Tian Ci Australia Pty Ltd v Neilson

[2017] VCC 1125

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-17-03166

TIAN CI AUSTRALIA PTY LTD	Plaintiff
v
VALERIE CANDY NEILSON	First Defendant
and
DAVID WELLS	Second Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	9 August 2017
DATE OF RULING:	17 August 2017
CASE MAY BE CITED AS:	Tian Ci Australia Pty Ltd v Neilson & Anor
MEDIUM NEUTRAL CITATION:	[2017] VCC 1125

REASONS FOR RULING
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Subject:  PROPERTY LAW

Catchwords:             Possession – where property purchased at Sheriff’s auction – where claim for possession as bare trustee

Legislation Cited:     Sheriff Act 2009 (Vic); Transfer of Land Act 1958 (Vic)

Cases Cited:Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164; Mercier Rouse Street Pty Ltd v Burness & Ors [2015] VSCA 8; Milenkovic v Belleli & Ors [2015] VSC 349; Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177; Stern v McArthur (1988) 165 CLR 489

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr K Mihaly	Marshalls & Dent Lawyers
For the Defendants	The second defendant appeared in person on behalf of the first and second defendants

HIS HONOUR:

Introduction

1 This case concerns an application for the recovery of land pursuant to order 53 of the County Court Civil Procedure Rules 2008 (Vic). The subject property is the land situated at 19 Hatteras Court, Patterson Lakes in the State of Victoria, being the land more particularly described in Certificate of Title Volume 10515 Folios 536 and 537 (‘the property’). The defendants are the persons currently in possession of the property. In short, the plaintiff was the purchaser of the property at a Sheriff’s auction conducted to satisfy a judgment debt entered against the defendants. The debt giving rise to the warrant of seizure and sale is unconnected with the plaintiff. Nonetheless, as a result of the sale by the Sheriff, the plaintiff claims an entitlement to be registered as the proprietor of the property and to have possession of the property.

Background

2       On 20 December 2014, the first defendant (‘Neilson’) became registered proprietor of the property. Neilson and the second defendant (‘Wells’) have been resident at the property at all material times since then. Neilson remains the registered proprietor as at the date of this application.

3       On 20 December 2014 the Australia and New Zealand Banking Group Ltd (‘the ANZ bank’) registered mortgages over the property.

4       On 22 December 2014 Alex Mavidis (‘Mavidis’) lodged a caveat over the title to the property. The basis for the caveat was an interest in the property which Mavidis claimed as an unpaid vendor under a contract of sale with the defendants.

5       On 7 September 2015 Mavidis entered judgment against the defendants in proceeding CI-15-01741 in the County Court in the sum of $330,020.70.

6 On 18 February 2016 the County Court issued a warrant of seizure and sale to the Sheriff. The warrant was endorsed for the purposes of section 52(2) of the Transfer of Land Act 1958 (Vic) (‘the TLA’) as affecting the property.

7       On 13 December 2016, by dealing number AN372715T, notice was recorded on the title of the property that the warrant had been served. The warrant was later extended. On 28 February 2017, by dealing number AN601343J, notice was again recorded on the title of the property that the warrant had been served.

8       On 30 March 2017 the Sheriff conducted a public auction of the property. The Sheriff sold the property for $385,000. The plaintiff purchased the property by paying the said $385,000 and also paying out the ANZ bank as the mortgagee of the property.

9       On 6 April 2017 the plaintiff lodged a caveat over the title to the property claiming an interest as purchaser from the sale by the Sheriff.

10      On 13 April 2017 the plaintiff paid $346,000 to the Sheriff for the property and subsequently a further sum of $856,256.50 to the ANZ bank in order to discharge its mortgage.

11      On 28 April 2017 the plaintiff demanded that Neilson vacate the property by 5 May 2017.

12      On 4 May 2017 the Sheriff lodged dealing AN799355R to transfer the property to the plaintiff. A discharge of mortgage was also lodged.

13      On 2 June 2017 the plaintiff demanded that Wells vacate the property by 30 June 2017.

Plaintiff’s contentions

14      The plaintiff contends that it is entitled to become the registered proprietor of the property and to have possession of the property.

15 Pursuant to section 23 of the Sheriff Act 2009 (Vic) (‘the Sheriff Act)’, the Sheriff may seize recoverable property in accordance with a warrant which authorises the seizure regardless of who is in possession of the property at the time. ‘Recoverable property’ means property seized lawfully under a warrant.

16 Under section 24 of the Sheriff Act, and subject to the provisions of that act, the Sheriff is entitled to sell seized property in accordance with the warrant which authorises the seizure.

17 By section 42 of the TLA, the sale of real property is permitted where notice has been given to the Registrar of Titles and certain deadlines are met. Such deadlines require that the transfer is lodged within three months of notice being given to the Registrar of the warrant of seizure and sale. Where the three months have elapsed, further notice can be given to the Registrar so that, provided the eventual sale is within three months of the latest notice, the timeliness requirements are considered to have been satisfied.

18 Under section 25 of the Sheriff Act, a person buying property from the Sheriff acquires good title to that property if he or she bought in good faith and without notice of any defect in title.

19      Thus, in circumstances where a warrant authorised the seizure and sale of the property, the plaintiff through the Sheriff’s sale has acquired good title, has the beneficial interest in the property, and is entitled to be registered as the proprietor.[1] Because the plaintiff is the registered proprietor of the property and holds the beneficial interest in the same, the plaintiff is entitled to possession of the property.

[1]Milenkovic v Belleli & Ors [2015] VSC 349 at [190].

20      Notwithstanding that Neilson remains the registered proprietor for the time being, the plaintiff is nonetheless entitled to possession. Neilson is a bare trustee.[2] This means that Neilson has no interest in the property other than any interest which might exist by reason of the office of trustee and the holding of the legal title. This excludes the right to possession.[3] The plaintiff argues that, because the property is effectively held for its absolute benefit and at its absolute disposal,[4] it is entitled to possession of the property.

Defendants’ contentions

[2]Stern v McArthur (1988) 165 CLR 489, 521-3; Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177 at [22].

[3]Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164, 192 followed in Mercier Rouse Street Pty Ltd v Burness & Ors [2015] VSCA 8 at [84].

[4]See Dal Pont GE, Equity and Trusts in Australia (5 ed, 2011) at [21.45].

21      Wells appeared in person on behalf of the defendants. He was not present and ready to proceed when the matter was called on for hearing at about 10:05am. At his request, and in order to accommodate his personal situation, the commencement of the plaintiff’s application was delayed and ultimately began at about 3:15pm.

22      Wells spoke at some length about his opposition to the relief sought by the plaintiff. He explained that:

a)    he was not happy with the Sheriff’s failure to accept from him a proposal whereby he could have repaid the amount owing to the judgment creditor over time;

b)    in his view, the Sheriff sold the property at a significant undervalue. Wells says that the land alone is worth $1.2 million and that an insurer assessed the value of the property at $2.1 - 2.2 million. He says that the value of the property has increased since that time. In the circumstances, Wells says that the property should be worth, at a minimum, $1.7-1.8 million, and that he could obtain $1.5 million “in a heartbeat”.

c)     the Sheriff conducted the sale process badly and unprofessionally. This was partly because the only person to see inside the property was the director of the plaintiff , and partly because the Sheriff used an estate agent based in Seymour. Allegedly, the agent would not answer his phone and would not conduct public inspections of the property.

d)    the plaintiff took improper advantage of the defendant’s position by purchasing the property at the Sheriff’s auction.

e)    the defendants are keen to remain living at the property because of its size and security and the protection which it affords them.

f)     unfortunately for Wells, he has been involved in some real estate dealings which, from his perspective, went badly wrong. Wells alleges that he was the victim of serious criminal behaviour by a number of people. He says that it was only in March 2017 that he received confirmation from the Commonwealth Director of Public Prosecutions that he could take legal action against the alleged perpetrators and seek to recover the land and/or the losses which he suffered.

Consideration

23      While for the purposes of this application, I am prepared to assume that Wells has been gravely wronged, his situation on this issue is legally distinct from, and irrelevant to, the plaintiff’s application. The plaintiff was not involved in the criminal activity of many years ago and is not compromised by that activity. In circumstances where the defendants’ allegations do not impugn the conduct of the plaintiff, I consider that the plaintiff’s submissions as to the law are correct and that the plaintiff is entitled to become the registered proprietor of the property and to have possession of the property. Aside from the fact that none of the defendants’ submissions had any foundation in sworn affidavit material, taken at their highest, I am satisfied that they do not establish to the requisite degree that the plaintiff failed to acquire title in good faith or that the plaintiff acquired the property with notice of a defect in title.

Conclusion

24      Accordingly, having regard to the forgoing, I order that:

a)    the plaintiff recover possession of the land described in its originating motion as 19 Hatteras Court, Patterson Lakes in the State of Victoria, being the land more particularly described in Certificate of Title Volume 10515 Folios 536 and 537.

b)    the defendants pay the plaintiff’s costs of the proceeding to be taxed on a standard basis in default of agreement.