St George Bank - a Division of Westpac Banking Corporation v Zhang

[2013] NSWSC 1418

Supreme Court

New South Wales

Case Title:	St George Bank - A Division of Westpac Banking Corporation v Zhang
Medium Neutral Citation:	[2013] NSWSC 1418
Hearing Date(s):	3 September 2013
Decision Date:	03 September 2013
Jurisdiction:	Common Law
Before:	Hall J
Decision:	Notice of Motion filed 25 May 2012 seeking relief under s 66G of the Conveyancing Act dismissed
Catchwords:	REAL PROPERTY - first defendant obtained three loans from plaintiff secured by mortgage over block of land - subsequently three defendants amalgamated their disparate blocks of land into one certificate of title - Register describes interest of each proprietor by reference to the previous folio as interim measure which creates folios of multiple ownership - three defendants chose not to progress with amalgamation - first defendant's loans fell into arrears - application by plaintiff for relief under s 66G of the Conveyancing Act 1919 to appoint trustees for sale - whether land the subject of the certificate of title can be in 'co-ownership' as defined by s 66F(1) of the Act - whether defendants entitled to an interest in the land of the other - certificate of title records ownership in terms of "of the part formerly in" - not a case in which defendants hold title as either joint tenants or tenants in common - relief not available under s 66G
Legislation Cited:	Conveyancing Act 1919 Real Property Act 1900
Cases Cited:	Aoun Investments Pty Ltd v Chief Commissioner of Revenue [2006] NSWSC 1394 Commonwealth Bank of Australia v MacDonald [2000] NSWSC 553
Texts Cited:	Baalman & Wells' Land Titles office Practice Woodman & Nettle's, The Torrens System in NSW
Category:	Interlocutory applications
Parties:	St George Bank (Plaintiff) Wei Zhang (First Defendant) Guang Qing (Lydia) Zhang (Second Defendant) Qining Feng (Third Defendant)
Representation
- Counsel:	Counsel: L Gor (Plaintiff) No Appearance (First Defendant) Unrepresented (Second Defendant) No Appearance (Third Defendant)
- Solicitors:	Solicitors: Kemp Strang (Plaintiff) No Appearance (First Defendant) In person (Second Defendant) No Appearance (Third Defendant)
File Number(s):	2010/108317

JUDGMENT

1. HIS HONOUR: The plaintiff, in a Notice of Motion filed in the proceedings on 25 May 2012, sought relief under s 66G of the Conveyancing Act 1919 to appoint trustees for sale.

2. In the event its application for relief under s 66G failed the plaintiff, by another Notice of Motion, filed 26 August 2013, sought to amend its Statement of Claim in order to seek declarations and ancillary relief under s 138 Real Property Act and join the Registrar-General to the proceedings.

3. In support of the motions the plaintiff relied on the affidavits of Alexia Schar sworn on 23 May 2012 and Kristina Fraser sworn on 23 August 2013.

4. The basis for the relief sought was the default of the first defendant on three loan facilities advanced by the plaintiff.

5. On the hearing of the Notices of Motion on 3 September 2013, Mr L Gor appeared on behalf of the plaintiff. There was no appearance for or on behalf of the first or third defendants. The second defendant appeared unrepresented.

6. The second defendant opposed the relief sought in both Notices of Motion.

7. The Registrar-General neither consented nor opposed the plaintiff's application to amend its Statement of Claim, nor to join him as a party.

8. The abovementioned affidavits were read in support of the applications. Ms Zhang, the second defendant, sought and obtained leave to rely upon her affidavit sworn 2 September 2013. That affidavit was read. However, much of the material in the affidavit was irrelevant to the applications. In that respect, rulings were made on admissibility: T 3 September 2013, at 15.

Submissions

1. Mr Gor relied upon his written submissions dated 3 September 2013, supplemented by his oral submissions at the hearing.

2. The background facts were conveniently summarised by Mr Gor. The factual matters set out below are based upon his recital of the facts set out in his written submissions.

3. At one time or other, all three defendants were customers of the plaintiff. Each had a loan facility secured by real property. The second and third defendants have repaid their loans and the plaintiff claims no security interest in their property.

4. The defendants approached the plaintiff to amalgamate and consolidate their disparate blocks of land into one certificate of title. This was done for the purpose of developing the properties. The plaintiff consented to the amalgamation.

5. As a result, the title to the four blocks of land are now in one certificate of title.

6. The plaintiff advanced the three abovementioned loans to the first defendant secured by a first registered mortgages over the land in question.

7. The first defendant's three loan facilities fell into arrears in 2009 and that position remains the position as at the date of hearing.

8. The certificate of title describes each defendants' interest by reference to his/her former plot of land. That, as the discussion below will indicate, is a significant factor to be taken into account in relation to the application seeking to invoke relief under s 66G.

9. It is the practice of the LPI to create a certificate of title describing the interest of each proprietor by reference to the previous folio. This is an interim measure until all the land passes into the ownership of the registered proprietors. This practice creates folios of multiple ownership.

10. This interim measure has been in place for some time as the defendants have taken the forensic decision not to progress the amalgamation/consolidation.

11. The provisions of s 66G(1) is in the following terms:

    Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.

12. The term "co-ownership" is defined in s 66F(1) as follows:

    Co-ownership means ownership whether at law or in equity in possession by two or more persons as joint tenants or as tenants in common; and co-owner has a corresponding meaning and includes an incumbrancer of the interest of a joint tenant or tenant in common.

13. It was submitted on behalf of the plaintiff that the success or failure of the s 66G application turned on whether the land the subject of the relevant certificate of title can be said to be in "co-ownership" as defined by s 66F(1).

14. In that respect my attention was drawn to the decision of Gzell J in Aoun Investments Pty Ltd v Chief Commissioner of Revenue [2006] NSWSC 1394 and to the decision of Young J (as his Honour then was) in Commonwealth Bank of Australia v MacDonald [2000] NSWSC 553.

15. As Mr Gor acknowledged, the decision of Gzell J at Aoun suggests that the defendants are neither joint tenants, nor tenants in common. However, Mr Gor submitted that the decision in that case is distinguishable in that it did not concern the provisions of s 66G.

16. The decision in Commonwealth Bank of Australia v MacDonald, it was noted, was to the effect that severalty cannot be the subject of a s 66G application: at [33]-[53]. Key to his Honour's reasoning, it was noted, is the need to establish entitlement to possession of the entirety of the property in favour of all the "owners" irrespective of any agreement between the parties: Plaintiff's Outline of Submissions at [19].

17. Mr Gor submitted however, that the decision in the latter case was distinguishable on the facts; it concerned interest in shares.

18. Moreover, the definition of "co-ownership" in s 66F(1) is defined to include "means ownership ... in equity in possession...".

19. If the nature of the arrangement between the defendants is such that each is entitled to an interest in the land of the other, then it was submitted that this is enough to enliven the definition of "co-ownership" and to s 66G relief. There is, it was submitted, unity of possession.

20. If the court formed the view that s 66G relief was available, then the submission was that it ought to exercise the discretion to grant such relief as it is the only way by which the plaintiff can satisfy its debt and the defendants can realise their equity.

Consideration

1. On 3 September 2013, I determined that relief is not available under s 66G in these proceedings. I stated that I would later give reasons for my decision, those reasons now being contained in the present judgment.

2. By reason of my determination against granting the plaintiff relief under s 66G, the plaintiff's second Notice of Motion was also determined on 3 September 2013. I determined that leave ought be granted to the plaintiff to amend its Statement of Claim to join the Registrar-General and gave an ex tempore reasons in that respect.

3. In Commonwealth Bank of Australia v MacDonald, supra, it was observed:

   "(2) Co-ownership

   33 The more divisive question between the parties is whether what had happened in the instant case means that the first and second defendants hold the shares or the right to occupation as co-owners.

   34 Co-owners must, by definition either be joint tenants or tenants in common. The defendants are obviously not joint tenants. The question is thus, do the defendants hold the shares as tenants-in-common?

   35 At first blush they do not. With a tenancy in common, each co-owner holds some interest in the whole of the property. On the facts in the instant case, the second defendant holds a distinct 40% interest and has no interest in the first defendant's 60% and vice versa.

   36 To constitute a tenancy in common, there must be an equal right to possession of every part and parcel of the subject matter of the tenancy; joint possession is not essential, unity of the right of possession being all that is required ... Unity of possession means that each co-owner is as of right as much entitled to possession of any part of the property as the others..."

4. At the hearing, Mr Gor drew my attention to extracts from Woodman & Nettle's, The Torrens System in NSW. In the discussion in that case of common ownership, the learned authors observed:

   "Whatever the meaning of 'joint proprietors', it does not include proprietors who own 'in severalty', as distinct from in common. For example, assume that A owns lot 1 and B owns lot 2, and they agree to consolidate their land into a new lot, lot 3. Assume also that the Registrar-General records as the owners of lot 3: "A as to the land formerly in lot 1; and B, as to the land formerly in lot 2". Here, A and B are 'several', or independent, owners; they are neither joint tenants nor tenants in common but separate owners - see Aoun Investments Pty Ltd v Chief Commissioner of State Revenue ..."

5. That example is apt in the circumstances of the present case. In the extract from Baalman & Wells', Land Titles Office Practice to which Mr Gor drew my attention it is observed at 205.500:

   "As a result of subdivision of land by a proprietors of separate titles, a folio of the Register may occasionally be created in the names of different proprietors of parts of one lot in a Deposited Plan. These folios are commonly referred to as 'dual ownership' or 'multiple ownership' folios of the Register.

   The extent of each proprietor's interest in the land in the current folio of the Register is described by reference to the previous folio of the Register of which he or she was registered proprietor.

   Eventually the entirety should pass into single ownership but unless this happens or specific delivery instructions are received, the dual ownership certificate of title is filed in the Delivery Section until such time as transfers are lodged passing the entirety into single ownership."

6. In the present case the evidence includes a title search of the relevant certificate of title. In relation to each of the first, second and third defendants, the title in the First Schedule records, against the name of each, the ownership in terms "... of the part formerly in ..." there then appearing the relevant folio numbers.

7. It is clear, in my opinion, that each of the defendants are several owners of particular parts of the property as so described. This is not a case in which they hold title as either joint tenants or tenants in common.

8. In those circumstances, it is clear that relief is not available under s 66G of the Conveyancing Act as the property is not held in co-ownership.

9. It was upon that basis that the relief sought under the Notice of Motion filed on 25 May 2012 was refused at the conclusion of the hearing on 3 September 2013.

   **********