FEDERAL COURT OF AUSTRALIA

Commonwealth Bank of Australia v Western Australia Land Authority trading as Land Corp [2013] FCA 888

THE COURT ORDERS THAT:

1.    Subject to paragraphs 3 and 4 below, title in the property at 16 Finch Street, Nickol in the State of Western Australia being all the land described in Certificate of Title Volume 2669 Folio 410 (Property) is vested in the fourth respondent freed from all encumbrances.

2.    A declaration that the stamp duty payable in relation to the transfer of the Property on or about 15 March 2011 between Anita Mohamat and the fourth respondent has been paid, and that no further stamp duty in relation to this transfer is required in order to effect the transfer.

3.    The applicant cause to have registered over the title to the Property a first ranking registered mortgage given by the fourth respondent.

4.    The first respondent cause to have registered over the title to the Property a caveat claiming absolute interest in the Property as a chargee and the holder of an option to purchase.

5.    The parties take all necessary steps to give effect to paragraphs 1 through 4 (inclusive).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

OVERVIEW

1    By originating application filed in the Court on 4 April 2013, the applicant seeks a vesting order and related orders in respect of property pursuant to s 133(9) of the Bankruptcy Act 1966 (Cth) (Act), the second respondent having disclaimed the property follow its sequestration under the Act.

2    For the reasons which follow, the Court is of the view that the orders sought should be granted.

background

3    On 16 February 2007, Ms Anita Mohamat entered into a written agreement with the first respondent whereby she offered to purchase a property at 16 Finch Street, Nickol, Western Australia (Property) for $180,500. The offer was subject to various conditions (Conditions).

4    On 29 November 2007, a transfer of land in relation to the Property was registered with the Western Australia Land Titles Office. On this same date, the first respondent also registered a caveat over the title to the Property, claiming an absolute interest in the Property as chargee (under cl 16 of the Conditions) and the holder of an option to purchase (under cl 17 of the Conditions) (LandCorp Caveat).

5    On 29 June 2009, Ms Mehmat and the fourth respondent entered into a conditional contract of sale pursuant to which Ms Mehmat was to sell the Property to the fourth respondent for the lesser of $850,000 and the market value of the Property upon completion of certain building and landscaping works (First Contract).

6    In September 2009, the applicant granted Mr Alistair Perry and Mr David Greig a business loan with a limit of $650,000 (Facility). It appears the purpose of the Facility was to provide funding for the purchase of the Property from Mrs Mohamat and the construction of a dwelling on the Property.

7    The Facility was secured by a guarantee and indemnity given by Ms Mohamat, securing the debts and obligations of Mr Perry and Mr Greig to a limit of $650,000, and was also to be supported by a first registrable mortgage over the Property (Mortgage).

8    However, because the LandCorp Caveat remained on the title to the Property, the Mortgage was unable to be registered. As a result, in December 2009 the applicant and first respondent entered into a mortgagee deed of covenant (Deed of Covenant). On 4 January 2010, the first respondent withdrew the LandCorp Caveat, which enabled the Mortgage to be registered. On 4 April 2011, the first respondent re-registered the LandCorp Caveat over the Property, in accordance with cl 7 of the Deed of Covenant.

9    On 15 March 2011, Ms Mehmat and the fourth respondent entered into a second, unconditional contract of sale pursuant to which Ms Mehmat sold the Property to the fourth respondent for $560,000 (Second Contract). At the time the Second Contract was entered into the First Contract was apparently cancelled. Further to the Second Contract, Ms Mehmat and the fourth respondent executed a transfer of land (Transfer). On 23 June 2011, the fourth respondent paid the stamp duty that had been assessed on this transfer of land.

10    It appears that before the Transfer could be registered Ms Mohamat subsequently defaulted in respect of certain of her obligations under the Conditions and, on 7 November 2011, the Federal Magistrates Court (as it then was) made a sequestration order against her estate.

11    On 3 August 2012, the second respondent registered a caveat over the title to the Property, claiming an equitable interest in the Property as the trustee in bankruptcy. However, on 3 October 2012, pursuant to s 133(1) of the Act, the second respondent provided a “disclaimer of property” to the applicant in relation to the Property on the basis the property was burdened with various covenants and so was not readily saleable.

12    Following this disclaimer, on 15 October 2012 the third respondent registered a caveat over the title to the Property pursuant to s 188(7) of the Transfer of Land Act 1893 (WA) and ss 133(1AA) and 133(1) of the Act.

consideration

13    The applicant seeks the following relief (proposed orders):

1.    Subject to Paragraphs (3) and (4) below, title in the property at 16 Finch Street, Nickol in the State of Western Australia being all the land described in Certificate of Title Volume 2669 Folio 410 (Property) is vested in Karratha Commercial Properties Pty Ltd (ACN 127 446 753) freed from all encumbrances.

2.    A declaration that the stamp duty payable in relation to the transfer of the Property on or about 15 March 2011 between Anita Mohamat and Karratha Commercial Properties Pty Ltd has been paid, and that no further stamp duty in relation to this transfer is required in order to effect the transfer.

3.    The Plaintiff cause to have registered over the title to the Property a first ranking registered mortgage given by Karratha Commercial Properties Pty Ltd (ACN 127 446 753).

4.    The First Defendant cause to have registered over the title to the Property a caveat claiming absolute interest in the Property as a chargee and the holder of an option to purchase.

5.    The parties take all necessary steps to give effect to Paragraphs 1 through 4 (inclusive).

 6.    Any further or other orders as the Court sees fit.

14    In effect, the proposed orders seek to ensure an outcome, in relation to the Transfer, that would have been effected but for the bankruptcy of Ms Mohamat.

15    Section 133 of the Act relevantly provides:

(1)    Subject to this section, the trustee may, notwithstanding that he or she has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation to it and notwithstanding, in the case of property the transfer of which is required by a law of the Commonwealth or of a State or Territory of the Commonwealth to be registered, that he or she has not become the registered owner of that property, by writing signed by him or her, at any time disclaim the property.

…

(9)    The Court may, on application by a person either claiming an interest in, or being under a liability not discharged by this Act in respect of, disclaimed property, and after hearing such persons as it thinks fit, make an order, on such terms as the Court considers just and equitable, for the vesting of the property in, or delivery of the property to, a person entitled to it or a person in whom, or to whom, it seems to the Court to be just and equitable that it should be vested or delivered, or a trustee for that person.

16    The Court’s power to make a vesting order under s 133(9) is triggered in this case:

    It is apparent that the Property is “disclaimed property” within the meaning of s 133(1) of the Act.

    The fourth respondent is a “person entitled” to the property.

    The applicant is a person “claiming an interest” in the Property, as mortgagee or former mortgagee: McVey v State of New South Wales, in the matter of McVey (Bankrupt) [2012] FCA 455 at [8].

17    The only question which then remains is whether the Court considers it just and equitable that the Property vest in the fourth respondent freed from all encumbrances (apart from a first ranking registered mortgage to the applicant) and that the related orders be made?

18    The intent and effect of the proposed orders is and would be that the situation envisaged by the Transfer, and which would have occurred but for Ms Mohamat’s bankruptcy, will be achieved.

19    I also note that the first and third respondents have filed notices stating that they do not intend to be heard in the proceeding, save as to costs. Further, the first, second and fourth respondents have informed the applicant that they consent to the vesting order being made.

orders

20    I would, therefore, make orders in terms of the proposed orders.

Associate:

Dated:    30 August 2013