The Corporation of the City of Marion v Nash

[2022] SASC 29

Supreme Court of South Australia

(Civil)

THE CORPORATION OF THE CITY OF MARION v NASH

[2022] SASC 29

Reasons for Decision of Judge Dart a Master of the Supreme Court  

28 March 2022

REAL PROPERTY - RATES AND CHARGES - RATING OF LAND - RECOVERY OF RATES - SALE OF LAND

Applicant levied rates on land - registered proprietor deceased - occupier is executor of the deceased's will - rates remain unpaid for a number of years - rates are a charge on land - statutory notice served - applicant has a right to sell the land pursuant to s 184 of the Local Government Act - implied into the power of sale is an entitlement to take possession to facilitate sale.

Order:

1. Applicant entitled to an order for possession.

Local Government Act 1999 (SA) s 177 and s 184; Real Property Act 1886 (SA) s 102, s 128B and s 192; Local Government Act 1934 (SA); Municipal Corporations Act 1890 (SA); Local Government Act 1993 (NSW), referred to.

Anderson v The Council of the City of Lismore [2011] NSWSC 1058; Harden Shire Council v Richardson [2012] NSWSC 622, considered.

THE CORPORATION OF THE CITY OF MARION v NASH

[2022] SASC 29

1. The applicant seeks an order for the possession of land at Marion. The first interested party is in occupation of the land. It is entitled to the order.

Background

1. The land is at 8 Tilley Court, Marion and is the land comprised and described in Certificate of Title Register Book Volume 6130 Folio 890. The registered proprietor of the land is Mr John David Nash (“the deceased”). It appears that Mr Nash passed away in 2016. The respondent is the brother of the deceased and opposes the making of any order in favour of the applicant.  He is both the respondent and first interested party.  He is a respondent as the personal representative of the deceased estate of his brother.  Since the death of Mr Nash, no council rates have been paid. The applicant wishes to take possession of the land, to sell the same, to recover the unpaid rates.

2. The deceased left a will.  The respondent is named as the executor in the will.  The second interested party, who appeared on the argument, Ms Bromilow, is the remainder beneficiary of the whole of the deceased estate.  Arguably the will created a life interest for the first interested party in the subject property.  That is not entirely clear.  There is presently a probate proceeding in this Court seeking to pass over the respondent as executor and appoint a different executor.  That action will no doubt also need to resolve interpretation questions arising in the will.  The second interested party takes no position in respect of the applicant’s application for possession and its proposal to sell the property.  She does seek to have the respondent passed over as executor in the probate proceeding.

The legal basis of the application

1. The application is based on statute.  Relevant for present purposes are the following two provisions of the Local Government Act 1999 (“the LGA”):

   177—Rates are charges against land

   (1) Rates imposed on land are a charge on the land.

   (2) However, if rates are assessed against the common property, or part of the common property, of a community scheme under the Community Titles Act 1996, the rates are not a charge on the common property but are, instead, a charge on each of the community lots of the community scheme in proportion to the lot entitlements of the respective lots.

   (3) Subsection (2) does not apply in a case where section 147(6) applies.

   …

   184—Sale of land for non-payment of rates

   (1)          If an amount payable by way of rates in respect of land has been in arrears for three years or more, the council may sell the land.

   (2)          Before a council sells land in pursuance of this section, it must send a notice to the principal ratepayer at the address appearing in the assessment record—

   (a)    stating the period for which the rates have been in arrears; and

   (b)    stating the amount of the total liability for rates presently outstanding in relation to the land; and

   (c)    stating that if that amount is not paid in full within one month of service of the notice (or such longer time as the council may allow), the council intends to sell the land for non-payment of rates.

2. A notice was served on the respondent, pursuant to the provisions of s 184, on or about 25 November 2020. The notice was served by affixing it to the subject property. It was also published in The Advertiser. The notice was served after a lengthy period of discussion with the respondent about the need to have the rates paid. At that time the unpaid rates were in the amount of $7,964.10. The rates were not paid.  Further rates have accrued since that date. The unpaid rates are now approximately $12,000.  The condition precedent to the power of sale has been established.

Possession of land

1. Ordinarily, when the Court is asked to make an order in respect of the possession of real property, it acts pursuant to s 192 of the Real Property Act 1886 (“RPA”), which is in the following terms:

   192—Summons to give up possession

   Any of the following persons (in the following sections called the claimant) may cause any person in possession of land under the provisions of this Act to be summoned to appear before the Court to show cause why the person summoned should not give up possession to the claimant—

   (a) the registered proprietor of a freehold estate in possession;

   (b)          any registered mortgagee or encumbrancee where the person in possession is a mortgagor or encumbrancer in default, or a person claiming under such mortgagor or encumbrancer;

   (c) any lessor with power to re-enter where the rent is in arrear for three months, whether there be or be not sufficient distress found on the premises to countervail such rent, and whether or not any previous demand shall have been made for the rent;

   (d)          any lessor where a legal notice to quit has been given, or the lease become forfeited, or the term of the lease has expired.

2. The section requires an applicant to have a registered interest in land. The provision in s 192(b) relates to a registered mortgagee or registered encumbrancee. The applicant does not have a registered interest in the land. A charge can be an encumbrance. The applicant lodged a caveat in respect of the charge. The RPA anticipates that some encumbrances may be registered. Relevant is the following section:

   128B—Encumbrance of land

   (1) If land is to be charged with, or made security for, the payment of an annuity, rent‑charge or sum of money in favour of a person, an encumbrance in the appropriate form must be executed by the registered proprietor and the person.

   (2) This section only applies to land intended to be charged or made security under this Act by the registration of an encumbrance.

3. The drafting of that section indicates that what is being dealt with is an agreement between the registered proprietor of land and some other person. The section is not dealing with charges created by statute. It is not relevant to the present matter. The reference to encumbrances in s 192 is a reference to an encumbrance created pursuant to s 128B.

4. The LGA anticipates that some charges created by that Act will be registered on land. It provides a process to register such charges. In particular, the following:

   Schedule 6—Charges over land

   1—Preliminary

   (1) This Schedule applies to a charge on land created by this Act.

   (2) However, this Schedule does not apply to rates, charges, interests or fines recoverable under Chapter 10 or a building upgrade charge under Schedule 1B.

   2—Notice of charge to Registrar-General

   (1) For the purposes of imposing a charge over land, a council must deliver to the Registrar-General a notice, in a form determined by the Registrar-General—

   (a)    identifying the land over which the charge is to exist; and

   (b)   declaring the unpaid amount, and the rate of interest; and

   (c)    requesting the Registrar-General to make a note under this section in the Register Book.

   (2) On receipt of a notice under subclause (1), the Registrar-General must enter an appropriate note in the Register Book and, when that entry is made, a charge is created over the land.

   3—Effect of charge

   (1) The effect of the charge is as follows:

   (a)    the Registrar-General must not, after entry of the note under clause 2, register an instrument affecting the land over which the charge exists unless—

   (i)     the instrument—

   (A)      was executed before the entry was made; or

   (B)      has been executed under or pursuant to an agreement entered into before the entry was made; or

   (C)      relates to an instrument registered before the entry was made; or

   (ii)    the instrument is an instrument of a prescribed class; or

   (iii)     the instrument is expressed to be subject to the operation of the charge; or

   (iv)     the instrument is a duly stamped conveyance that results from the exercise of a power of sale under a mortgage, charge or encumbrance registered before the entry was made; and

   (b)   the council has the same powers in respect of the land over which the charge exists as are given by the Real Property Act 1886 to a mortgagee under a mortgage in respect of which default has been made in payment of money secured by the mortgage.

   (2) An instrument registered under subclause (1)(a)(i) or (ii) has effect, in relation to the charge, as if it had been registered before the entry was made.

   (3) If an instrument is registered under subclause (1)(a)(iv), the charge will be taken to be cancelled by the registration of the instrument and the Registrar-General must take whatever action the Registrar-General considers appropriate to give effect to the cancellation.

   4—Discharge of charge

   (1) The council in whose favour a charge exists must, if the amount to which the charge relates is paid, by notice in a form determined by the Registrar-General, apply for the discharge of the charge.

   (2) The Registrar-General must then cancel the relevant entry.

5. As clause 1 of Schedule 6 makes clear, the schedule does not relate to charges that arise under Chapter 10 of the LGA. Section 177 of the LGA is to be found in Chapter 10 of the LGA. The registration process provided in Schedule 6 has no application in the circumstances of this matter.

6. There is a provision in the RPA which appeared, at first glance, as if it may apply to the facts of this matter. Section 102 provides:

   102—Memorial of order for sale of land for non-payment of rates

   Whenever the Court or a Judge under the powers conferred by the Local Government Act 1934 or any Act or Acts amending the same, or any other Act, shall have made an order for the sale of any land under the provisions of this Act, the Registrar-General shall, upon being served with a copy of the order, mark thereon the time of such service, and shall enter a memorial thereof in the Register Book, which shall operate as a caveat against alienation other than in pursuance of such order while the same remains in force.

7. The provision is a little hard to follow. The Local Government Act 1934 granted a power of sale in similar terms to that found in s 184 of the present Act.  No order of the court was required for the sale of land under that Act.

8. The answer may be that s 102 is a relic of earlier statutes. The Municipal Corporations Act 1890 permitted the sale of land for non‑payment of rates. It required a council to first obtain an order from the Supreme Court to sell the land by public auction. The section appears to deal with that eventuality.

9. In summary the relevant charge is not registered and is not registerable. There is no statutory basis on which to order possession of the land.

An implied power

1. The LGA contains no express power to grant possession to the applicant for the purpose of conducting a sale. The equivalent New South Wales legislation likewise provides no power for a local government body to take possession of property. The issue has been considered a number of times in that state and the decisions provide appropriate guidance in this matter.

2. In Anderson v The Council of the City of Lismore Brereton J was considering the equivalent position under the Local Government Act 1993 (“LGA NSW”). His Honour noted:

   I would not accept that the act of exercising a power of sale under s 713, or the decision to exercise that power would, of itself, ordinarily be attended by a requirement to comply with the rules of procedural fairness. The Council's power to sell under s 713 is akin to a mortgagee's power of sale; it is given to Council as a creditor to enforce a debt, due to the Council, that is charged by statute on the land. It is triggered, relevantly, by rates being overdue for a period of at least five years. Without more, a decision to exercise it would not attract the operation of the rules of procedural fairness: the nature and purpose of the power and the context in which it appears is such as (at least implicitly) to exclude the operation of those rules, notwithstanding the width of the test enunciated by the High Court in cases such as Kioa v West [1985] HCA 81; (1985) 159 CLR 550 and Annetts v McCann.

3. The applicant in its submissions referred to the case of Harden Shire Council v Richardson.In that case Johnson J was, as with this matter, considering an application for the possession of real property to permit a council to sell for non‑payment of rates. His Honour determined that it was implied in the scheme of the LGA NSW that there was an entitlement to possession. In particular, his Honour said:

   The entitlement of the Plaintiff to obtain possession of the Jugiong property from the Defendant may be implied in the scheme in the LG Act because it is necessary (that is, reasonably required or legally ancillary) to the Plaintiff's statutory power to sell the property to Mr Smith, and to give vacant possession to him on completion as an incident of the sale: cf Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435 at 451-452 [50]- [51].

   It is a principle of construction that "Whoever grants a thing is deemed also to grant that without which the grant itself would be of no effect": Troncone v Aliperti (Court of Appeal, 20 April 1994, BC9402483, page 2). Although this principle relates to construction of contracts, it sheds light here upon the appropriateness of an implied entitlement to be found in the relevant statutory scheme, which will necessarily involve a contract for sale to give effect to the statutory power of sale.

   The statutory power of sale in the LG Act carries with it the entitlement of the Plaintiff to take possession of the land so that it may give vacant possession to Mr Smith on payment of the balance of the purchase price.

4. I am satisfied that the applicant is entitled to an order for possession. It has a right to sell the property to recover the debt owed to it. The rates are unpaid for more than three years and the required notice was given. A right to possession is to be implied to facilitate the sale of the property. None of the submissions put by the respondent are such as to require a different outcome. There is no reason in the exercise of the Court’s discretion to decline to make an order for possession.

5. For completeness it should be noted that the respondent can resolve the matter at any time by paying the unpaid rates.