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Bank of Queensland Limited v Dodrill


[2011] QCA 130

Reported at [2011] 2 Qd R 541






Court of Appeal


General Civil Appeal



17 June 2011




11 March 2011


Margaret McMurdo P, Muir JA and Daubney J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made


1. The appeal be allowed with costs.

2. The declaration and orders made in the proceeding on 11 October 2010 be set aside.

3.  The respondents pay the appellants’ costs of the proceeding at first instance.

It is declared that the first appellant is and, at all material times, was entitled to be paid the amount of $620,695.63 from the surplus arising from the sale of the subject land in priority to the respondents.


EQUITY – GENERAL PRINCIPLES – PRIORITY AND NOTICE – PRIORITY – PRIORITY BETWEEN PRIOR LEGAL AND SUBSEQUENT EQUITABLE INTEREST – where the appellants claimed to be entitled to surplus proceeds of sale of real property at Toowong held in trust by the respondents’ solicitors – where the respondents claimed to be entitled to the monies because of writs of execution registered over the land prior to its sale – where the appellant Bank was chargee under registered charges and sought to have the monies paid to Mulhern as directed by the receivers – where the appellants submitted that the surplus should be characterised as a future asset falling within the purview of the Bank’s charges which were released only with respect to the land itself – where the appellants submitted that their equitable proprietary interest took priority over that of the respondents because it did not arise by act of the debtor after registration but by operation of law and as a consequence of crystallisation of the charges – where the respondents argued that the charges had been released – where the respondents submitted that there was no surplus proceeds of sale to which the Bank’s charges could attach – whether the Bank’s charges attached to surplus proceeds – whether the appellants’ interest in the surplus proceeds prevailed over the respondents’ interest

Agnew v Commissioner of Inland Revenue [2001] 2 AC 710; [2001] UKPC 28, distinguished

Black v Garnock (2007) 230 CLR 438; [2007] HCA 31, considered

Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33, cited

Dodrill & Anor v Bank of Queensland & Ors [2010] QSC 371, not followed

Federal Commissioner of Taxation v Everett (1978) 21 ALR 625; [1978] FCA 39, considered

Ferrier v Bottomer (1972) 126 CLR 597; [1972] HCA 11, considered

NZI Capital Corporation v William Hamilton As Liquidator of Rex Developments Pty Limited (In Liquidation) [1995] FCA 1096, considered

Re Androma Pty Ltd [1987] 2 Qd R 134, cited


A B Crowe SC, with B T Porter, for the appellants

R Perry SC, with C Coulsen, for the respondents


Dibbs Barker for the appellants

Lynch Morgan Lawyers for the respondents

[1] MARGARET McMURDO P:  I agree with Muir JA’s reasons for allowing this appeal. 

[2] The first appellant, Bank of Queensland, took two charges on 27 March 2002 and 4 February 2003, for present purposes in like terms, over the property of the third appellant, Mulhern Constructions Pty Ltd to secure substantial debts, now in excess of $12.5 million.  The effect of those charges was that fixed charges attached to the surplus from the proceeds of sale in September 2010 of Mulhern Constructions’ real property situated at 3 Sherwood Road, Toowong, after it met its obligations under its mortgage to Bankwest.  This was so even though, well before settlement, Bank of Queensland released its mortgage and charges over the real property situated at 3 Sherwood Road.  And it was so, even though on 7 May 2010, well before the contract of sale of 3 Sherwood Road was executed or completed, the respondents had registered enforcement warrants over the title to 3 Sherwood Road.

[3] This conclusion followed from two things.  First, as the primary judge recognised, Bank of Queensland’s releases of charge were only partial releases; they were limited to the real property at 3 Sherwood Road;[1] they did not include a release of charges over future interests such as the surplus arising from any subsequent sale of 3 Sherwood Road.  The primary judge rightly recognised that the surplus moneys constituted “‘future’ assets subject to the Bank’s charges”.[2]  Second, it followed from the wide definition in the charges of “property”.  The charge of 27 March 2002 defined ‘property’ in Part 3 (Amendment of General Conditions) as meaning “assets and undertakings, both present and future, related to, connected with, the real property described as [3 Sherwood Road].”  The charge of 4 February 2003 defined ‘property’ in Part 17 (Understanding the Charge) (a) (Definitions)[3] as specifically including future assets under the charge. 

[4] The second point supporting the conclusion I have reached was not appreciated by the primary judge, no doubt because it was not clearly brought to his Honour’s attention.  The Bank of Queensland’s charges over the surplus were fixed, not floating.  The wide definition of “property” under the charges, combined with the wide description of what constituted a “Fixed Charge” in Part 2 (This Charge) (c) (Fixed Charge)[4] meant that the Bank of Queensland had fixed charges over Mulhern Constructions’ benefits and interests arising from future contracts, including the surplus which ultimately arose here from the sale of 3 Sherwood Road.  The Bank of Queensland’s fixed charges dated 27 March 2002 and 4 February 2003 over that future interest took priority over the respondents’ interests which arose only much later when, on 7 May 2010, they registered enforcement warrants over the title to 3 Sherwood Road.

[5] As to the further contentions raised by the respondents in their written submissions filed by leave after the appeal hearing, these were not raised at first instance or in the appeal.  But in any case, I agree with Muir JA’s reasons for rejecting them.

[6] It is true that the appellants did not actively advance at first instance the construction of the charges on which they have succeeded in this Court.  But the respondents have vigorously denied the Bank of Queensland’s entitlement to the surplus and enthusiastically asserted their rights to it both at first instance and on appeal.  They have not contended that had the appellants raised this argument more assertively at first instance and it met with the success it deserved, they then would not have contested that decision in this Court.  Their written submissions on the matter filed by leave after the appeal hearing suggest the contrary.  In the circumstances, the appellants should have their costs both of the appeal and of the proceeding below.

[7] I agree with the orders proposed by Muir JA.

[8] MUIR JA:  Introduction

The appellants appeal against orders of the primary judge made on 11 October 2010 after a hearing in the applications jurisdiction concerning the entitlement to the balance of proceeds of sale of two parcels of land sold by the second appellants who were receivers appointed by the registered mortgagee of the land, Bankwest Ltd.  The first and second respondents (“the respondents”) claimed entitlement to the moneys pursuant to writs of execution issued on 6 May 2010 and registered on the title to the land on 7 May 2010, prior to the sale of the land.

[9] The respondents were enforcement creditors of the registered proprietor of the land, the third appellant Mulhern Constructions Pty Ltd (“Mulhern”), which was in receivership.  The second appellants are the receivers and managers of Mulhern.  The first appellant, Bank of Queensland Limited, claimed entitlement to the moneys as chargee under registered charges 870041 and 930437 granted by Mulhern to the Bank. 

[10] There were two central issues for determination by the primary judge:

(1)whether the Bank, in releasing the land from its charges, also released from the charges any future surplus arising from the sale of the land (“the Surplus”); and

(2)if not, whether the interest of the Bank in the Surplus under the charges gave it priority over any interest in the Surplus of the respondents as holders of the registered enforcement warrants.

[11] The primary judge found for the appellants on the first issue, holding that the Surplus constituted “future assets” subject to the Bank’s charges.  The second issue was determined against the appellants on the basis that the Bank’s interest in the Surplus arose when its floating charges crystallised after the registration of the writs of execution.  In the primary judge’s opinion, the interests of the respondents under the registered writs of execution were subject only to prior legal and equitable interests in the land.  The focus of the argument before the primary judge was whether the Bank’s charges, said to have been floating, had crystallised before registration of the warrants of execution.  On appeal, the Bank argued that the charges were, in fact, fixed.

[12] The appellants contended that the primary judge  erred in resolving the second issue against them for reasons either not advanced at first instance or adverted to only in passing.  The respondents challenged the primary judge’s findings on the first issue.

[13] Charge 870041 and 930437 were respectively created on 27 March 2002 and 4 February 2003 and registered on 20 June 2002 and 20 March 2003.  Also on 27 March 2002, Mulhern gave the Bank a mortgage over the land, which was then registered.

[14] Pursuant to a partial refinancing, the following transactions took place:

(a) there were partial releases of the property secured by the first and second charges;

(b) the registered real property mortgage was released;

(c) Bankwest advanced $4.8m to Mulhern which moneys were applied in reduction of debts owed to the Bank by Mulhern under a related company; and

(d) Bankwest took a charge to secure its advance, limited to Mulhern’s interest in the land and receivables generated by it. 

[15] On 7 May 2010, the enforcement warrants were registered over the land.  They were based on judgments against Mulhern in favour of the respondents, each in the amount of $334,875.  The second appellants were appointed receivers and managers of Mulhern’s assets and undertaking on 24 May 2010.  Mulhern then owed the Bank $12.3m.  On 25 May 2010, the second appellants were appointed receivers and managers of the land under the Bankwest charge.  They took possession of the land and sold it.  The Surplus was paid into the respondents’ solicitor’s trust account pending agreement or the court’s determination as to its disposition.

The Bank’s charges

[16] For present purposes, except to the extent identified below, the Bank’s charges were identical in terms.  Both were fixed and floating.  The general conditions of each instrument of charge relevantly provided:


(a) Security

To secure payment to us of the secured money you charge in favour of us all of your right, title and interest in the property.

(b) What the Charge Secures

The charge is security for payment to us of:

  • the secured money; and
  • interest on the secured money; and
  • all or any other amounts to be paid to us under this charge or under any other agreement between you and us, or any agreement about which you have given us a guarantee.  This includes agreements entered into in the future.

(c) Fixed Charge

This charge is a fixed charge over:

  • real property; and

  • the benefit of any contract or agreement to which you are a party; and
  • any right to recover money or property (other than book debts) by legal proceedings; and

  • Any other personal property that is not acquired for disposal in the ordinary course of your business; and
  • Interests in any of the property, assets or rights described above.

(d) Floating Charge

This charge is a floating charge over the rest of the property.

(e) When does the floating charge become fixed?

The floating charge will become fixed:

  • over all the assets subject to the floating charge if:

- any step is taken to wind you up; or


  • over any asset subject to the following charge if:

-  that asset is subject to execution or a Court process; or


[17] The definition of “property” in Part 17 of the General Conditions in the instrument of charge No. 930437 was:

“‘property’ means all your assets and undertakings, both present and future, including but not limited to, uncalled and called but unpaid capital (including premiums) on your shares.  If you are a trustee, the property includes all assets and undertakings, both present and future, held by you or to which you are entitled as trustee of the trust;”

[18] “Property” was defined in the other instrument of charge as:

“ … all your assets and undertakings, both present and future, related to, connected with, the real property described as Lot 9 on Registered Plan 218793 County of Stanley Parish of Enoggera, and the business carried on at that property.”

The competing contentions of the parties

[19] Counsel for the appellants argued that the benefit of the contract for the sale of land (“the Contract”) was caught expressly by paragraph (c) of Part 2 of each instrument of charge and that, on completion of the Contract, the Surplus continued to be caught.  He submitted that, if it was not within “the benefit of any contract or agreement to which [Mulhern was a party]”, it fell within “any other personal property that is not acquired for disposal in the ordinary course of [Mulhern’s] business”. 

[20] Counsel for the respondents argued that the fixed charge did not apply to the proceeds of sale contending, by reference to the definition of “property”, that the unconditional releases of charge would have had the effect of discharging the fixed charges over the proceeds if the appellants’ argument was otherwise correct.  Senior counsel for the respondents submitted that acceptance of the appellants’ contention would bring about an odd practical result.  In order to enable the sale of the land to take place the purchaser paid the Surplus to the respondents in return for which the respondents released the warrants.  It was argued that if the Bank was entitled to the Surplus, it, and not the respondents, would be receiving the moneys paid in return for release of the warrants.  That, it was contended, would not be consistent with the terms of charge, the operation of the charge or “the system under which an execution warrant creditor can proceed”. 

[21] A related argument, advanced in written submissions filed by leave after the hearing of the appeal, was that there were in fact no Surplus proceeds of sale to which the Bank’s charges could attach.  The argument proceeded as follows.  Section 61(2)(b) of the Property Law Act 1974 (Qld) implies in every contract for the sale of land an obligation on the part of the vendor to deliver a conveyance of the land free of encumbrances.  Consequently, the phrase “surplus proceeds of sale” must describe the moneys remaining from the sale of an asset after discharge of all encumbrances and the making of any contractual adjustments.  No proceeds of sale can exist until after the sale has been completed.  The registered enforcement warrant was an encumbrance as, by operation of s 117 of the Land Title Act 1994 (Qld), the warrant burdened and affected the land.

[22] Reference was made to provisions of the Contract stating the respective obligations of vendor and purchaser on settlement.  It was argued that, in consequence of these provisions, no obligation to pay the purchase moneys arose until the delivery of a transfer “free from encumbrances” and this was achieved by the prior delivery of requests for the withdrawal of the enforcement warrants to the purchaser.  The price for such delivery was the provision of a bank cheque for the benefit of the respondents.  As the conveyance of the land was not complete until the registration of the transfer free from encumbrances, no surplus proceeds of sale came into existence and the appellant’s charges did not attach to the cheque handed over to the respondents prior to the completion of the conveyance.

[23] Other contentions were:

(a) Part 2 of the general conditions of each instrument was intended to create a fixed charge only over existing property;

(b) If there was a fixed charge over future property it could attach, at the earliest, on the date of execution of the Contract of the land and that date was after registration of the enforcement warrants.

(c) If there was a fixed charge over the benefit of the contract of sale it would “prevail over Bankwest’s purchase money security interest conferred by its later registered charge, contrary to law.”

(d) The appellants’ construction placed an impermissible fetter on the operation of s 117 of the Land Title Act 1994, contrary to public policy.

The scope and effect of the Bank’s fixed charges

[24] There is, in fact, nothing odd or unexpected in the result for which the appellants contended.  Putting to one side the possible application of Black v Garnock,[5] if the fixed charges caught the benefit of the contract of sale of the land or “personal property” in the form of money, the Bank’s interest as chargee would not have been defeated by the registration of the warrants of execution.  The instruments of charge pre-dated registration of the warrants of execution and the fixed charges created by the instruments attached to future property the instant the future property came into existence. [6]   That was before Mulhern or any third party could acquire any interest in or rights in respect of it in priority to that of the Bank and that was so whether the future property in this case is considered to be the benefit of the contract of sale, or the Surplus.  The rights conferred on the respondents by the registration of the warrants were therefore always subject to the interests of the Bank as chargee.

[25] The path by which the Bank acquired its interest in the Surplus in such a way as to defeat interests created after the dates of the instruments of charge is lucidly explained in the reasons of Deane J in Federal Commissioner of Taxation v Everett[7] as follows:[8]

“27.The effect of a purported immediate assignment of an expectancy or possibility was concisely stated in Jordan’s Chapters on Equity in New South Wales (6th ed., at pp. 51-52) in words which warrant repetition: ‘. . . a purported assignment of a mere expectancy (in the sense of the chance of becoming entitled under the will or intestacy of a person who is still living), or of property to be acquired in the future, is inoperative as an assignment, and has no effect unless made for valuable consideration. If there be consideration, it will operate as an agreement to assign the property when acquired, or to hold it in trust (the latter if the whole of the consideration has been satisfied) and this agreement will be binding on the parties as from its date and binding on the property in equity (although not at common law), if and when it is acquired by the assignor, if it is of such a nature and so described as to be capable of being identified. In the interval between the making of the agreement and the acquisition of the property by the assignor, the interest of the assignee is not contractual merely, but he has, as between himself and the assignor, a prospective interest in the property to be acquired which has some of the incidents of a proprietary right.’ (References to authority have been omitted.) (at p50)

  1. The nature of the intended assignee's interest pending acquisition by the intending assignor of future property the subject of a purported immediate assignment for valuable consideration which has been fully satisfied is of some importance in the present matter. Even pending acquisition by the intending assignor, the intended assignee enjoys more than the traditional concept of an equitable right in personam against the assignor. The relevant equitable principle does not depend upon the possibility of a court of equity decreeing specific performance with the consequence that the assignee’s beneficial interest could not arise until after acquisition by the assignor. The relevant principle is that equity considers as done that which ought to be done. The consequence is that the beneficial interest in the property the subject of the assignment never vests in the assignor when the property is acquired by him. He holds it immediately in trust for the assignee.” (emphasis added)

[26] The respondent’s contention that the fixed charge did not apply to future property cannot be accepted.  The property listed in paragraph (c) of Part 2 describes types or categories of property, generally without attaching any temporal qualification or limitation.  Where a more detailed description is necessitated by the nature of the property referred to, as is the case with “book debts” and “other personal property that is not acquired for disposal in the ordinary course of business”, it is apparent that the description includes present and future acquired property.

[27] It is significant that the floating charge is given only “over the rest of the property”.  In so far as personal property is concerned, that must refer to “personal property not acquired for disposal in the ordinary course of business” as all other personal property is caught by the description of the personal property the subject of the fixed charge.

[28] If there were any doubt about whether future property was intended to be caught it is removed by the definition of “property” which includes “both present and future” property.  There is no good reason why this definition should be disregarded when construing the meaning of “real property” and “personal property” in clause (c).  Paragraph (a) of Part 2 states that all the company’s “right, title and interest in the property” is charged.

[29] The respondents contended that if clause 2(c) of the Bank’s charges operated as the appellant’s contended, the Bank would have an interest in “the gross proceeds of sale” in priority to that of Bankwest.  This, it was submitted, would be contrary to the principle stated in Sogelease Australia Ltd v Boston Australia Ltd.[9]  For present purposes the principle referred to is adequately described in the headnote:

“If a loan is made to enable completion of a purchase on the understanding that a charge or security will be given over the purchased property, the purchaser acquires legal title to the property subject to that security; and a charge held by a prior chargee over the assets of the purchaser is a charge over the purchased property subject to the security with the consequence that the prior chargee’s charge will rank behind the lender’s security.”

[30] If the principle applied, it would have affected the respective rights of the Bank and Bankwest, but it had no bearing on the respective rights to the surplus of the Bank and the respondents.

Were the charges released?

[31] I will now address the respondents’ contention that fixed charges were released.  The “notifications of discharge or release of property from a charge” are relevantly identical.  Under the heading “discharge extent”, the property the subject of the release from charge 870041 was identified as:

Property released

Description of the property released

3 Sherwood Road, Toowong Qld 4066, referred to as

Lot 9 on RP 218793-Title Reference 17154064


[32] It was argued on behalf of the respondents that as the instruments of charge did not make a distinction between the land and its proceeds of sale, each charge took effect as “a single indivisible charge” over both the land and its proceeds of sale.  Agnew vCommissioner for Inland Revenue[10] was cited as authority for this proposition.  Agnew does not assist the respondents.  The question for determination in Agnew was whether a charge over the uncollected book debts of a company, which left the company free to collect them and use the proceeds in the ordinary course of its business, was a fixed charge or a floating charge.  In paragraph 42 of the judgment of the Privy Council, delivered by Lord Millett, it was said:

“Their Lordships turned finally to the questions which have exercised academic commentators: whether a debt or other receivable can be separated from its proceeds; whether they represent a single security interest or two; and whether a charge on book debts necessarily takes effect as a single indivisible charge on the debts and their proceeds irrespective of the way in which it may be drafted.”

[33] In the next paragraph of the judgment the difference between a book debt and other types of assets is explained:

“43. Property and its proceeds are clearly different assets.  On the sale of goods the seller exchanges one asset for another.  Both assets continue to exist, the goods in the hands of the buyer and proceeds of sale in the hands of the seller.  If a book debt is assigned, the book debt is transferred to the assignee in exchange for money paid to the assignor.  The seller’s former property right in the subject matter of the sale give him an equivalent property right in its exchange product.  The only difference between realising a debt by assignment and collection is that, on collection, the debt is wholly extinguished.  As in the case of alienation, it is replaced in the hands of the creditor by a different asset, viz. its proceeds.”

[34] The following paragraph provides a further explanation of why principles applicable to assignments of, or charges over, book debts may have little relevance to the principles applicable to real property charges:

“46. While a debt and its proceeds are two separate assets, however, the latter are merely the traceable proceeds of the former and represent its entire value.  A debt is a receivable; it is merely a right to receive payment from the debtor.  Such a right cannot be enjoyed in specie; its value can be exploited only by exercising the right or by assigning it for value to a third party.  An assignment or charge of a receivable which does not carry with it the right to the receipt has no value.  It is worthless as a security.  Any attempt in the present context to separate the ownership of the debts from the ownership of their proceeds (even if conceptually possible) makes no commercial sense.”

[35] NZI Capital Corporationv William HamiltonAs Liquidator of Rex Developments Pty Limited (In Liquidation),[11] upon which counsel for the respondents also relied, was also concerned with the release of book debts.  Like the present case and others referred to by counsel, the scope of the instrument releasing property from a charge depended on the wording of the release and the nature of the relevant property. 

[36] Counsel for the respondents submitted that the respondents’ argument was supported by the following passage from Goode on Legal Problems of Credit and Security:[12]

“A question of some importance is whether the effect of the security agreement is to create a single, continuous security interest which moves from asset to proceeds or two entirely distinct security interests, the security in the original asset at the time of the security agreement and the security in proceeds at the time they come into the hands of the defendant.  There are compelling reasons for treating the security interest as an indivisible and continuous security interest which moves from the original asset to the proceeds.  To treat the security interest in proceeds as a separate security interest coming into existence upon their receipt by the debtor could have implications for the priority of the security interest, if priority dated from the date of creation.”

[37] The learned author, however, acknowledges in paragraph 1-65 that such generalisations must give way to contrary contractual terms.  Here the ambit of the charges are expressly stated and, by the relevant time, there was no fixed charge over the real property itself.

[38] The subject releases are clear in their terms.  In each case the release is of a specified parcel of real property.  There was nothing in the circumstances in which the releases were executed to suggest that they should not be given a literal construction.  The contrary was the case.  Mulhern continued to owe the Bank a substantial sum of money and the Bank had no incentive to do more than release the real property.  Ferrier v Bottomer,[13] in which a later payment for goods previously sold was held to be within the scope of the subject charge, suggests that the Court should not be astute to limit the operation of a deed of charge. 

The consequences, if any, of the payment of the Surplus by the purchaser directly to the respondent’s solicitors

[39] There is no substance in the contention that the Bank’s rights (if any) to the Surplus were defeated by the fact that the purchaser of the land paid the Surplus directly into the respondents’ solicitor’s trust account.  The Bank’s interest in the Surplus arose when the Contract was entered into or, conceivably, when payments were made which created the Surplus.  There was never a point at which any part of the Surplus was held by anyone free of the Bank’s interest.  The principles discussed in Everett make that plain.  In addition to that, the Surplus was paid into the respondents’ solicitor’s trust account pursuant to undertakings, including an undertaking, that it not be disbursed unless “an order is made by a court … declaring the beneficial ownership of such funds.”

[40] The respondents’ argument to the effect that there was no Surplus and thus nothing to which the Bank’s charges could attach ignores the arrangement between the parties.  Before settlement under the Contract and even before the Contract was entered into, the respondents were aware that the Bank claimed to have charges over the balance of the proceeds of sale of the land, which had precedence over their rights as execution creditors.  The solicitors for the Bank proposed to the solicitors for the respondents that the Surplus proceeds of sale be paid into court pending resolution of the dispute between the parties as to their respective entitlements.  The Bank’s solicitors intimated that if the proposal, which included the withdrawal of the respondents’ enforcement warrants, was not accepted, the proposed Contract of sale would not be entered into and Bankwest would be left to exercise its power of sale under its security. 

[41] On 9 September 2010, the solicitors for the respondents undertook to the Receivers and the Bank, in effect, to pay the sum of $733,179.06 “or, if the surplus available from the sale of the property is less than that sum, that surplus” into their trust account and not to disburse it without the written consent of the Receivers and the Bank or without a court order declaring the beneficial ownership of such moneys and accretions. 

[42] The solicitors for the Bank and the Receivers gave a similar undertaking in respect of any Surplus proceeds of sale in excess of the $733,179.06 to be paid into the trust account of the respondents’ solicitors.  Settlement under the Contract took place on 17 September 2010 and $620,695.63 was paid into the respondents’ solicitors trust account to be held pursuant to the undertaking given by those solicitors.

[43] The appellants object to the respondents’ arguing that no surplus actually arose.  The argument was not advanced at first instance or on the hearing of the appeal.  There is merit in the objection as I consider that “had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding.”[14]  It is unnecessary, however, to decide the objection.

[44] The payment of the $620,695.63 was made subject to the prior agreement between the parties as to the manner in which it would be held, namely, in the absence of agreement between the parties as to its disposition, to be disposed of consistently with the findings of a court as to the Bank’s and the respondents’ respective entitlements.  Not only that, the undertakings given by the solicitors for the parties treated the balance proceeds of sale, before deduction of the moneys claimed by the respondents, as “the Surplus”.  The plain effect of the arrangement entered into between the parties was to have the court decide the entitlement to those moneys on the assumption that they were the balance proceeds of sale, subject to the Bank’s charges or to a prior entitlement of the respondents as holders of the registered warrants of execution.

[45] Even if, contrary to Secure Funding Pty Ltd v Doneley[15] and the implicit findings of the primary judge, the construction of the statutory provisions considered in Black vGarnock[16] is directly applicable to ss 116-120A of the Land Title Act 1994, the respondents cannot succeed on the arguments under consideration.

[46] It has long been accepted in this State that the registration of a writ of execution on the title to land, although preventing the execution debtor from dealing with the land, did not confer on the execution creditor any interest in or charge over the land or any right which would prevail over that of the holder of a prior proprietary interest in the land.[17]

[47] In Black v Garnock, the High Court, by a majority, held that the effect of ss 105A, 105B and 105C of the Real Property Act 1900 (NSW) was that the registration of a transfer pursuant to a sale under a writ of execution “leaves the transferee holding the land transferred ‘free from all estates and interests except’ those specified in s 105B(2).  Consonant with the fundamental premise of the Torrens system of land title, the transferee pursuant to a sale under a writ obtains a particular kind of title by registration.”  The High Court reversed the decision of the New South Wales Court of Appeal, upholding the decision at first instance granting an injunction in favour of purchasers of the land, who claimed an equitable interest arising from their status as purchasers, restraining the appellant judgment creditors from executing their writ of execution.

[48] The High Court concluded that, given the language of s 105A, there was no warrant for excluding from the prohibition in that section against the registration of dealings within the period of six months from the registration of the writ of execution any dealings other than those specifically excluded from the prohibition by sub-section (1).

[49] If Black v Garnock governed the construction of the relevant provisions of the Land Title Act 1994, it is arguable that the respondents would have defeated the prior interests of the Bank under its charges by executing the warrants.  The purchaser from the Sheriff would have gained an indefeasible title and the respondents may have been entitled to the balance proceeds of sale.  But that is not what happened.  The respondents were faced with the threat that, unless agreement could be reached with the Bank and the Receivers, the land would be sold by Bankwest under its security.  Under the arrangement entered into there was no Sheriff’s sale.  The land was sold by the Receiver and the warrants were released.

[50] None of the majority in Black v Garnock concluded that the holding of an execution warrant confers an interest in the subject land.  The majority held that, by operation of the relevant statutory provisions, the holder of the prior unregistered interest was not able to restrain the execution creditor from executing the writ and that a purchaser from the Sheriff could obtain a better title than the execution debtor.  But the execution creditor’s ability under the New South Wales legislation to defeat a prior unregistered interest was entirely dependent on the writ of execution remaining on the register and being executed by the Sheriff. 

[51] If there had been an agreement between the parties that the rights of the respondents would be determined as if the sale under the Contract was effected by the Sheriff pursuant to the warrants of execution, the respondents would have been able to rely on Black v Garnock, if, contrary to the decision at first instance and Secure Funding, Black v Garnock applied.  There was, however, no contention that such an agreement existed.  That is not surprising as the point now sought to be argued was not an issue at first instance.

[52] Accordingly, the arguments based on the alleged non-existence of a Surplus and on reliance on Black v Garnock also fail.

The appellants’ reliance on the floating charges

[53] The appellants’ contentions that the Surplus was caught by the Bank’s floating charges was conceded to depend on two findings of fact not sought at first instance.  There, the appellants’ argument was focussed on the appointment of the second appellants as receivers of Mulhern’s property as the crystallising event.  The appointment was after the registration of the writs of execution.

[54] On appeal, the appellants sought to rely on the making of a winding up application on 29 March 2010 and the issuing the warrants of execution on 6 May 2010 as other crystallising events.  The respondents’ protest that if these events had been relied on at first instance they may have conducted their case differently and that it was possible that evidence could have been led which prevented the appellants from succeeding.[18]

[55] I am sceptical about the application of these principles to the facts under consideration, particularly with regard to the appellants’ reliance on the issuing of the warrants of execution.  However, in view of my earlier conclusion it is unnecessary to pursue the new argument.  Nor is it necessary to determine the merits of the appellants’ contention that the Bank’s equitable priority interest which arose either on 10 September 2010 (the contract date) or on 17 September 2010 (the completion date) took priority over the earlier registered warrants as the Bank’s interest did not arise by act of the debtor.


[56] For the above reasons, I would order that:

(a) The appeal be allowed with costs;

(b) The declaration and orders made in the proceeding on 11 October 2010 be set aside; and

(c) The respondents pay the appellants’ costs of the proceeding at first instance.

And I would further declare that the first appellant is and, at all material times, was entitled to be paid the amount of $620,695.63 from the surplus arising from the sale of the subject land in priority to the respondents.

[57] DAUBNEY J:  I respectfully agree with the reasons for judgment of Muir JA and with the orders he proposes.


[1] Dodrill & Anor v Bank of Queensland & Ors [2010] QSC 371, [5].

[2] Above, [15].

[3] Set out in Muir JA's reasons at [17].

[4] Set out in Muir JA reasons at [16].

[5] (2007) 230 CLR 438.

[6] Re Androma Pty Limited [1987] 2 Qd R 134 at 147 et seq pt per McPherson J.

[7] [1978] FCA 39.

[8] Per Deane J at [27]-[28].

[9] (1991) 26 NSWLR 1.

[10] [2001] 2 AC 710 at [42].

[11] [1995] FCA 1096.

[12] Gullifer J (ed), Goode on Legal Problems of Credit and Security 4th ed Sweet & Maxwell, London, 2008, p 47.

[13] (1972) 126 CLR 597 at 607.

[14] Coulton v Holcombe (1986) 162 CLR 1 at 7.

[15] [2010] QSC 91.

[16] (2007) 230 CLR 438.

[17] Bond v McClay [1903] St R Qd 1; Corfield v Groundwater (1868) 1 QSCR 194; Day v General Credits Ltd [1981] Qd R 115 and Commonwealth Trading Bank of Australia v Austral Lighting Pty Ltd [1984] 2 Qd R 507.

[18] See eg, Coulton v Holcombe (1986) 162 CLR 1.


Editorial Notes

  • Published Case Name:

    Bank of Queensland Limited & Ors v Dodrill & Anor

  • Shortened Case Name:

    Bank of Queensland Limited v Dodrill

  • Reported Citation:

    [2011] 2 Qd R 541

  • MNC:

    [2011] QCA 130

  • Court:


  • Judge(s):

    McMurdo P, Muir JA, Daubney J

  • Date:

    17 Jun 2011

Litigation History

Event Citation or File Date Notes
Primary Judgment [2010] QSC 371 11 Oct 2010 de Jersey CJ.
Appeal Determined (QCA) [2011] QCA 130 [2011] 2 Qd R 541 17 Jun 2011 Appeal allowed: McMurdo P, Muir JA and Daubney J.
Special Leave Refused [2012] HCATrans 22 10 Feb 2012 French CJ and Kiefel J.

Appeal Status

{solid} Appeal Determined - {hollow-slash} Special Leave Refused (HCA)