Queensland Premier Mines Pty Ltd & Ors v French [2007] HCATrans 158 (24 April 2007)

Last Updated: 2 May 2007

[2007] HCATrans 158

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M3 of 2007

B e t w e e n -

QUEENSLAND PREMIER MINES PTY LTD, FRANK GEORGE BECKINSALE, HELEN MARY BECKINSALE, MARMINTA PTY LTD

Applicants

and

WALTER MURDOCH FRENCH

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON TUESDAY, 24 APRIL 2007, AT 11.51 AM

Copyright in the High Court of Australia

MR C.L. PANNAM, QC: If the Court pleases, I appear with my learned friend, MR M.S. GOLDBLATT, on behalf of the applicants. (instructed by Oakley Thompson & Co)

MR A.C. ARCHIBALD, QC: If the Court pleases, I appear with my learned friends, MR P.J. BICK, QC and MR D.K. SHIRREFS, for the respondent. (instructed by Norton Gledhill)

KIRBY J: Yes, Mr Pannam.

MR PANNAM: The Court has seen the question that was determined by the Victorian Court of Appeal was the meaning and effect of section 62 of the Land Titles Act (Qld), which is a section which deals with the consequences of the registration of the transfer of, amongst other instruments, a mortgage. That section, section 62 of the Queensland Act, is not precisely mirrored in all other jurisdictions in this country, but in substance there are provisions to a similar effect that vary. Nevertheless, it is submitted - - -

HAYNE J: Do you say any of those variations is significant in dealing with a problem of the kind that now arises.

MR PANNAM: We would say no. I simply draw attention to the fact that the language sometimes varies, but the point is exactly the same, in our respectful submission.

KIRBY J: You have a contest about the meaning of the section and the application of three decisions of this Court. You have a refusal to follow the Queensland Court of Appeal which you said to be clearly wrong, and you have a considerable amount at stake in this particular case.

MR PANNAM: Certainly so.

KIRBY J: You say that the issue that is presented is a matter important for the Torrens system and that therefore it should have the attention of this Court, whatever may be its ultimate disposition?

MR PANNAM: Yes, and if for no other reason, for the first time – I think it was 1958 that the Torrens system first came into effect. This is the first decision on a section of this kind that holds that under the transfer provisions, all that is transferred are obligations that are actually created by and expressed in the mortgage, as distinct from obligations that are created by separate documents, agreements, facilities, whatever, that are secured by the mortgage.

In my respectful submission, the point is of considerable commercial significance, it is of general application and would warrant this Court looking at the matter, especially in view of the fact that there does not seem to be any debate below that there are dicta in this Court in at least three of those earlier cases that supported the trial judge’s approach. Indeed, Justice Redlich said as much but said it did not really determine the outcome of the case.

HAYNE J: But how fact-specific is this case? Are the facts of this case such as would take it off into its own little tiny box?

MR PANNAM: In our respectful submission, there is nothing fact-specific about the case at all. It is a simple transfer of a mortgage and the question is what is the effect of section 62 and the equivalent statutory provisions in other jurisdictions in this country given that circumstance? What goes with the transfer? Really our grounds for special leave have been succinctly stated by the learned presiding Judge.

KIRBY J: We might advance the pleasure of hearing from Mr Archibald.

MR ARCHIBALD: This case throws up a very rare factual circumstance, if the Court pleases, namely the circumstance in which the mortgage is assigned but the parties abstained from the signing of the loan agreement which provided the substantive and primary covenants to pay the debts. It is for that reason only that resort has been had by the applicants in this Court to the provisions of section 62. The applicants rely upon section 62 in order to achieve an outcome which the contract of the parties abstain from achieving, namely assignment to the assignee of the mortgage of the loan covenants.

When one fastens upon section 62, as the applicants do, one sees in the provisions of subsection (4) what the applicants have called two limbs, limb one and limb two. It has always been common ground that limb one does not apply. Limb one has the verbiage which has the consequence of fastening by reason of the registration of the transfer rights to sue on the terms of the mortgage. So it has been common ground throughout the litigation that the loan agreement covenants were not terms of the mortgage.

Resort is then had by the applicants to what they call limb two. Limb two includes within the rights transferred by registration of the instrument the right “to recover a debt or enforce a liability under the mortgage”. It is upon those words, “a liability under the mortgage”, that the case really revolves. The Court of Appeal, in our submission, was clearly right in determining that the loan agreement covenants were not covenants which gave rise to a liability under the mortgage. They were - - -

KIRBY J: They may be but they have said that they regarded the opinion of the Court of Appeal of Queensland in this respect as clearly wrong. We therefore have a diversity of opinion in the intermediate courts of this country and it is unseemly that Queensland courts will, being bound to, follow the Queensland court and that the Victorian courts will, being bound to, follow the Court of Appeal of this State and other courts in between will decide until we or the Parliament fix it up.

MR ARCHIBALD: In our submission, no. There is no diversity of view amongst intermediate Courts of Appeal and the way in which that concept is ordinarily understood and applied in this Court. As the learned President observed in his Honour’s reasons, what was said in Julong in the reasons of Justice Atkinson was a matter of assumption. The point was not in issue before that court, it was not debated before that court, and what her Honour did in her Honour’s reasons was simply in one line to articulate what are essentially the words of the section and refer to the decision of Naylor in this Court as an authority supporting that proposition.

KIRBY J: Yes, but his Honour says at paragraph 52:

To the extent that the Court in Julong reached a different conclusion from my own, I would decline to follow the decision as, for the reasons I have given, I regard the conclusion as clearly wrong.

So his Honour obviously thought that they had or may have given effect to the different view from the one he adopted, so we have a diversity of opinion. Could there be a case more interesting? We have an issue arising under the Torrens system that has not arisen in 150 years.

MR ARCHIBALD: The point may have been interesting before the decision of this Court in Measures v McFadyen 97 years ago. Measures v McFadyen determined, in our submission, quite authoritatively, and it has never been doubted since, that the one thing that sections of the kind of which section 62 is an example do not do is to extend beyond the substantive operation of the parties’ contract the rights which were otherwise available to be dealt with.

All that section 62 does, according to Justice Isaacs - and the other Justices of the Court agreed with his Honour – is perfect that which lies within the ambit of the underlying transaction and does not have any substantive additional operative effect. Here what - - -

HAYNE J: Is that consistent with Breskvar v Wall and later notions of not registration of title but title by registration, Mr Archibald?

MR ARCHIBALD: It is precisely, your Honour, because it is universal throughout the nation. What the original form of these sections shows is that the language that we see in subsection (4) of the current Queensland Act was attributable to the circumstance then existing that debts and choses in action were generally not assignable under the law. These provisions were enacted before the passage of Judicature Acts in this nation. This is exactly what Measures v McFadyen is authority for, in our submission. The only reason that one has those provisions in these sections is to protect against the potentiality that because of the rule against assignability of debts and choses in action, the underlying transaction by which the parties assigned a mortgage may not be achieved. That is why the provisions are there to perfect the transaction.

Here the original legislation in Queensland was passed in the 1860s, hence those words. In 1876 the Queensland Judicature Act was passed and section 5(6) enacted a general provision whereby debts and choses in action became assignable under the common law. Hence the reason for the precautionary words and the presence of these provisions in the Torrens Title legislation was overcome, but the provisions sat there in the same form, stripped away subsequently from the protective words, “notwithstanding that the debt or liability may be ineffective under the general law”.

That is the context in which Measures v McFadyen was decided. So that one can see clearly, in our submission, what the reason for these provisions is, why they were introduced in the 1860s around the nation, why Measures v McFadyen concluded rightly that those provisions did not have any additional substantive effect, and the position has remained the same since 1910. Though as interesting as one might first think, this kind of point may be, in our submission - - -

KIRBY J: We have a duty here. They have copied our Torrens system more than any other Australian legal invention. I saw a delegation the other day from Mongolia -they are copying it. Ghana has copied it, everyone has copied it. We have a duty to get it right.

MR ARCHIBALD: Where our law and our Torrens system legislation has stood in place for 100 years without challenge or doubt, there is, in our submission, no occasion or no reason to succumb to any temptation that the Court might otherwise entertain to look at this somewhat arcane remote provision in factual circumstances which will very rarely, if ever, occur.

KIRBY J: Your reference to “arcane” has made it compellingly interesting.

MR ARCHIBALD: Arcane points are not necessarily of any importance whatsoever. They may be of academic interest but not of general importance. The three decisions of the - - -

KIRBY J: It is the difference of view between the two intermediate courts that attracts my notice because that is a matter which this Court under the Constitution would anyway regard as important, but it is in the Judiciary Act.

MR ARCHIBALD: But there is not, in our submission, a substantive difference of view. First, as the reasons in the Court of Appeal in this case show, it is entirely unclear what the underlying factual circumstances of covenants and arrangements were in that case. It is far from clear that they were akin to this decision at all. One simply cannot determine. Secondly, the point was not in issue. It was not a matter that was determined by the court or needed to be determined by the court. It was not argued before the court and it is certainly not the subject of any considered evaluation by Justice Atkinson.

So that, although one can see words there, they do not reflect a considered assessment by the Queensland court of the issues and problems which sets it against the decision in the Court of Appeal in this case. That is why, in our submission, entirely properly and appropriately, the learned President in this case was immediately dismissive of the Julong decision. It was not a matter which commanded attention or deliberation or assessment. It was a matter that could be immediately put to one side. So in those circumstances the presence of those stray words is not an occasion which should lead this Court to entertain the matter.

So far as the three decisions of this Court that are referred to are concerned, I have already dealt with Measures v McFadyen. Naylor is a case which is strongly in favour of the position we adopt, for in Naylor there was a refusal to treat as assigned, by virtue of the registration of the transfer, liabilities under a guarantee, notwithstanding that the guarantee lay within the mortgage itself. Here we have a circumstance where the transaction in the covenants with which we are concerned lie outside the mortgage. Naylor was concerned with a matter that lay inside the mortgage and, notwithstanding that it was inside the mortgage, it was not assigned because it was collateral. It is entirely consistent with – and, indeed, our case is even stronger than - the circumstances in Naylor because our covenants lie outside the mortgage.

The fundamental error of the primary judge, in our submission, was to treat the decisions of the High Court which your Honours considered as establishing the principle that the subject covenants are assigned if they are intimately connected with the proprietary interest which is the subject of the
mortgage. Her Honour derived that principle from the High Court cases which she considered. That feature, an intimate connection, which is akin to touching and concerning, is a necessary but not a sufficient foundation for rights to be effectively assigned under the mortgage transaction. In each of the three High Court decisions the covenants lay in the mortgages. Here we are concerned with covenants outside the mortgage. The High Court was therefore not addressing in any of those cases, Naylor, Phillips or Measures, the nature of the collateral feature which presents itself here.

So one needs two things to achieve assignment under section 62: one, that there be an intimate connection and, two, that it be under the mortgage. The three decisions of this Court stand for the first proposition. We do not gainsay those in any respect; they are not in controversy. The problem here is that the covenants are not under the mortgage and the Court of Appeal, in our submission, was clearly right to conclude that they were not under the mortgage. None of that involves any controversy in relation to any of the decisions in this Court, nor, in our submission, is there any substantial controversy between what the Court of Appeal in this case determined and what was mentioned, so to speak, in passing in the Julong Case.

KIRBY J: If we were minded to grant special leave contrary to your arguments, there is a mention of a point concerning rates and land tax. As I understand it, that is not being pressed in this Court. Is that correct? Is that your understanding?

MR ARCHIBALD: It is a little unclear to us.

KIRBY J: We had better get that clear from Dr Pannam.

MR ARCHIBALD: Two things about that. First, on the rates and taxes point, it is squarely within the decision in Measures v McFadyen because it concerns a completed past breach before the transfer of the mortgage and on Measures v McFadyen principles it would not be transferred even if it was within the mortgage. So on the merits, in our submission, there can be no substantial argument but, more than that, throughout the course of the proceeding there were concessions made about that point by the applicants and, in our submission, it is not a point which should be entertained by this Court.

KIRBY J: Thank you, Mr Archibald. Dr Pannam, what do you say about that last point? I am not entirely sure whether you are pressing that issue in this Court.

MR PANNAM: Both before the primary judge and in the Court of Appeal we accepted that the rates and taxes argument went with the substantive
question. In other words, if we won, we won all of the points; if we lost, we lost all of the points. Our learned friend raises in the outline something different, and I have to explain. One of the points that we advanced in the outline was that even on the Court of Appeal’s decision the rates and taxes created obligations in the mortgage itself. So the argument was put that even if the Court of Appeal was right, then the rates and taxes stand in a different situation. We do not press that for this reason. If we lose on the principal point, the amounts of money that are outstanding just do not merit a consideration of that separately.

HAYNE J: Can I understand that by reference to the draft notice of appeal. If you go to 110 and following of the application book you have your draft notice. Are there some grounds that could or should or might come out? In particular, should 7 come out at page 111?

MR PANNAM: In our respectful submission, no. That should stay because the case has been argued below on the basis that the rates and taxes issue in effect was quite separate, and if we won, we won all of the points; if they won, they won all of the points. So that, in our respectful submission, if the Court is to entertain the appeal, it ought to deal with all of those issues. They are not separate from the main point; they are simply a coat-tail point.

KIRBY J: Anyway, the marginal cost of the issues is very small. It is really just part of the general argument, it would seem.

MR PANNAM: Yes.

KIRBY J: If it is in McFadyen, then we will be looking at McFadyen anyway.

MR PANNAM: ....., yes.

KIRBY J: Thank you. Is this a one-day matter, Dr Pannam?

MR PANNAM: I would have thought so, your Honour.

KIRBY J: Do you agree with that, Mr Archibald?

MR ARCHIBALD: Yes, one day.

KIRBY J: Very well. Special leave is granted in this application. The Court notes that it is a one-day matter. It will probably be committed to a Full Court. Justice Hayne points out that it may come up quicker than you expect.

AT 12.12 PM THE MATTER WAS CONCLUDED