Margeorg Pty Ltd v W J Cavanagh
[2009] QSC 211
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- Unreported Judgment
- Margeorg Pty Ltd v W J Cavanagh[2009] QSC 211
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Margeorg Pty Ltd v W J Cavanagh[2009] QSC 211
Margeorg Pty Ltd v W J Cavanagh[2009] QSC 211
SUPREME COURT OF QUEENSLAND
CITATION: | Margeorg P/L v W J and RKB Cavanagh [2009] QSC 211 |
PARTIES: | MARGEORG PTY LTD ACN 078 368 000 |
FILE NO/S: | 2718 of 2009 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 25 July 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 26 May 2009 |
JUDGE: | Martin J |
ORDER: | Applicant to bring in minutes of order. |
CATCHWORDS: | TORRENS – INDEFEASIBILITY – EXECUTION – DUTY OF BAILIFF – Where judgment for sale of the respondents’ property - Where bailiff charged with selling property under a duty to act reasonably and obtain a fair price – Where applicant purchased property at arm’s length – Where the respondents claim purchase price not fair – Where respondents seek set aside – Where adjournment sought so that issues may be tried – Whether bailiff breached statutory duties – Whether respondents have a recognised right of action against the applicants – Whether the matter should be adjourned to allow for a trial. Land Title Act 1994, s 185(1), s 188B Anderson v Liddell [1967] Qd R 410 Owen v Daly [1955] VLR 442 White v Tomasel and Anor [2004] 2 Qd R 438 |
COUNSEL: | A C Harding for the applicant L J Nevison for the respondents |
SOLICITORS: | Garland Waddington for the applicant Legal Aid Queensland for the respondents |
- This is an application for the following orders:
- A declaration that the applicant (“Margeorg”) is the sole legal and equitable owner of a property situated at 70 Albury Street, Deagon (“the property”);
- Delivery up or recovery of the property;
- An injunction restraining the respondents (“the Cavanaghs”) from occupying, using or otherwise being in possession of the property, or being upon, remaining upon or coming on to the property except with the permission of Margeorg.
- Margeorg is the registered proprietor of the property.
- In December 2002 the Cavanaghs entered into a personal loan contract with Westpac Bank. Westpac assigned its interest in that loan contract to Credit Corp Services Pty Ltd. The Cavanaghs fell into arrears. In January 2007, Credit Corp sought to recover the debt. There is evidence that the Cavanaghs were served with the relevant process. Mrs Cavanagh says that she did nothing about it. She explained her failure to act in the following way:
“I recall that at the time I was served with the New South Wales court documents, I did nothing about it for the following reasons:
- my Husband was seriously ill;
- I had my own health issues;
- I did not believe that the documents were directed to my Husband or me as I did not know of, and had not borrowed any money, [from] the company referred to as Credit Corp;
- I had no dealings at that time in New South Wales”[1]
- Default judgment was obtained by Credit Corp against the Cavanaghs in New South Wales in May 2007.
- An enforcement warrant was issued at the Magistrates Court at Sandgate in July 2007 and refreshed in July 2008.
- The bailiff of the Magistrates Court at Sandgate exercised his power of sale under the enforcement warrant.
- Margeorg purchased the property in January 2009 at an auction conducted by the bailiff and became the registered proprietor. The purchase was subject to the registered mortgages on the property.
- In February 2009, Margeorg served a Notice to Vacate on the Cavanaghs. The Cavanaghs answered that Notice in a letter which raised no matters of substance but contained only tendentious, even absurd, allegations.
- On this application, the Cavanaghs submit that the application should be adjourned to allow a trial to take place of the issues they raise. It was put on behalf of the Cavanaghs that, at any trial to be held on this matter, they would argue that the bailiff breached his duty to act reasonably in the interests of the judgment creditor and the judgment debtor and did not obtain a fair price. It would also be argued that other breaches of the requirements of the Uniform Civil Procedure Rules had also occurred.
Conduct of the bailiff
- The Uniform Civil Procedure Rules provide, in Chapter 19 Parts 3 and 4, for the manner in which an enforcement warrant may be enforced.
- The Cavanaghs assert that some of the requirements of those rules were not met.
- Rule 828(6) provides that “An enforcement officer must send a copy of the notice by prepaid post to the enforcement debtor at the enforcement debtor’s last known address.” Mrs Cavanagh says, in her affidavit, that she “did not know that there was to be an auction selling our home”. She does not say that there was no notice received. There is no evidence that the notice was not sent. Of course, the relevant enforcement officer (the bailiff) is not a party to these proceedings and no evidence from that person about any of these matters was produced by either party.
- Mrs Cavanagh also says that a reasonable price was not obtained for the property. Rule 831 provides:
“(1) Unless the court orders otherwise, an enforcement officer must put up for sale by public auction all property liable to be sold under an enforcement warrant—
(a) as early as possible, having regard to the interests of the parties; and
(b) at a place and in a way appearing to the enforcement officer to be suitable for a beneficial sale of the property.
(2) The public auction may be conducted by the enforcement officer or a person authorised by the enforcement officer.
(3) Property sold by public auction must be sold under the following conditions of sale—
(a) for goods, if the person conducting the auction considers the particular lot in which the goods are to be auctioned is worth less than $500, or for other property if the enforcement debtor agrees—at the best price obtainable;
(b) otherwise, if the reserve is reached—to the highest bidder;
(c) if the person conducting the auction considers there is a dispute as to who is the highest bidder, the property is to be reauctioned and knocked down to the highest bidder.
(4) However, before a sale by public auction, a party or an enforcement officer may apply to the court for an order that the property be sold privately.
(5) The application must be supported by affidavit.
(6) If the applicant is a party, the applicant must also serve the enforcement officer with the application.
(7) If, on application by the enforcement creditor, the court makes an order that the property be sold privately before a public auction, the court may order that the enforcement creditor pay any costs already incurred by the enforcement officer for the auction.
(8) If property put up for sale at public auction is not sold by auction, the enforcement officer may sell the property privately—
(a) for an amount not less than the highest bid made at the auction that the enforcement officer considers is a reasonable amount for the property; or
(b) if no bid was made at the auction—for an amount the enforcement officer considers is a reasonable amount for the property; or
(c) in accordance with a court order.
(9) In this rule—
reserve, for property to be sold at auction, means the reserve amount set by the enforcement officer, being an amount the enforcement officer considers is not less than a reasonable amount for the property.” (emphasis added)
- It was contended by the Cavanaghs that the property was worth approximately $315,000, that there were loans secured by mortgages in the amount of approximately $214,000 and, so, they had an “equity” in the property of about $100,000. As the property was sold (subject to the mortgages) for $20,000 it is argued that a reasonable price was not obtained and that, therefore, a reasonable amount was not set as the reserve.
- Consistent with that submission, it was argued that there had been a failure by the enforcement officer to seek an order allowing a sale at the best price obtainable pursuant to r 833. That rule provides:
“(1) This rule applies if the enforcement debtor’s property has not been sold under rule 832.
(2) An enforcement officer or an enforcement creditor may apply to the court for an order to sell property at the best price obtainable.
(3) The application must be supported by an affidavit giving details of the required steps for sale that have been taken.
(4) Unless the court orders otherwise, the enforcement debtor must be served with the application.”
- The arguments about the sale price, if otherwise valid, rest entirely on the true value of the property. The Cavanaghs did not obtain an expert valuation of the property; rather, they produced an opinion from a real estate agent which was couched in suitably cautious terms. It estimated the selling price of the property at $325,000 but did not give a value of the property if sold pursuant to an enforcement warrant.
- It was then argued that, if there was a trial then, assuming success, the contract of sale would be set aside and the Cavanaghs could then take action to correct the register. Reliance would be placed on s 185(1)(a) and (e) of the Land Title Act.
- In support of the argument that there was a breach of duty, Mr Nevison (who appeared for the Cavanaghs) pointed to what he said was the gross disparity between the sale price of $20,000 and the equity which the Cavanaghs allege they had in the property of about $100,000.
- Three things need to be said about that submission. First, the “value” of the property was no more than an indicative estimate. Secondly, the argument about the value of the property valuation failed to take into account that the sale was not an ordinary one but a forced sale with the inevitable consequence that a lower price would be obtained. Thirdly, the sale was subject to the registered mortgages which would also contribute to a lower price being offered.
The Bailiff’s Duties
- If a bailiff does not comply with the requirements for a sale conducted in these circumstances then the debtor may have a claim against that person for damages. In some circumstances a court might set aside the sale. I was referred to the decision of Dean J in Owen v Daly,[2] where he said:
“I am of opinion that I am entitled to set aside a sale made by the Sheriff if I am satisfied that it has not been properly conducted or that it was not a real sale. I am satisfied of both these matters in this case and accordingly I must set the so-called sale aside. In doing so I do not overlook cases to which I was referred to the effect that the remedy is usually not to set the sale aside but to award damages against the Sheriff – see Palmer v Bourke (1902) 28 VLR 275; Perkins v Willcock (1871) 2 VR(E) 222; In Re J T Hughes (1850) 1 Legge (NSW) 659. But here the judgment creditor is very closely involved in what has been done. Not only did his solicitor misinform the Sheriff of the address of the judgment debtor when he and his Bairnsdale solicitors knew she resided on the land to be sold, but he was also fully aware of what the Sheriff had done, and, through the town agents of his solicitors, aware that she had no notice of the sale and was himself the purchaser at an almost nominal price. I see no hardship to him in setting aside the sale. It might have been made difficult to do so if the purchaser had been a stranger, unaware of the facts relating to the conduct of the sale. The sale will accordingly be set aside.”[3]
- I note that Dean J made specific reference to the usual remedy being to award damages against the sheriff (or bailiff) and that it might have been made difficult to set aside the sale if the purchaser had been a stranger. In this case, there is no debate about Margeorg being anything but a stranger to the facts relating to the conduct of the sale. That decision was applied by Lucas J in Anderson v Liddell.[4] His Honour said:
“What I have so far set out covers the Sheriff’s authority to sell, the procedure to be adopted in selling, and the time limit within which a sale must be effected. There is no evidence in this case that the Sheriff failed in any respect to comply with his statutory duty to advertise the sale; indeed, if it matters, he went further, for there is no statutory requirement to post a notice of sale on the property. Compliance with the statutory requirements, however, does not exhaust the duty of the Sheriff. His duty at common law is set out by Dean J, in Owen v. Daly (1955) V.L.R. 442, at p. 446, in terms with which I respectfully agree:-
‘It is, I think, clearly established that at common law a sheriff selling the chattels, including chattels real, of a judgment debtor is bound to act reasonably in the interests of the judgment creditor and of the judgment debtor in order to obtain a fair price, not necessarily the market value, for it is well recognised that compulsory sales under legal process rarely bring the full value of the property sold … The duty of the sheriff to act reasonably with due regard to the interests of both sides and his liability in damages if he fails to exercise reasonable care has been frequently stated.’
In addition, it is clear from the decision in the same case that if the Sheriff fails to act reasonably, and if he fails to obtain a fair price, the sale may be set aside. The usual remedy, however, in such a case, is not to set the sale aside, but to award damages against the Sheriff. In Owen v. Daly (supra) the judgment creditor was closely involved; he was himself the purchaser at the Sheriff’s sale, at a nominal price sufficient only to defray the expenses of selling. Dean J. found that the sale was not a real sale at all, and, while recognising that this was an unusual remedy, set it aside, remarking that in doing so he saw no hardship to the judgment creditor. In the present case, however, there was no evidence that the purchasers acted improperly or in collusion with the Sheriff. Their action in purchasing the property for $16,500 after having offered $24,500 for a private sale in no way reflects discredit upon them; it is, of course, an example of the self-evident proposition that property will not realise upon a forced sale as much as it would upon a private sale conducted at leisure. I have come to the conclusion that there is in this case no basis for any of the relief sought against the Sheriff, but even if there were I should not in these circumstances exercise the jurisdiction to set the sale aside.”[5]
- That decision was taken on appeal to the High Court of Australia. In Anderson v Liddell[6] the court dismissed the appeal. Of importance are the statements by Barwick CJ (with whom McTiernan J agreed) and Kitto J about the circumstances in which a bailiff’s sale might be set aside. It was made clear that the capacity to set aside a sale based upon the conduct of a bailiff or an enforcement officer will only exist where the new registered proprietors were involved in the breaches of procedure or colluded with the bailiff in breaching the relevant requirements of the sale.
- Barwick CJ said:[7]
“I have dealt with the appellant's various submissions in support of his claim to set aside the sale: but in reality there was in any event no ground for such a course. The respondents were not, in my opinion, in any respect involved in any of the matters said by the appellant to be significant irregularities on the part of the sheriff. Consequently, in any case the sale should not be set aside. Nor was there any evidence, in my opinion, upon which it could be found that any of the suggested irregularities caused the appellant any damage.” (emphasis added)
- To like effect, Kitto J said:[8]
“Another complaint on the part of the appellant was that the price accepted by the sheriff was grossly below the value of the land, and that the sheriff before accepting the bid should have satisfied himself, by obtaining a competent valuation, what the true value was. If it was apparent to the sheriff that in fact or in all probability the bid was so far below the value that he would be acting unreasonably by accepting it, his proper course was to make a return that the property remained unsold for want of a buyer, and to refrain from selling at such a price unless commanded by a venditioni exponas to sell for what he could get: Keightley v. Birch … . For selling in that situation without waiting for a venditioni exponas he would be liable to an action for damages at the suit of the appellant, but whether the sale could be set aside in the absence of collusion between the sheriff and the purchaser is by no means clear. In the case of chattels I am not aware of any jurisdiction that the Court possesses, on the ground of a breach by the sheriff of any duty he may be under in relation to the sale, to set aside the sale and restore to the debtor the ownership which the sheriff has passed to the purchaser by virtue of the special property vested in him by his seizure under the writ. The jurisdiction seems to have been assumed in Ireland in respect of chattel interests in land, in the case of Edge v. Kavanagh … ; but in the case of land to which s. 35 of The Real Property Act of 1877 (Q.) applies I do not see, as at present advised, any ground upon which a purchaser from the sheriff can be denied his right to have a transfer registered in accordance with that section unless the jurisdiction of a court of equity to act in personam be attracted by proof of collusion between him and the sheriff: cf. Perkins v. Willcock … , and Palmer v. Bourke … . No collusion was suggested in the present case. It was not proved that the sheriff had any reason to think that a bid of $16,500 was so far below the value of the land that he could properly make a return to the effect that in reality he had no buyer, or even that in fairness to the appellant he ought to obtain the advice of a valuer. In my opinion Lucas J. was right in rejecting this ground of attack on the sale.”
Conclusion
- As in Anderson v Liddell no collusion between Margeorg and the bailiff was suggested. This answers the general case advanced by the Cavanaghs and the more specific argument in which they relied upon White v Tomasel and Anor.[9] In that case, the Court of Appeal held that the indefeasibility of a registered title could be attacked if there was a restitutionary obligation resting on the new registered proprietor. But such an obligation derived (in that case) from the registered proprietor’s actions in acquiring its title by the orders of a court which should not have been made. Further, as PD McMurdo J said:[10] “… to constitute an ‘equity” within s 185(1)(a) [of the Land Title Act 1994], the interest must derive from a recognised right of action, at law or in equity, which arises from the acts of the registered proprietor and which is not inconsistent with the policy of a Torrens system of title.”
- It was submitted that the act of Margeorg which gave rise to a right of action was that, by entering into the contract which contained numerous denials of warranty by the bailiff, it had, somehow, become involved in the alleged breaches of the bailiff. There was no suggestion that Margeorg knew anything about the actions of the bailiff. It is not the case that an innocent purchaser can be visited with the alleged “sins” of the person who has conducted the sale in these circumstances.
- The Cavanaghs sought an adjournment in order to have the questions they raised explored at a trial. There is no prospect of them succeeding against Margeorg for the reasons I have given above.
- I will make orders in terms of the application. The applicant is to bring in minutes of an order and I will hear the parties on costs.