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Sutherland v Compton Lot Ten Pty Limited

Sutherland v Compton Lot Ten Pty Limited

Case [2023] NSWSC 1472 30 November 2023

Mortgages & Security Interests

Equitable Estoppel

Statutory Interpretation

Property Law

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Supreme Court

New South Wales

Medium Neutral Citation: Sutherland v Compton Lot Ten Pty Limited & Anor [2023] NSWSC 1472
Hearing dates: 7, 8, 16 November 2023
Date of orders: 30 November 2023
Decision date: 30 November 2023
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The proceedings are dismissed and the plaintiff to pay the defendants’ costs of the proceedings as agreed or as assessed.

Catchwords:
MORTGAGES AND SECURITIES — Mortgages — Duties, rights and remedies of mortgagee — Foreclosure — Where plaintiff alleges it has been assigned the security rights of a mortgagee over a share in a company — Where not established that lender or plaintiff as assignee has extinguished the defendant’s equity of redemption by a foreclosure action — Whether an order can be made under s 175 of the Corporations Act 2001 (Cth) to correct the register of members to record the plaintiff as the legal and beneficial owner of the share.

Legislation Cited:
- Civil Procedure Act 2005 (NSW), s 94
- Conveyancing Act 1919 (NSW), ss 12, 38
- Corporations Act 2001 (Cth), ss 135, 169, 175, 180, 181, 203C, 1071B
- Evidence Act 1995 (NSW), s 136
- Personal Property Securities Act 2009 (Cth)

Cases Cited:
- Adelaide Building Co Pty Ltd (in liq) v ABC Investments Pty Ltd (1990) 8 ACLC 445
- Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
- Armagas Ltd v Mundogas SA [1985] 1 Ll R 1
- Bennell v Netlink Australia Pty Ltd (2002) 42 ACSR 680; [2002] NSWSC 822
- Elders Forestry Ltd v Bosi Security Services Ltd (2010) 242 FLR 360; 80 ACSR 122; [2010] SASC 223
- ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24
- Harrold v Plenty [1901] 2 Ch 314
- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810
- Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
- Kuhl v Zurich Financial Services Ltd (2011) 243 CLR 361; [2011] HCA 11
- Mount Gilead Pty Ltd v Macarthur-Stanham (as executor of Estate of late Lee Macarthur-Onslow) [2023] NSWCA 37
- Musa v Alzreaiawi [2021] NSWCA 12
- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789
- Re Lorie Najjar & Sons Pty Ltd (in liq) (2013) 94 ACSR 561; [2013] NSWSC 798
- Re Motasea Pty Ltd (2014) 97 ACSR 589; [2014] NSWSC 69
- Re SRD Property Pty Limited [2023] NSWSC 441
- United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2002] NSWSC 1178
- Varma v Varma [2010] NSWSC 786
- Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:
- A Finch, ‘Security over Shares’ (1995) 13 Company and Securities Law Journal 292
- E L J Tyler et al, Fisher & Lightwood’s Law of Mortgage (LexisNexis, 3rd ed, 2014)
- E Sykes & S Walker, The Law of Securities (Law Book…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sutherland v Compton Lot Ten Pty Limited

Details

AGLC: Sutherland v Compton Lot Ten Pty Limited [2023] NSWSC 1472
Case: [2023] NSWSC 1472
Decision Date: 30 November 2023

CaseChat Overview and Summary

The case of Sutherland v Compton Lot Ten Pty Limited involved the plaintiff, who claimed to have been assigned the security rights of a mortgagee over a share in a company, seeking an order under s 175 of the Corporations Act 2001 (Cth) to correct the register of members to record the plaintiff as the legal and beneficial owner of the share. The defendant contested the plaintiff's claim, arguing that the equity of redemption had not been extinguished by a foreclosure action. The matter was heard in the Supreme Court of New South Wales.

The court was tasked with determining whether the plaintiff, as the assignee of the mortgagee, had the necessary standing to seek an order to correct the register of members. This involved examining whether the equity of redemption had been extinguished and whether the plaintiff's assignment of the mortgagee's rights was valid. The court also needed to decide if the plaintiff was entitled to an order under s 175 of the Corporations Act to record the plaintiff as the legal and beneficial owner of the share.

In reaching its decision, the court found that the plaintiff had not established that the lender or the plaintiff as assignee had extinguished the defendant’s equity of redemption through a foreclosure action. Consequently, the court held that the plaintiff was not entitled to an order under s 175 of the Corporations Act to correct the register of members. The plaintiff’s claim was dismissed, as the necessary legal conditions for the requested order were not met.

The court ordered that the plaintiff's application be dismissed and that no order be made to correct the register of members to record the plaintiff as the legal and beneficial owner of the share. The defendant was also awarded costs of the proceedings.

Orders