Shire of Katanning v Bride
[2018] WASC 375
•6 DECEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SHIRE OF KATANNING -v- BRIDE [2018] WASC 375
CORAM: CURTHOYS J
HEARD: 12 NOVEMBER 2018
DELIVERED : 6 DECEMBER 2018
FILE NO/S: CIV 2853 of 2010
BETWEEN: SHIRE OF KATANNING
Plaintiff
AND
EDWARD JAMES BRIDE
Defendant
Catchwords:
Vexatious litigants - Possession - Owner - Form of judgment - Interpleader
Legislation:
Civil Judgments Enforcements Act 2004 (WA)
Local Government Act 1995 (WA)
Transfer of Land Act 1893 (WA)
Vexatious Proceedings Restriction Act 2002 (WA)
Result:
Defendant to make application for leave under the Vexatious Proceedings Restrictions Act 2002 (WA) by 21 December 2018 or claim to be barred
Representation:
Counsel:
| Plaintiff | : | N G Mansfield |
| Defendant | : | In person |
Solicitors:
| Plaintiff | : | Price Sierakowski |
| Defendant | : | In person |
Case(s) referred to in decision(s):
Bride & Bride v KMG Hungerfords (Unreported, WASC, Library No 940353A‑C, 14 July 1994)
Bride v Shire of Katanning [2013] WASCA 114
Ex parte Barkla [2017] WASC 102
Shire of Katanning v Bride [No 2] [2011] WASC 248
Shire of Katanning v Bride [No 2] [2011] WASC 314
CURTHOYS J:
On 25 October 2011 the Shire of Katanning obtained judgment against Edward Bride for $102,926.81 (the Judgment).
The Judgment
The Judgment was in the following terms:
1.Judgment is entered for the plaintiff in the sum of $21,381.56.
2.Interest from the date of this judgment to be paid by the defendant to the plaintiff at the rate adopted from time to time by the plaintiff pursuant to the Local Government Act 1995 (WA).
3.The defendant to pay the plaintiff's costs of the action, including any reserved costs, to be taxed.
4.The costs of this action and the costs in action CIV 2994 of 2009 to be taxed as one bill.
5.There be liberty to either party to apply with respect to order 2.
Judgment was entered on 25 October 2011.
The Judgment arises from unpaid local government rates and service charges that were due by Mr Bride as 'owner' of the relevant property under the Local Government Act 1995 (WA).
The Property (Seizure and Sale) Order
On 3 July 2017 the Shire issued a Property (Seizure and Sale) Order against Mr Bride pursuant to pt 4 div 6(2) of the Civil Judgments Enforcement Act 2004 (WA) to enforce the Judgment.
A notice issued to the Sheriff by the Shire stated that the land believed to be affected by the Order is Lot 29 on Diagram 62969 Volume 1682 Folio 357 ('the Land'). The registered proprietors were Mr Bride and his wife Wendy as joint tenants. The order was directed to Mr Bride's interest only.
The court notes that Mr Bride submitted that the Order was out of time because the Order was issued more than six years after the Judgment. Even if there is a six year limitation period, the order was issued within six years of the Judgment. The order has subsequently been extended. No time limitation issue arises.
Section 83 of the Civil Judgments Enforcement Act provides:
Making a claim to property
(1)A person (the claimant), other than the judgment debtor who claims -
(a)any legal or equitable estate or interest in any personal property that has been seized by the sheriff under a property (seizure and sale) order; or
(b)any legal or equitable estate or interest in any real property in which a Plaintiff has a saleable interest to which a property (seizure and sale) order applies; or
(c)the proceeds of the sale of any such property or interest,
May make a claim to the sheriff.
Notice of the claim to property by the Shire was given to Mr Bride. He disputed that he beneficially owned the Land and asserted that the Land was purchased by the Pinwernying Family Trust ('the Trust') for the children of he and his wife (the Trust's claim).
Judgments against trustees
A trustee whose property incurs a debt in the course of acting as a trustee is liable in respect of the debt. Because the liabilities the trustee incurs are his or her personal debts it gives the creditors no direct right of recourse to the trust assets - in this case the Land. Generally the trustee has a right of indemnity out of the Trust assets [Red Book 43.0.12A].
The interpleader proceedings
The Sheriff issued an interpleader summons on 18 June 2018 to determine the validity of the Trust's claim.
Mr Bride filed an affidavit sworn on 27 July 2018 in support of his claim that the Land was beneficially owned by the Trust.
The Shire filed a responsive affidavit by Sumarie Steyne sworn 28 August 2018.
The Vexatious Proceedings Restriction Act Orders
In the Shire of Katanning v Bride [No 2] [2011] WASC 314 Tottle J made the following orders:
The orders that I will make are as follows:
1.The plaintiff be granted leave to bring this application.
2.The first and second defendants, either personally or in a representative capacity, are hereby prohibited from instituting any action, proceeding, appeal, counterclaim or other application in any Court of the State Western Australia against the plaintiff in respect of any claim or matter:
(i)proceedings alleging fraud or unlawful conduct arising from or in connection with the Shire's conduct in Supreme Court proceedings CIV 2064 of 2007, CIV 2170 of 2009, CIV 2994 of 2009 and CIV 2853 of 2010, District Court proceedings APP 101 of 2005, CIV 2297 of 2002, Magistrates Court proceedings 19525 of 2004 and any interlocutory applications heard therein, or appeals therefrom;
(ii)proceedings relating to or arising from the Shire's conduct in asserting that the first and second defendant in their personal capacities or as trustees for the Pinwernying Trust are liable to pay to the Shire rates in respect of Lot 29 on Diagram 62969, Certificate of Title Volume 1682 Folio 357 (Lot 29) pursuant to the Local Government Act 1995 (WA) for the period of 1984 to 2011 (and continuing until such time as Mr Bride, Mrs Bride or the Trust cease to be the 'owner' of Lot 29 pursuant to s 1.4 of the Local Government Act 1995; and
(iii)proceedings asserting that the first and second defendants in their personal capacities or as trustees for the Pinwernying Trust are not liable to pay to the Plaintiff rates in respect of Lot 29 pursuant to the Local Government Act 1995.
3.The first defendant pay the costs of the amended originating motion to be taxed.
The future course of the proceedings
An interpleader claim is 'another proceeding' for the purposes of Tottle J's orders (s 3 Vexatious Proceedings Restriction Act 2002 (WA)). However, the Brides have been declared vexatious litigants and they will need leave to proceed by making an application under s 6 of the Vexatious Proceedings Restriction Act: Ex parte Barkla [2017] WASC 102. Normally it would be appropriate to issue directions under O 17 r 5 of RSC.
The court will fix a period under which such an application must be made. If the Trust fails to do so then it is appropriate to make an order barring the Trust from claiming an interest in the Land.
Observations
The observations below are obiter and will fall to be resolved in the interpleading proceedings if the Brides in their representative capacity as trustees are given leave to proceed. Having regard to the submissions made by the parties it is appropriate to make these observations so as to focus the parties' minds on the future course of these proceedings.
The form of the Judgment
At par 18 of its submissions the Shire submitted:
The Defendants submit that the judgment against the Plaintiff is in his capacity as the owner of the property, whether that be in his capacity as an individual or as trustee of the Pinwernying trust. The proceedings were instituted against Mr Bride as owner of the property. It is therefore the Defendants submission that the saleable interest of the property seizure and sale order can be sold by the Sheriff to satisfy the judgment debt.
The question may not be as simple as the Shire contends.
The Shire did not cite any authorities in support of its proposition in par 18.
The Judgment simply refers to Mr Bride. It does not refer to Mr Bride as owner or as trustee. If it was a Judgment against Mr Bride in his capacity as a trustee one would have expected Mrs Bride as co‑trustee to also have been named in the Judgment.
It would appear that when judgment was obtained the parties gave little thought to the form of the judgment or the appropriate judgment debtor for the purposes of enforcement. A registered proprietor can own the property personally or as a trustee. An enforcement order can be enforced directly against land that a person owns personally but not against land that a person holds as a trustee. It is difficult to see that a judgment that fails to specify the capacity in which judgment is given, where there are alternatives, enables the judgment creditor to, in effect, elect.
Section 83 of the Civil Judgments Enforcement Act
The Shire asserts the Mr Bride does not have standing by reason of s 83 of the Civil Judgments Enforcement Act because he is the judgment debtor. The claim is not made by Mr Bride in his personal capacity but in a representative capacity as trustee of the Trust. The Trust is not named as the judgment debtor. Accordingly, the Trust does have standing to bring the claim, subject to the Vexatious Proceedings Restriction Act.
Section 55 of the Transfer of Land Act
The Shire submitted that the original transfer of the Land makes no reference to a trust and therefore a claim cannot be made by the Trust. Section 55 of the Transfer of Land Act 1893 (WA) provides:
Trusts
(1)The Registrar shall not enter on a certificate of title notice of any trusts other than those set out in the body of the original Crown grant or certificate of title or contained or referred to in the transfer, or the ministerial order for the conveyance, of the relevant Crown land into the fee simple.
(2)Where a trust is declared in any other document and the document or a copy of it has been deposited with the Registrar, the Registrar may cause the document or copy to be kept for safe custody and reference but shall not register the document.
(3)The Commissioner may protect, in any manner he thinks fit, the rights of the persons for the time being beneficially interested in, or required to give consent under, a trust a record of which is kept under subsection (2).
(4)The rights incidental to any proprietorship, instrument, dealing or matter registered under this Act shall not be affected by the keeping of a record of a trust under subsection (2).
The declaration of trust was made after the purchase of the Land.
The fact that the Certificate of Title does not refer to the Brides as trustees is not relevant to the Trust's claim. The Trust can still make a claim.
The beneficial ownership of the Land
Mr Bride exhibited a transfer of the Land to his affidavit. The transfer was dated 30 June 1978. The land was purchased from Antonio and Assunta Nesci.
The previous certificate of title relating to the Land was Volume 1682 Folio 356. That Certificate of Title was cancelled and the present Certificate of Title, Volume 1682 Folio 357, was issued in December 1984.
The purchasers were Edward Bride and his wife as joint tenants.
On 25 March 1982 Mr and Mrs Bride signed a statutory declaration stating that they held the Land as trustees of the Trust.
On 26 March 1982 the Land was mortgaged to Australia Bank Limited.
The mortgage referred to a deed of settlement made the 6th day of May 1977 constituting 'The Pinwernying Trust' and the trustee as the mortgagor.
Shire of Katanning v Bride [No 2]
The Shire's submissions that it could proceed to enforce the judgment against the Land relied on two decisions of the court as a basis for its case that Mr Bride owns the Land in his personal capacity.
In Shire of Katanning v Bride [No 2] [2011] WASC 248 Allanson J held that Mr Bride was liable to pay the rates. His finding was based on the definition of 'owner' as set out in the Local Government Act 1995 (WA). At [20] he stated:
The question of who is the owner of land is thus central to the scheme for imposing and recovering rates, and is critical to the result of these proceedings. Under s 6.25, other than in relation to a retirement village, owner has the meaning given in s 1.4, which states:
Owner, where used in relation to land -
(a)means a person who is in possession as -
(i)the holder of an estate of freehold in possession in the land, including an estate or interest under a contract or an arrangement with the Crown or a person, by virtue of which contract or arrangement the land is held or occupied with a right to acquire by purchase or otherwise the fee simple;
(ii)a Crown lessee or a lessee or tenant under a lease or tenancy agreement of the land which in the hands of the lessor is not rateable land under this Act, but which in the hands of the lessee or tenant is by reason of the lease or tenancy rateable land under this or another Act for the purposes of this Act;
(iii)a mortgagee of the land; or
(iv)a trustee, executor, administrator, attorney, or agent of a holder, lessee, tenant, or mortgagee, mentioned in this paragraph;
(b)where there is not a person in possession, means the person who is entitled to possession of the land in any of the capacities mentioned in paragraph (a), except that of mortgagee;
(c)where, under a licence or concession there is a right to take profit of Crown land specified in the licence or concession, means the person having that right;
(d)where a person is lawfully entitled to occupy land which is vested in the Crown, and which has no other owner according to paragraph (a), (b), or (c), means the person so entitled;
(e)means a person who -
(i)under the Mining Act 1978, holds in respect of the land a mining tenement within the meaning given to that expression by that Act;
(ii)in accordance with the Mining Act 1978 holds, occupies, uses, or enjoys in respect of the land a mining tenement within the meaning given to that expression by the Mining Act 1904 ; or
(iii)under the Petroleum and Geothermal Energy Resources Act 1967 holds in respect of the land a permit, drilling reservation, lease or licence within the meaning given to each of those expressions by that Act;
or
(f)where a person is in the unauthorised occupation of Crown land, means the person so in occupation.
The definition of 'owner' in the Local Government Act is a broad definition. In the context of this case a person may be an owner either by reason of s 1.4(a)(i) or s 1.4(a)(ii). At [72] Allanson J held:
Since 2005, Mr Bride has been in possession and entitled to possession. It is not material whether he has been in possession as the holder of the freehold estate. While he is in possession, and entitled to possession, he cannot establish that he is not the owner.
A finding that a person is the 'owner' of land for the purposes of the Local Government Act is not necessarily the same as a finding that the land is beneficially owned for the purposes of the Civil Enforcement Act. Allanson J found that Mr Bride was the owner for the purposes of the Local Government Act.
Justice Allanson's decision was appealed: Bride v Shire of Katanning [2013] WASCA 114. In the Court of Appeal the leading judgment was delivered by Edelman J. At [163], Edelman J stated:
When the purpose of the definition of 'owner' in s 1.4 of the Local Government Act 1995 is considered, the outcome of the trial, and this appeal, requires the recognition of Mr Bride's liability for rates. The application of the definition of 'owner' to the liability for rates is concerned to provide a person such as the Shire with a means of recovering rates from the party who is exercising rights in relation to the Land. Only in the absence of a person exercising those rights will the Local Government Act 1995 impose liability on the party (other than a mortgagee) who has the right to an estate in the Land but who does not exercise that right. In circumstances in which Mr Bride is presumed to be the owner of the Land (s 9.42) and in circumstances in which, from 2005, he was the only person with any relationship with the Land, the matters to be considered by the Shire to identify the person responsible for rates point directly to Mr Bride.
At [140] Edelman J stated:
In light of my conclusion that from at least 2005 the Australian Bank was no longer 'in possession' as a mortgagee of the Land, it is not necessary to reach any conclusion concerning whether, from 2005, Mr Bride was, within par (a)(i) of the definition of 'owner', in possession as the holder of an estate of freehold in possession in the land. The reason why this does not matter is because if Mr Bride was not 'in possession' within par (a)(i), then no person would be 'in possession' and, as the person entitled to possession under par (b), Mr Bride would still be the 'owner' under the Local Government Act 1995.
Arguably, neither the decision of Allanson J or the Court of Appeal amount to a finding that Mr Bride was the owner under (a)(i) or was or was not a trustee of the Land. The issue before Allanson J and the Court of Appeal related to possession. Therefore it may be that neither of those cases is of assistance in determining the validity of the claim by the Trust and the enforceability of the judgment against the Land.
The Shire's reliance on those cases is arguably misplaced.
Section 9.42 of the Local Government Act provides:
A person may be alleged to be, or at a stated time to have been, the owner or occupier of land and, unless the contrary is proved, the person is to be presumed to be or have been the owner or occupier of the land, as alleged.
Section 9.42 arguably does not assist in resolving this matter because the presumption relates to 'owner' which is defined in cl 1.4.
A judgment that Mr Bride is the owner of land for the purposes of the Local Government Act does not necessarily resolve the question as to what assets are available to satisfy the Judgment.
Bride v KMG Hungerfords
The history of the proceedings in which the Brides have been involved supports Mr Bride's claim that the Trust is the owner of the land. In Bride & Bride v KMG Hungerfords (Unreported, WASC, Library No 940353A‑C, 14 July 1994) Malcolm CJ (Kennedy & Rowland JJ agreeing) set out the history of the Trust's ownership of the Land:
The Appellants as Trustees
As indicated above, the action was brought by the appellants [Mr and Mrs Bride] as the trustees of the Pinwernying Family Trust. The terms of the trust were not in evidence before his Honour, but that was not regarded as material. The learned Judge found that the evidence supported the conclusion that the appellants were the trustees of the trust, of which the beneficiaries were their children, and that the appellants themselves did not appear to have any capacity to benefit from the trust. This conclusion was significant in that, as the learned Judge also found, it provided an answer to a plea by the respondents that the appellants had no standing to sue personally because they became bankrupt on their own petition on 6 September 1984, from which they were unconditionally discharged on 14 February 1986, and a sequestration was made on their joint and separate estates on 6 November 1990. By reason of their bankruptcy, ss 58 and 116 of the Bankruptcy Act 1966 (Cth) operated to vest any cause of action which formed part of their bankrupt estate in the trustee in bankruptcy. The learned Judge noted that under s 116(2)(a) of the Bankruptcy Act property held by a bankrupt in trust for another person 'was excluded from the property of the bankrupt divisible amongst creditors'. His Honour concluded that a right of action which a bankrupt may have as trustee for another would not be property subject to the bankruptcy and vested in the trustee in bankruptcy. Such a right of action would remain property in respect of which the bankrupt remained entitled to exercise all proprietary rights, including the right to institute and carry on proceedings.
…
Mr Bride left school early and was employed in a bakery business operated by his parents in Katanning. Subsequently, he took over the business. By the mid 1970s he had added bakeries in Wagin and Kojonup. He was the owner of a residence known as 'Pinwernying' on the outskirts of Katanning and Mrs Bride because the owner of adjacent rural land comprising some 42.45ha (104a). The bakery business was carried on by Mr and Mrs Bride in partnership under the firm name 'E.J. & W.M. Bride' ('the partnership'). The partnership provided the funds for the purchase of an additional 24ha of land of which some 4ha had been developed as an orchard and a similar area had been developed as a vineyard. This land was in an area zoned for industrial use. It was found by the learned Judge to have been acquired by Mr and Mrs Bride as trustee for the trust.
…
The view taken by the learned Judge was that from the outset the partnership accounts were '… consistent only with the proposition that the business of the oat mill having been acquired, it was vested in and operated by the partnership'. At the same time, the learned Judge found that the land upon which the oat mill was reconstructed was vested in the trust from the outset and that the buildings once erected thereon also became the property of the trust.
…
For these reasons his Honour concluded that the business:
'… was purchased with partnership funds in the name of the trustees, the business was erected on land owned by the Trust, but the business was immediately vested in and operated by the partnership.'
…
The various tax returns of the trust and the partnership, which were prepared by Duncan and approved by Mr Bride, were put in evidence at the trial. They show that the land and buildings which Murray J found to be assets of the trust were rented to the partnership, which carried on the business.
…
Conclusions
In my opinion, it has not been demonstrated that there is any reason to disturb the findings made by the learned trial Judge that the appellants owned and operated the business of 'Oat Milling of Katanning' as partners in their own right and not as trustees of the trust. In particular, nothing has been put before us which calls in question the conclusion by the learned Judge, on the evidence before him, that Mr Bride was well aware of the structure of the appellant's business operations and that his accountant (Mr Duncan) had made no error in the presentation of the accounts.
On the limited evidence before me I am satisfied that there is an arguable case that the Land is held by Mr and Mrs Bride as trustees for the Trust. There is therefore an arguable case as to whether the judgment is enforceable against the Land.
Although the decision in Bride v KMG Hungerfords is not binding on the Shire it supports the Trust's claim that it is the beneficial owner of the Land. It is an appropriate issue to be resolved by interpleader proceedings if leave is given under the Vexatious Proceedings Restriction Act.
The transcript before Tottle J
Mr Bride submitted highlighted paragraphs of the transcript before Tottle J on 11 November 2016 which he argued assisted his submissions. The transcript does not assist Mr Bride's case.
The future of these proceedings
It is a matter for the Shire to determine if and how it should proceed against the Brides personally or as trustees and whether it should consider alternative proceedings such as bankruptcy.
Order
Unless by 4.00 pm on 14 December 2018 the Brides as trustees of the Pinwernying Trust make an application for leave to proceed under the Vexatious Proceedings Restriction Act their claim to the Land as trustees be barred and the Shire be at liberty to sell the Land to enforce the Judgment.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MDM
ASSOCIATE TO JUSTICE CURTHOYS6 DECEMBER 2018