Commonwealth Bank of Australia v Brown & Anor A2/1995 [1995] HCATrans 86 (30 March 1995)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A2 of 1995

B e t w e e n -

COMMONWEALTH BANK OF AUSTRALIA

Applicant

and

KEITH REGINALD HAMLIN BROWN and AUSTRUST LIMITED

Respondents

Application for special leave to appeal

BRENNAN J

DEANE J

DAWSON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON THURSDAY, 30 MARCH 1995, AT 10.43 AM

Copyright in the High Court of Australia

MR N.W MORCOMBE, QC: May it please your Honours, I appear for the applicant in this matter. (instructed by N.P. Anderson)

MR A.J. BESANKO, QC: If the Court please, I appear for the respondents. (instructed by Patel & Co and Thomsons)

BRENNAN J: Mr Morcombe.

MR MORCOMBE: May it please the Court, the lower courts have acknowledged several principles of statutory interpretation and it is our submission in this application that the court has failed to take sufficient account of the provisions of section 15 of the Retirement Villages Act 1987 when interpreting section 9(4a) of that same Act.

It is our submission that the lower courts have taken a very narrow view and if granted leave, the applicant would seek to make the ratio of the hearing on appeal in terms of the following, that is that when interpreting a statute which retrospectively removes vested property rights the court must have regard to, and give due weight to, the protection for the property holder. Could I take your Honours to the Act, and in particular to section 9(4a) and also to section 15.

Your Honours will find section 9(4a) at page 72 of the application book and section 15 at page 80. I could start first with section 9(4). Pursuant to that subsection, in the event that a resident of a retirement village pays moneys to the person operating that village, then a charge is created over the land on which that village sits in favour of the person paying the money. We do not seek to agitate in this application the validity of the charge. What we do seek to agitate is the priority of that charge, vis-a-vis a registered first mortgage which was registered not only prior in time to the creation of that charge under subsection (4) but also at a time when the real estate itself was not a retirement village within the meaning of the Act.

DAWSON J: How would you read subsection (4a)?

MR MORCOMBE: Your Honours, we say that subsection (4a) needs to be read in such a way as to interpret "mortgage" as being a mortgage in which the mortgagee has been given notice of the fact that the real estate is a retirement village. Section 15 provides the machinery by which notification of the fact that the real estate is a retirement village can be registered. Importantly, subsection (3) of section 15 provides for the consent of the mortgagee to be obtained prior to the registration of the fact that the real estate forms a retirement village.

So that the scheme in section 15 is that pursuant to subsection (1) of section 15, a note of the fact of there being a retirement village must be notified on the certicate of title.

DAWSON J: That is an odd construction, because the charge which is pursuant to subsection (4a) is to protect the person going into the retirement village, the retiree, if I might call it that. It would be odd that that protection is dependent upon some other person doing something, that is to say giving notice under section 15, the proprietor of the retirement village.

MR MORCOMBE: Your Honour, I accept that totally. What we are looking at here is the priority of that charge as against a prior registered charge and particularly where the mortgagee has had no opportunity, and can have no opportunity, of becoming aware that it may subsequently lose its interest.

DAWSON J: But looking at it from the other point of view, the point of view of the person going into the retirement village, they can do nothing about the notice.

MR MORCOMBE: With respect, your Honour, they can, because if the procedures under section 15 are followed, then there is notification on the title not only of the registered first mortgage but also of the fact that the real estate forms part of a retirement village. If one looks at it from a point of view of what each of the two respective parties can do, the person paying money to the retirement village and thereby obtaining a charge is able to search the title and is able to see what registered interests are already appearing on the title. From the point of view of a lender - and that lender could be someone with their superannuation or an institution, it could be a private individual - if the appropriate endorsement appears on the certificate of title under section 15 at the time when they are advancing the moneys, then they are on notice that section 9(4a) may have created charges in favour of people who are not registered on the title, and it would then be up to that lender to make further inquiries, but the crucial point is that they are on notice after registration has occurred.

DAWSON J: I follow that, but why should the retiree search the title?

MR MORCOMBE: Because, your Honour, that is a step that the retiree is able to take and ascertain the accurate facts.

DAWSON J: But why would the retiree want to ascertain that fact? The notice on the title is not for the retiree's protection.

MR MORCOMBE: No, it is not. The registration of the mortgage is for the retiree's protection, your Honour. It is a question of which of the two entities is able to take any steps in order to ascertain the current position as to moneys that they might advance, and it is a question of balancing interests. What I put to your Honours is that given the fact that this legislation had a retroactive operation, and particularly operating against the Bank, then it is necessary to take into account when interpreting subsection (4a) of section 9 the existence of section 15, the protection that is afforded to the mortgagee by section 15, because if one does not do that then there is, in effect, no protection under section 15. There would be no point, in our submission, in allowing the mortgagee the ability to give or withhold its consent, as is envisaged in section 15.

In this particular case at bar, the Bank had no notification not only of the advance of the moneys, but also of the existence of the operation of the retirement village. It was not in a position to be able to ascertain whether its moneys advanced were at risk nor do anything about it. In my submission, it is a case somewhat similar to the High Court decision in Re Bolton; Ex parte Bean, except applied to a different area. In that case the High Court said that it would take - and perhaps if I could refer your Honours to my summary of argument, in particular on page 3, paragraph 15, where in that case your Honour Justice Brennan used the term "unmistakable clarity", and the submission that I put in paragraph 15 is that the courts endeavour to construe the enactments so as to maintain fundamental freedoms, and I have put in parenthesis, and proprietary rights. Because what you have in the case at the moment is a registered first mortgagee which had no ability to protect its position, whereas the retiree was in fact able to protect its position, if the interpretation of the statute which I seek to advance is accepted. If it please, those are my submissions.

BRENNAN J: Thank you, Mr Morcombe. We need not trouble you, Mr Besanko.

Despite the argument of Mr Morcombe, which has exposed the unsatisfactory drafting of the Retirement Villages Act (SA) as amended, the question is in substance merely one of construction of particular statutory provisions involving no question of general public importance. For that reason it is appropriate to refuse the grant of special leave.

MR BESANKO: If the Court pleases, I ask for costs.

BRENNAN J: What do you have to say to that, Mr Morcombe?

MR MORCOMBE: I cannot resist it.

BRENNAN J: Special leave is refused with costs.

AT 10.57 AM THE MATTER WAS CONCLUDED