Stockland (Macquarie) Pty Ltd v Australia & New Zealand Banking Group Ltd

[1991] HCATrans 362

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B26 of 1991

B e t w e e n -

STOCKLAND (MACQUARIE) PTY LTD

Applicant

and

AUSTRALIA & NEW ZEALAND BANKING

GROUP LTD

Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

MCHUGH J

Stockland 1 13/12/91

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY. 13 DECEMBER 1991, AT 10.34 AM

Copyright in the High Court of Australia

MR P.A. KEANE, QC:  May it please the Court, I appear with

my learned	friend, MS J.H. DALTON, for the
applicant.	(instructed by Corrs Chambers
Westgarth)

MR J.D.M. MUIR, QC:  May it please the Court, I appear with

my learned friend, MR H.B. FRASER, for the

respondents, other than the fourth respondent who
has not taken any part in these proceedings and who
has, we understand, not entered an appearance in

this application. (instructed by Morris

Fletcher & Cross)

BRENNAN J:	I think we will call on Mr Muir.
MR MUIR:	If the Court pleases, there are three points that

we wish to make in resisting the application.	The
first is that the remaining issue in the case is
merely a matter of construing a section in a

statute. It is not suggested that the decision of

the Full Court reveals any error in principle by

way of their approach to statutory construction.

The second point is that the point involved in

the application appears to be one of little or no

general interest or application. Your Honours, we

make that submission - - -

McHUGH J:  I am not sure that lessors would agree with that.

MR MUIR:  Your Honour, let me develop my point. There are a

couple of aspects to the submission. The first is

this, that the comparable provisions in real

property legislation in other States and

teriitories are materially different from that in

Queensland. In no other State or territory is

mortgage defined as a charge on land created under

the Act or in similar terms to that. I say that

with one qualification, and that is the South

Australian provisions. There the provisions get fairly close to the one now under consideration.

If I could quickly refer to that, in the Real

Property Act 1886 to 1875 in section 3, Part I, there is no definition of "mortgage", but

"mortgagee" is defined as meaning the registered

proprietor of a mortgage. So that provision has some similarity to the Queensland provision. In

the other States and territories, there does not appear to be any definition of "mortgage" or, if there is a definition, it is not a definition which

relates to registration under the Torrens statute.

Your Honours, perhaps even more significantly

for present purposes, though, as far as the

researches of the parties in this case have been

Stockland 2 13/12/91

able to disclose, this is the first time that this issue has fallen for determination by any court in the history of the Torrens Title legislation.

Your Honours, perhaps that is not all that

surprising. Your Honours will have seen that there

is no affidavit before the Court which suggests

that this issue is one of any general commercial

importance or concern, and perhaps it would be

surprising if any such affidavit could have been

produced.

BRENNAN J: Is that because mortgage debentures are not

usually taken collateral to mortgages?

MR MUIR: Well, Your Honour, perhaps it is more because if a

secured creditor was considering going into possession, either by means of appointing a receiver or appointing an agent, it would tend to

give consideration to the advantages and

disadvantages of taking that course. As for the

lessors, of course, if a secured creditor enters

into possession, but declines to pay rent, the

lessor's obvious remedy, unless a commercial

solution can be found, is to terminate the lease.

And for those reasons, we submit that the type of

problem which has arisen here is one which is

unlikely to arise in practice. And, of course,

Your Honours are not told that there is any

particular commercial need for the resolution of

this problem. Not one other instance of this

problem occurring in practice has been pointed to.

Your Honours, the third point that we make is that the decision is clearly correct and, if I

could refer to some observations of

Mr Justice Mason in K & S Lake City Freighters Pty

Ltd v Gordon & Gotch Ltd, 157 CLR 309, at page 315,

His Honour, in the third line, said:

On its faces 133, which is expressed in

general terms, contains no limitation on the
nature of the claim to damages or other remedy

to which it refers. However, to read the

section in isolation from the enactment of

which it forms a part is to offend against the cardinal rule of statutory interpretation that

requires the words of a statute to be read in

their context.

And then, going down, His Honour refers to Prince

Ernest Augustus of Hanover and another decision,

and concludes:

The instances of general words in a statute

being so held to be constrained by their

context are legion.

Stockland 3 13/12/91

Your Honours, if I could take you to the

definitions which we submit make the meaning of

section 62 quite plain, they are to be found in the

pamphlet copy of the Act at page 4 in section 4.

"Mortgagee" is defined in these terms:

shall mean the person in whose favour a charge

on land such as is referred to in the

definition "mortgage" is or is intended to be

created.

And then, looking at the definition of "mortgage"

in the previous page:

shall mean any charge on land created under or

in accordance with the provision of this Act.

BRENNAN J: 

Now, in this case were the receivers who were in

possession entitled to apply the profits of the
business in repayment of the moneys secured by the

bill of mortgage?

MR MUIR: 

Your Honour, receivers were not appointed or, if

they were appointed, did not go into possession.

The mortgagee appointed agents to go into

possession.

BRENNAN J: I am sorry. Well, the agents who accounted, no

doubt, to the mortgagee - was the mortgagee then

entitled to apply the profits from the business in

discharge of any liability secured by the mortgage?

MR MUIR:  Your Honour, there is nothing in the record before

the Court which indicates that, but my instructions

are, yes.

BRENNAN J:  How is it then that it can be said that there is

not a mortgagee in possession?

MR MUIR:  Because of the argument, Your Honour, that when

one looks at section 62, where it provides:

Any mortgagee ..... after entering into

possession -

that that, because of the definitions to which I

have just referred and also to the sections in the

Act which surround it, is a reference to a
mortgagee entering into possession under a mortgage

registered under the Act.

BRENNAN J: Or does that mean "under"?

MR MUIR: Well, a mortgage which has been registered,

Your Honour.

Stockland	13/12/91
BRENNAN J:	We have a mortgagee who goes into possession physically?
MR MUIR:	Yes, Your Honour.

BRENNAN J: What do you mean by "under the mortgage"?

MR MUIR: Well, in this case the agents were appointed

pursuant to a charge registered in the company's

office. It was a charge over the assets of the

company, and they were not appointed pursuant to

the provisions of the registered real property

mortgage.

BRENNAN J:  Do you mean that there were two powers of

appointment?

MR MUIR:  Yes, Your Honour.

BRENNAN J: And only one was exercised?

MR MUIR:  Yes, Your Honour.

BRENNAN J: And what is it that identifies the power as

being the power being exercised? How do you

identify that power as the power that was

exercised?

MR MUIR: Well, Your Honour, there was a deed of appointment

of the agents pursuant to the company's charge but

no appointment of agents under the registered real

property mortgage.

BRENNAN J:  Was any appointment of agents necessary under

the real property mortgage?	I mean, the mortgagee
is a corporation.

MR MUIR: Yes, Your Honour.

BRENNAN J:  So obviously whenever a mortgagee, being a

corporation, is in possession, it is in possession

by its agents.

MR MUIR: Yes, Your Honour, but here -

BRENNAN J: What is it that shows that this mortgagee was

not in possession?

MR MUIR: Well, if I can refer Your Honours to an affidavit

of a Miss Deane at page 78 of the record, Your

Honours will see at about line 24 it deposed to

that:

The ANZ appointed the respondents ..... as its

agents in possession pursuant to the mortgage

debenture.

Stockland 13/12/91

So that is a matter which, Your Honours, was common

ground between the parties, and presumably still

is.

McHUGH J: But what is your answer to what

Mr Justice McPherson said about this point at

pages 8 and 9 of the record? You see, he took the
view that:

Section 62 ought not, I consider, to be construed as requiring in a case like this a

subtle analysis of the character in which a

mortgagee entered into possession.

MR MUIR:  Yes, but His Honour did seem to take the view that

it may be necessary to impose some qualification or

restriction. If one looks at page 9, at line 5,

where he says:

Conceivably the position might be different if

it had entered in some character other than

that of a mortgagee -

but goes on to say -

I need not consider such a case.

And, Your Honours, that gives rise to the

question, of course, of what would be the position

if the Bank, or putting aside the Bank for the

moment, if some other mortgagee had entered into

possession in some quite different capacity such as
sublessee or assignee, or pursuant to rights

conferred under a building contract or the like.

We submit it would be a highly improbable result to

read the provision in the literal way that

His Honour did, namely, to provide that merely

because there was a registered mortgage and merely

because that mortgagee had happened to go into

possession even though its acts had nothing

whatsoever to do with the mortgage, that section 62

had application.

BRENNAN J:  We do not need to decide on this application

whether your submissions are right, of course -

MR MUIR:	No, Your Honour.
BRENNAN J:	- - - but I wonder why it is that if a mortgagee

is found in possession having the power to enter

into possession pursuant to the bill of mortgage

and enabled to apply the profits of the business of

which he is in possession in discharge of the

mortgage debt, one does not find that the

description of that person as a mortgagee in

possession is not entirely accurate.

Stockland 6 13/12/91

MR MUIR: Well, Your Honours, could I deal with that this

way. Might I adopt what His Honour

Mr Justice de Jersey had to say at page 62 of the

record where His Honour said at about line 31:

The term "mortgage" is defined by the Act

to cover only charges created "under or in

accordance with" the Real Property Act, and

mortgagee bears a corresponding meaning. The

Bank's contention was that although it was a

"mortgagee" within the meaning of s 62, being

the holder of the registered bill of mortgage, it had not relevantly entered into possession,

because its entry was made pursuant to the

mortgage debenture and not the bill of

mortgage.

Then in the next sentence His Honour sets out the

contrary argument. Then, if I can take

Your Honours down the page to line 17:

I consider that in referring to an

"entering into possession" of land by the

mortgagee, s 62 means an entering into

possession by the mortgagee in that capacity,

in reliance on the security which leads to

his being styled a "mortgagee" falling within

the section. The section does not apply if a

person who happens to be a mortgagee under the

section because he holds a registered bill of

mortgage, nevertheless enters into possession

of the premises under another security, such

as this mortgage debenture, or indeed under

some completely different arrangement, such as

a sub-tenancy. To my mind, the section is

plainly concerned with the protection of

lessors in the event of a lessee's mortgagee's
taking possession of the land under his

mortgage. If the taking possession were not

related to the mortgage, then the section

could operate to burden the mortgagee simply

because of that status in circumstances quite

irrelevant to it.

Your Honours, might I then take you please to the

provisions of the Act which, I submit, make it
plain enough that His Honour's approach was the

correct one.

BRENNAN J:  Mr Muir, that is the argument which you would

advance in support of the Court of Appeal's

decision?

MR MUIR: Yes, Your Honour; we would go a little further

though and refer Your Honours, if I could do it

briefly, to the surrounding sections, which provide

Stockland 7 12/13/91

considerable support to the approach that

His Honour adopted. Could I refer Your Honours

BRENNAN J:  You may want to bear this in mind, that the

passage that you just read raises an obvious

question of law and the question which you must now

address is whether that proposition of law is so

manifestly right that we ought not to take it on

board.

MR MUIR: Yes, Your Honour. Your Honour, if one looks at

section 60 - and I refer to that because section 62

is found in the middle of a number of sections

which are clearly dealing with registered mortgages

- any construction other than the one just advanced

by His Honour in the Full Court fails to take into

account that section 62 does not appear by itself,

but is a provision in a statute which provides for

a system of title by registration. A provision

such as section 62, even disregarding its

juxtaposition with sections such as section 60, to

which I am about to come, should be seen as dealing

with instruments registered under the Act. When

regard is had though, Your Honours, to section 60

and section 63, section 65 and section 66, we

submit that the argument becomes extremely

compelling, to say the least.

Your Honours will see, looking at section 60,

that it is obviously a provision dealing with

provisions registered under the Act; it is in

narrative form. If one looks at the third

paragraph, for example, it says:

Provided also that it shall be lawful for

any registered mortgagee whenever any

principal or interest money annuity or rent
charge shall have become in arrear to bring an

action of ejectment to obtain possession of

the said land.

Your Honours, it does not say, and nor need it say,	that such registered mortgagee shall bring such an
action under his or its registered mortgage. That
goes without saying. And that is precisely the
position, with respect, in section 62.

DAWSON J: There is no doubt that the mortgagee can enter

into possession of the land, is there, and receive

the rents and profits?

MR MUIR:  No, Your Honour.

DAWSON J: Where a person is owed money, does he not take

what action he takes pursuant to all powers which

would assist him in his objective?

Stockland 12/13/91

MR MUIR: Well, Your Honour, I submit that if he has rights

under differing instruments, there is no difficulty

at all in his electing to pursue rights under one

instrument and not under another, particularly

DAWSON J:	No doubt he will say so if it suits his purposes, but no doubt also if an occasion arose he would
rely on the mortgage of necessity.
MR MUIR:	Yes, Your Honour and if that were the case, then

the consequences would be that, if, in this case,
reliance had been placed on the real property
mortgage, then we would not be here, but the rights

were exercised expressly under something other than

the Real Property mortgage and I submit,

Your Honours, there can be no difficulty in

principle with a mortgagee, or any party for that

matter who has rights under differing contracts,

exercising those rights as he or it deems fit.

DAWSON J: There is some difficulty. When it suits him he

says, "It's this", and when it suits him he says,

"It's that". The fact is that when he entered into

possession he did so pursuant to all powers

thereunto enabling him, when you look at it in

real terms.

MR MUIR:  Yes. Your Honour, there was never any debate

between the parties concerning the issue that

Your Honour has just raised.

DAWSON J: Until it was suggested that the Bank was liable

for the rents.

MR MUIR:  Your Honour, it was always the Bank's position and

it was the position argued at first instance and

then on appeal, as I understand it, that the Bank

had purported to exercise its rights under its

mortgage debenture.

DAWSON J: After the question had arisen. If he had asked

the Bank at the time that they entered into

possession without this question being on the

horizon, I may be wrong but I think the Bank would

say it relied on both - - -

MR MUIR:  No, Your Honour. The Bank at all times purported

to rely simply on the mortgage debenture and it

gave notice in writing.

BRENNAN J: The real question then becomes whether or not

the character of a mortgagee in possession is to be

determined or is determined by reference to the

intention of the mortgagee as to the power which it

will exercise in entering into possession.

Stockland 9 13/12/91

MR MUIR: Perhaps, Your Honour, or perhaps, with respect, it

might simply be an objective; a matter for

determination by reference to "objective criteria"

such as the notice of appointment which exists in

this case.

BRENNAN J: Quite so. I am not suggesting that it is a

matter simply of a subjective opinion or state of
mind but what was done and whether it was intended

by the mortgagee to exercise one power or another,

and the argument then is that the description of

mortgagee in possession is either extended to the

instant case or withheld according to whether the

power which the mortgagee intended to exercise was

the power conferred by the mortgage or by the

mortgage debenture. That is the proposition, is it

not?

MR MUIR: With respect, I am not entirely sure that it is.

The matter came before the court on a construction

summons, as one sees at pages 1 and 2 of the

record. So that it appears that it really is a

matter of statutory construction and, in the Full

Court, Mr Justice Williams referred to the fact

that there may well be factual matters which could

affect the question of construction, depending on

how a mortgagee exercised its rights and so forth.

BRENNAN J: But it must have been common ground that there

was a mortgage, that the Bank was a mortgagee and

the Bank had power under the mortgage to enter into

possession. It must have been also common ground

that the Bank under that bill of mortgage had power

to apply the rents and profits in discharge of the

mortgage debt.

MR MUIR:. I am not sure as to the latter. What Your Honour

says may well be right but it may not have been a

matter which arose for consideration.

BRENNAN J:  And then it was also common ground that there

was a mortgage debenture which conferred similar

powers.

MR MUIR: Yes, Your Honour.

BRENNAN J:  And that there was an instrument by which the

Bank appointed its agent expressed to be in exercise of the powers conferred by the mortgage debenture.

MR MUIR: That is so, Your Honour.

BRENNAN J: There is no dispute as to the facts. The

question is what flows from those facts.

Stockland 10 13/12/91

DAWSON J: Can I put to you this, that if there was some

question of the validity of the action of the Bank

under the debenture it is inconceivable that, in

any context, the Bank would not say, "Well, anyway,

we're entitled to be here under the mortgage.".

They would not say, "Well, we have to go out and come back again and enter into possession in a

different capacity.". That is quite unreal, is it

not?

MR MUIR:  No, Your Honour, with respect. I would submit

that the Bank, having purported to exercise its

powers under one set of contractual rights, would

be stuck with that position, and if it wished - - -

DAWSON J: Well, what you must say then, "And could not rely

on the mortgage to justify its position."

MR MUIR: Well, not unless it then - - -

DAWSON J: Went out and came back again and said, "We're now

coming back in our capacity as mortgagee".

MR MUIR:  Yes, or perhaps acted immediately to make an

appointment under the registered real property

mortgage.

BRENNAN J:  It would not have to make an appointment, would

it? It would simply say, "These are our agents".

MR MUIR:  Well, Your Honour, that in effect would be acting

under the real property mortgage, with respect.

BRENNAN J: Yes.

DAWSON J: There is a question, is there not?

MR MUIR: Well, Your Honours, we certainly do not - - -

BRENNAN J: You say there is not.

MR MUIR:  That is contrary to my submissions. Your Honours,

I do not know that I can add anything further,

except to refer Your Honours to sections 63, 65 and

66, each of which are also provisions which are

plainly concerned with registered mortgages, and we

find section 62 in the middle of those provisions,

the first one being section 60. Those are our

submissions.

BRENNAN J:  Yes. Mr Keane, the Court is minded to grant

special leave on the question that has been debated

but looking at your draft notice of appeal there is

an order sought at the bottom of page 90 restoring

the declaration given by Mr Justice McPherson on

19 September. Now, if one looks at that

declaration one finds that there were in fact two

Stockland 11 13/12/91

declarations. Your application is related only to

declaration (a), is that correct?

MR KEANE: That is correct, Your Honour. There is no need

for the Court to concern itself	with the other.
That was agitated on appeal and	was resolved
satisfactorily to the parties.

BRENNAN J:	Now, it seems that your orders that you seek need some amendment in the notice of appeal and if
the second declaration is not a matter of concern
to this Court then that may have, I do not know,
some consequential effect upon the costs order in
the Full Court.  You may give attention to the
notice of appeal as ultimately filed to ensure that
the appeal relates simply to the declaration (a).

MR KEANE:  The first declaration, Your Honour. We will do

that.

BRENNAN J: Your grant of special leave is limited to the

issues arising in respect of that declaration.

MR KEANE: If Your Honours please.

AT 11.05 AM THE MATTER WAS ADJOURNED SINE DIE

Stockland 12 13/12/91