a number of matters that Mrs Ross would like to have investigated before a decision was made, but none of those are relevant to the question of whether or not she has a caveatable interest.

The settlement date for the contract of sale which was entered into at the auction of the land on 20th October 2007 is due to happen on 8 February 2008.  The caveat, in my view, should be removed by the registrar forthwith.

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