PSAL Pty Ltd v Raja

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   PSAL PTY LTD -v- RAJA [2016] WASC 295

CORAM:   PRITCHARD J

HEARD:   10 DECEMBER 2015 & FURTHER WRITTEN SUBMISSIONS

DELIVERED          :   16 SEPTEMBER 2016

FILE NO/S:   CIV 2406 of 2012

BETWEEN:   PSAL PTY LTD

Plaintiff

AND

FAYYAZ AHMAD RAJA
Defendant

DAYANG RAIHAN PANGRIAN HAJI AHMED RAFFAE
Claimant

Catchwords:

Interpleader - Sheriff's Interpleader - Where plaintiff obtained property (seizure and sale) order against defendant's land - Where land had been sold by registered mortgagee - Where surplus left after satisfying defendant's debt to registered mortgagee - Where plaintiff had unregistered mortgage over land - Where claimant was purchaser under unperformed contract to buy land - Whether plaintiff or claimant had equitable interest in surplus proceeds - Which of plaintiff or claimant's interest in surplus proceeds had priority

Property - Real property - Nature of purchaser's interest in land under contract of sale - Whether purchaser is equitable owner of land - Whether purchase price paid in full - Whether conditions precedent to transfer satisfied - Whether purchaser's equity is dependent on continued availability of specific performance

Property - Torrens land - Indefeasibility of title - Whether registration of legal mortgage extinguishes prior equitable interest of purchaser under contract of sale - Transfer of Land Act 1893 (WA) s 109 - Whether s 109 requires payment of unregistered mortgagees in priority to mortgagor or other equitable interests

Remedies - Election - Res judicata - Where judgment entered for claimant against defendant pursuant to springing order - Where order that damages to be assessed - Whether proprietary remedy no longer available - Whether judgment pursuant to springing order could be construed as election as to remedy - Whether judgment pursuant to springing order can found res judicata

Legislation:

Real Property Act 1900 (NSW)
Transfer of Land Act 1893 (WA)

Result:

Claimant entitled to the funds paid into court

Category:    B

Representation:

Counsel:

Plaintiff:     Mr K L Christensen

Defendant:     No appearance

Claimant:     Mr S K Shepherd

Solicitors:

Plaintiff:     Gadens Lawyers

Defendant:     No appearance

Claimant:     Tottle Partners

Case(s) referred to in judgment(s):

Agip (Africa) Ltd v Jackson [1992] 4 All ER 451

Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679

Baines v State Bank of New South Wales (1985) 2 NSWLR 729

Brown v Heffer (1967) 116 CLR 344

Chan v Cresdon Pty Ltd (1989) 168 CLR 242

Chang v Registrar of Titles (1976) 137 CLR 177

Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639

Foskett v McKeown [2000] 3 All ER 97

Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101

Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd [2015] NSWCA 100; (2015) 105 ACSR 605

Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29

Haque v Haque (No 2) (1965) 114 CLR 98

Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326

Hewett v…

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Details
Case
[2016] WASC 295
Decision Date

CaseChat Overview and Summary

The case of PSAL Pty Ltd v Raja involves a dispute over the entitlement to funds obtained from the sale of Lot 103. The parties involved are PSAL Pty Ltd, Mrs Raffae, and Mr Raja. The primary issue revolves around who is entitled to the surplus proceeds from the sale of Lot 103, which was conducted by the registered mortgagee, BankWest, following a default by Mr Raja. Both Mrs Raffae and PSAL claim an equitable interest in the surplus proceeds, and the dispute is ultimately resolved by the court. The court had to decide whether the judgment entered for Mrs Raffae against Mr Raja pursuant to a springing order in a previous proceeding constituted an election of remedy that precluded her from claiming a proprietary remedy in the current case. The court also had to determine whether the judgment could be construed as res judicata.

The court found that the Registrar's Orders did not constitute an election by Mrs Raffae to abandon any remedy to which she was entitled by virtue of her equitable ownership of Lot 103. The court also held that the judgment pursuant to the springing order could not be construed as res judicata, as the issues in the current proceeding were not the same as those in the previous proceeding. The court further held that the priority of interests in the surplus proceeds of sale is determined by equitable principles, and that Mrs Raffae's interest had priority over PSAL's interest. Consequently, Mrs Raffae is entitled to the entirety of the Funds. The court ordered that interest be paid on the sum of $760,163.92 at the rate of 6% per annum from 17 April 2013 to the date of payment of the funds to Mrs Raffae or her representative, and that PSAL pay Mrs Raffae's costs of the interpleader proceeding.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Was any interest Mrs Raffae had in Lot 103 extinguished once she obtained an order that judgment be entered against Mr Raja in CIV 1348 of 2005?[77] Foskett v McKeown [2000] 3 All ER 97, 122 (Lord Millett), 104 (Lord Browne‑Wilkinson agreeing), 108 (Lord Hoffman agreeing). Counsel for PSAL submitted that 'even if [Mrs Raffae] did have a proprietary interest in Lot 103 which was not extinguished by BankWest selling the property, such interest was extinguished by the act of [Mrs Raffae] in obtaining [the Registrar's Orders]'.[78] Counsel for PSAL submitted that upon entering the judgment, Mrs Raffae made an election as to the remedy she sought, and whatever proprietary interest she may have had in Lot 103 merged into an entitlement to damages under that judgment.[79] PSAL's case was thus that the remedy to which Mrs Raffae was entitled had been determined by her election to pursue damages in lieu of specific performance, and the principle of res judicata precluded her from claiming a proprietary remedy which derived from her claimed right to specific performance in respect of Lot 103.[80][78] Plaintiff's submissions [19].[79] Plaintiff's submissions [20] citing Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.[80] ts 108. I am unable to accept that that is the position, for three reasons. First, having regard to the available evidence, I am not persuaded that the Registrar's Orders can be construed as an election by Mrs Raffae to abandon any remedy to which she was entitled by virtue of her equitable ownership of Lot 103, and instead to pursue equitable damages only. As I have already observed, there was no evidence in relation to the circumstances in which the Registrar's Orders were made, but it was common ground that they were made following Mr Raja's failure to comply with a springing order for the filing and service of his witness statements in CIV 1348 of 2005. The only evidence as to the nature of the issues in dispute in CIV 1348 of 2005 was a copy of the writ endorsed with a statement of claim. In the statement of claim, Mrs Raffae sought a variety of relief, including specific performance of the Agreement, an account in respect of the subdivision of the Towerhill Road property, 'all other necessary and consequential accounts and enquiries', 'a sum of money to be quantified' after those accounts were provided, and 'damages in addition to or in lieu of specific performance in respect of the Agreement'.[81][81] Exhibit 5. By the time that the Registrar's Orders were made in September 2013, Lot 103 had been sold by BankWest. Specific performance could therefore not have been ordered. The fact that no order in relation to specific performance was sought, and that Mrs Raffae obtained only an order that damages be assessed, is hardly indicative of an election by her to pursue only damages and otherwise to abandon any claim based on her equitable ownership of Lot 103. That is especially so in circumstances where, by the time of the Registrar's Orders, the Sale Surplus had been paid into court and the interpleader proceedings had been commenced.

Ratio Decidendi

Legal Principle Established

Counsel for PSAL also referred to Residential Housing Corporation v Esber.[97] That was another case which dealt with s 58(3) of the Real Property Act 1900 (NSW). Campbell JA (with whom Macfarlan JA and Sackville AJA agreed) considered the operation of similar legislation in other States, including s 109 of the TLA, and expressed the view that references in s 109 to the payment of subsequent mortgagees referred only to subsequent registered mortgagees. His Honour went on to observe that the way in which the situation of an unregistered mortgagee was accommodated was 'not through the construction of s 58(3) but by equitable principle operating to modify the operation of s 58(3) to prevent it being used to produce inequitable results'.[98] His Honour's observations indicate no more than that - quite apart from the requirements of s 58(3) - equity may entitle the holder of an unregistered mortgage, of which the registered mortgagee was aware, to obtain relief to secure the payment of that unregistered mortgage out of surplus proceeds of sale before the registered mortgagee paid the surplus proceeds to the registered proprietor.[97] Residential Housing Corporation v Esber [2011] NSWCA 25 [98] (Campbell JA, Macfarlan JA & Sackville AJA agreeing).[98] Residential Housing Corporation v Esber [2011] NSWCA 25 [71], [166] (Campbell JA, Macfarlan JA & Sackville AJA agreeing). Neither Kerabee Park nor Esber suggest that an unregistered mortgagee is entitled to payment from the proceeds of sale of land pursuant to s 109 of the TLA, and neither authority suggests that an unregistered mortgagee will be accorded any greater priority than it would otherwise have had, vis a vis the holder of any other equitable interest, in the proceeds of a sale of land by a registered mortgagee. Is Mrs Raffae or PSAL entitled to the Funds? For these reasons, Mrs Raffae is entitled to the entirety of the Funds. The parties should confer in relation to the orders which should now be made. On 16 September 2016, I published reasons resolving an interpleader proceeding brought by the sheriff. The following reasons should be read together with those reasons (the Interpleader Reasons)[99]. The same abbreviations are used herein.[99]PSAL Pty Ltd v Raja [2016] WASC 295. The interpleader proceeding concerned the question of who was entitled to funds seized by the sheriff pursuant to a property seizure and sale order. (Those funds (the funds) were paid into court at the commencement of the interpleader proceeding.) The funds seized were the proceeds of the sale of lot 103, which sale had been conducted by Bankwest (the registered mortgagee) following a default by the registered proprietor and mortgagor, Mr Raja. Both Mrs Raffae and PSAL claimed an equitable interest in lot 103 and thus in the surplus proceeds of its sale. Mr Raja did not participate in the interpleader proceeding. I determined that Mrs Raffae was entitled to the funds. I made an order to that effect. Mrs Raffae now seeks two orders from the Court (the Application), namely:(1)an order that interest on the sum of $760,163.92 at the rate of 6% per annum be paid by PSAL, as from 17 April 2013 to the date of payment of the funds to Mrs Raffae or her representative; and(2)an order that PSAL pay Mrs Raffae's costs of the interpleader proceeding to be taxed as an action if not agreed.