Secure Funding P/L v Pullen

[2010] QSC 11

SUPREME COURT OF QUEENSLAND

CITATION:

Secure Funding P/L v Pullen & Anor [2010] QSC 11

PARTIES:

SECURE FUNDING PTY LTD ACN 000 011 058
(applicant)

v

KEVIN MICHAEL PULLEN, JILLIAN PULLEN
(respondents)

FILE NO/S:

BS 4069 of 2009

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 January 2010

DELIVERED AT:

Brisbane

HEARING DATE:

13 January 2010

JUDGE:

Fryberg J

ORDER:

1.   The Applicant recover from the Respondents’ possession of the land described within Title Reference 18376181 as Lot 345 on RP 844430, County of Canning, Parish of Bribie, situated at 53 Gattera Rod, Landsborough, Queensland.

2.   The Respondents pay the Applicant’s costs of the application, excluding reserved costs, to be assessed.

CATCHWORDS:

Real property – Torrens title – Mortgages, charges and encumbrances – Powers and remedies of mortgagee – Possession – Ejectment under Torrens title – Title transferred to trustee in bankruptcy following mortgagor’s bankruptcy – Mortgagor continued to occupy property – Application by mortgagee to recover possession of land

Land Title Act 1994 (Qld), s 78

Metropolitan Permanent Building Society v McClymont [1983] 1 Qd R 160, cited

COUNSEL:

P A Schmidt for the applicant
The respondent K M Pullen appeared on his own behalf
No appearance for the respondent J Pullen

SOLICITORS:

Norton Rose for the applicant
The respondent K M Pullen appeared on his own behalf
No appearance for the respondent J Pullen

HIS HONOUR:  The applicant seeks recovery of possession of certain land.  The applicant is a finance company which lent money to the respondents. 

The first respondent was the mortgagor and gave the mortgage as security for the loan.  Unfortunately, he defaulted on payment of the amounts due under the mortgage and the mortgagee, using its powers under the mortgage, crystallised the whole of the amount owing and that has not been paid.

If those were the only facts it would be a simple case.  However, after those events the first respondent became bankrupt.   Following his bankruptcy the land was transferred to his trustee in bankruptcy and the trustee has been registered as the proprietor of the land.

Subsequent to the commencement of proceedings the trustee wrote to the respondents who were, and had remained, in possession of the land at all material times, requiring them to vacate the land.  They have not vacated the land and on the evidence they are, as against the trustee, now trespassers.  Neither of them claims any right, title or interest in the land.

The mortgagee remains registered as a charge on the land but the trustee has not been made a respondent to the application.  That is because the trustee has written to the applicant advising that he does not oppose the application.  There would, therefore, be no point in his being a party to the proceedings although technically, as the proceedings were framed, it is possible that he should have been.

The question which concerned me when the matter came before me this morning was whether s 78 of the Land Title Act, pursuant to which the application was brought, had any application with the circumstances of the case. That section relevantly provides:

“(1) A registered mortgagee of a lot has the powers and liabilities of a mortgagee under the Property Law Act 1974, part 7.
(2) Without limiting subsection (1), but subject to the terms of the mortgage, if the mortgagor defaults under a registered mortgage, the mortgagee may—

(a) take possession of the mortgaged lot in a way that does not contravene the Criminal Code, section 70; or
(b) enter into possession of the mortgaged lot by receiving rents and profits; or
(c) by a proceeding in a court of competent jurisdiction—

(i) obtain possession of the mortgaged lot; or
(ii) foreclose the right of the mortgagor to redeem the mortgaged lot; or
(iii) obtain an order of the court for the sale of the mortgaged lot.

(3) The powers in this section are in addition to other powers exercisable by the mortgagee.”

On behalf of the applicant, Mr Schmidt has submitted that sub-s 2(c)(i) is in no way limited by reference to the identity of the person against whom the proceeding may be brought.  I am inclined to doubt the correctness of that submission.  There is some reason to think that that provision is concerned with a proceeding against a person who, at the time of the proceeding, is a mortgagor.  However, for reasons, which will appear, I do not think it is necessary to resolve the point.

Historically a mortgagee of land was entitled to bring two types of proceedings against a defaulting mortgagor.  The mortgagee might bring an action for ejectment or he might bring an action in equity for the delivery up of the land.  The history of the matter is set out at some length in the judgment of McPherson J in Metropolitan Permanent Building Society v McClymont [1983] 1 Qd R 160.

Various changes took place under the provisions of the judicature system and particularly in relation to the obtaining of default judgments and as a result the previous
s 60 of the Real Property Act was amended to ensure that registered mortgagees had the same rights as unregistered mortgagees, that is the right to bring both types of proceeding.

The present proceeding is brought against two people, only one of whom is a mortgagor, not on the basis of their standing as mortgagors but on the basis that they are in occupation of the land and the applicant is entitled to occupy the land.  That is, to have possession of the land.

The evidence discloses, without question, that the applicant has a right to immediate possession.  As against the trustee the respondents are trespassers.  However, whatever remedy the trustee might have against them, it is, I think, fairly clear that no action in trespass lies against them on the part of the present applicant.  That is because the applicant was not in possession of the land at any time.  Trespass was an action designed to protect possession of land.

A person who had a right to immediate possession but was not in possession of the land at the time a third party wrongfully took possession of it was historically obliged to enforce his rights by an action of ejectment. These days that action is described as an action for the recovery of possession of land. It is, indeed, the same cause of action as was available to a mortgagee against a mortgagor but it is, in my judgment, available to the present applicant quite independently of s 78 of the Land Title Act.

Mr Pullen, who was unrepresented - there was no appearance for his wife - submitted two things.  He said first that he harboured doubts about the validity of the mortgage because it had taken the mortgagee so long, some four months, to produce the original of the mortgage when he requested to sight it and, second, that there had been a series of negotiations between him and the applicant, in consequence of which he had paid money to the applicant.  Not the whole of the amount owing but part of it.

He submitted that in these circumstances the Court ought not to allow the recovery of possession.  The first of these submissions cannot advance his position because whatever suspicions he might have about the validity of the mortgage are quite irrelevant.  It is necessary for him to demonstrate the facts or circumstances which produce the legal result that the mortgage is invalid if he wishes to advance such an argument.  He has not produced such evidence nor made any submissions on law which would create the slightest inkling of doubt as to the validity of the mortgage.

As to the question of negotiations, it is clear that the Pullens, or at least Mr Pullen, is simply a debtor and that neither of them is in a position to resist the applicant's claim to be entitled to immediate possession of the land.

The applicant’s acceptance of Mr Pullen’s payments in reduction of his indebtedness to the applicant, cannot, in my judgment, be construed as amounting to a waiver.  I see no other basis for not granting the relief sought.  The action of ejectment, and its modern equivalent, are common law actions and the Court does not have a discretion about granting the relief sought if the conditions for it are made out.  In the present case they are made out.

...

The respondents are to pay the applicant's costs of the application, excluding reserved costs, to be assessed.

...

With that amendment there will be an order in accordance with the draft initialled by me and placed with the papers.

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