Burke v Stapleton [1970] HCA 3; (1970) 120 CLR 664 (19 February 1970)

HIGH COURT OF AUSTRALIA

BURKE V. STAPLETON [1970] HCA 3; (1970) 120 CLR 664

Bankruptcy

High Court of Australia
Barwick C.J.(1), Kitto(2), Menzies(3), Windeyer(4) and Owen(5) JJ.

CATCHWORDS

Bankruptcy - Property divisible amongst creditors - Limitation on trustee's claim - Lapse of time as bar to claim to bankrupt's land - Torrens system land belonging to bankrupt at commencement of bankruptcy - Trustee registered as proprietor - Whether trustee divested of property after twenty years - Bankruptcy Act 1924- 1965 (Cth), s. 98 (3)*.

HEARING

Sydney, 1969, November 18; 1970, February 19. 19:2:1970
APPEAL from the Federal Court of Bankruptcy.

DECISION

1970, February 19.
The following written judgments were delivered:-
BARWICK C.J. In this matter the appellants, who are the personal declaration that by reason of the lapse of time and the provisions of s. 98 (3) of the Bankruptcy Act 1924-1965 (the Act) the official receiver of the bankrupt estates of William and Patrick Quirk now has no claim to certain land which formed part of those estates when the order for sequestration was made and an order that such land be transferred by the official receiver to them. (at p666)

2. I have had the advantage of reading the reasons for judgment prepared by my brother Menzies and, as I fully agree with them and the conclusion to which they lead, I have no need to do more than to say that, in my opinion, the respondent has no need to make any claim within the meaning of s. 98 (3) of the Act to any estate or interest in the subject land. All the estate and interest in that land was effectively vested in the former official receiver of the bankrupts' estates. He was its registered proprietor. By virtue of the order of the Bankruptcy Court made pursuant to s. 26 of the Act the respondent is now the official receiver of those bankrupt estates. The need to have the necessary notations made on the relevant certificate of title to replace the name of the former official receiver by the name of the respondent does not involve in the present circumstances the making of any claim to the land within the meaning of s. 98 (3) nor does the resistance by the respondent of the appellants' application involve such a a claim. (at p666)

3. In my opinion, the appeal should be dismissed. (at p666)

KITTO J. This is an appeal from an order made by the Federal Court of Bankruptcy (Gibbs J.) in September 1967 (Re Quirk (1967) 10 FLR 431), while the Bankruptcy Act 1924-1959 was still in force. The order dismissed an application by motion on notice by the respective executrices of two deceased bankrupts for an order declaring that the respondent as official receiver and trustee of the estates of the bankrupts "has no claim to" any estate or interest in certain land which the bankrupts had disclosed in their joint statement of affairs as property belonging to them, and that the estate or interest (scilicet which belonged to the bankrupts at the commencement of their bankruptcies) are deemed to be vested in the applicants as tenants in common in their representative capacities. (at p666)

2. By force of s. 60 (1) of the Act the estate or interest vested in the official receiver on the making of the sequestration order. The date of the order was 31st August 1929. The vesting was, by virtue of s. 103 (4), subject to compliance with the requirements of s. 90 of the Real Property Act, 1900 (N.S.W.) as to registration of the "assignee", i.e. the official receiver, by transmission as proprietor of the land; and the registration was effected, apparently in 1930, in the name of Charles Fairfax Waterloo Lloyd, the official receiver appointed by the sequestration order. Mr. Lloyd died in 1953 and thereupon the sequestration order was varied to appoint another official receiver in his place. It was again varied at a later date to appoint the present respondent official receiver. The estate or interest remains registered in the name of Mr. Lloyd, but subject to registration it has passed to and vested in the respondent by the operation of s. 103 (2) of the Bankruptcy Act, the respondent being the "trustee" of the bankrupts' estates for the purposes of the Act by virtue of s. 131. (at p667)

3. The applicants before Gibbs J. relied for the relief they sought upon sub-s. (3) of s. 98, which makes two provisions. The first is that after the expiration of twenty years after the date of the sequestration of the estate of a bankrupt, "no claim shall be made" by the trustee of the estate to any estate or interest in any land which is part of the property of the bankrupt. The second runs on immediately: "and that estate or interest shall . . . be deemed to be vested in the bankrupt or any person claiming through or under him, as the case may be". Clearly enough, "that estate or interest" means any estate or interest which is part of the property of the bankrupt but to which the trustee is debarred by the first provision from making a claim. If, therefore, the first provision operated in the present case to debar the trustee from making a claim to the estate or interest after 31st August 1949, the estate or interest was on 1st September 1949 divested from the then official receiver and is now vested in the appellants as executrices of the bankrupts. The question is not whether the trustee is now making a claim to the estate and interest, but whether he is debarred from making a claim to it. (at p667)

4. At the outset it should be observed that the first provision of the subsection does not provide, as the terms of the notice of motion would suggest, that after the twenty-year period the trustee shall "have" no claim to any estate or interest in land which is property of the bankrupt. What is denied to the trustee in terms is the right to "make" a claim to the estate or interest. The meaning cannot be that every assertion of a title by the trustee after the period, formal or casual, in court or out, is to be treated as a breach of the Act. The sense of the provision is that the trustee shall be disentitled to succeed in a claim; and a right to succeed in a claim is necessarily a right in proceedings between adversaries. The reference to the making of a claim to an estate or interest in any land must therefore necessarily be a reference to the setting up, in proceedings in which the title to an estate or interest in land is in question, of a right as against another person to have effect given in respect of that particular item of property to the vesting for which s. 60 in general terms provides. (at p668)

5. This construction gives sub-s. (3) as a whole the familiar operation of a statute of limitation barring first a remedy based upon title and then the title itself. As such, it is not incongruously associated in the one section with sub-s. (1), which enacts in respect of all after-acquired property a rule corresponding with that which Cohen v. Mitchell (1890) 25 QBD 262 laid down for personalty. The inclusion of these provisions in the one section is not, however, a circumstance upon which much can be logically built. In the first place, it is not a strong enough consideration to reduce the plain words of sub-s. (3) to a mere qualification upon sub-s. (1) and thus restrict "any land which is part of the property of the bankrupt" to land which is after-acquired property; and, in the second place, any value it might otherwise have possessed for purposes of interpretation disappears when sub-ss. (4) to (8) are read and it is seen that the provisions of s. 98 as a whole are upon topics unrelated to one another by anything but their general relevance to the course of administration. Indeed, if sub-s. (3) be construed as above suggested, the entire section, instead of being place in Div. 4 headed "Effect of Bankruptcy on Antecedent Transactions", might more fittingly have formed part of Div. 5, under the heading "Realization of Property". (at p668)

6. The bankrupts' estate or interest in question in the present case was got in, for the purpose of being administered in the bankruptcies, at the latest at the time when Mr. Lloyd obtained registration in his name, and that was within twenty years after the date of the sequestration order. If the registration had been in the official name, "the trustee of the property of" etc., as it might have been by virtue of s. 132 and r. 431, presumably nothing would have had to be done now to enable the present trustee to deal with the property. See s. 161 of the Bankruptcy Act 1966 (Cth). It is true that as things are, the present official receiver (trustee) needed under s. 103 (2), (3) and (4) at the time the matter was before Gibbs J., and still needs under ss. 132 and 283 of the 1966 Act, to obtain registration of the transmission to him before being able to give a transfer of the bankrupts' estate or interest upon realization; but he can obtain the registration by his own unilateral action and the purely administrative action of the Registrar-General. In order to make the general vesting of property under s. 60 effective in regard to the estate or interest in question he needs neither the concurrence of any other person nor the aid of any court or tribunal to overcome any person's opposition. In particular, he is in a position to deal with the estate or interest in the ordinary course of administering the bankrupt estates, without having to obtain any relief in proceedings against the appellants such as he would require, for example, if the estate or interest stood registered in their names or in the names of their testators and they challenged his right to it. In my opinion, therefore, the appellants' invocation of s. 98 (3) was misconceived and the motion was rightly denied. (at p669)

7. I would dismiss the appeal. (at p669)

MENZIES J. A sequestration order was made against William Quirk and Patrick Quirk on 31st August 1929. The bankrupts were discharged on 29th December 1930. Administration of the bankrupts' estates was not then completed and it remains incomplete. Included in the joint estate of the bankrupts was three hundred and twenty acres of land at Jerilderie, being land subject to the Real Property Act, 1900 (N.S.W.). This land was, and is, subject to a mortgage to the National Bank of Australia Ltd. After the bankruptcy the title to the land was, in due course and upon his application, transmitted to the official receiver of the bankrupt estates, C. F. W. Lloyd. It is still registered in his name, although he is no longer the official receiver. L. T. Stapleton, the respondent, is presently the official receiver of the bankrupt estates. Exercising its power under the mortgage, the bank has, from time to time, appointed receivers of the land and they have let it to various tenants. The present tenant is Catherine Frances Quirk, one of the appellants, who occupies it as lessee. There is a considerable equity in the land. William Quirk died on 5th March 1964, and, by his will, appointed Helen Burke the sole executrix of his will and the trustee of his estate. Patrick Quirk died on 29th August 1944, and, by his will, appointed Catherine Frances Quirk to be the executrix of, and the sole beneficiary under, his will. (at p669)

2. The appellants, Helen Burke and Catherine Frances Quirk, as executrices aforesaid, applied to the Bankruptcy Court for a declaration that L. T. Stapleton, the official receiver as aforesaid, has now no claim to any estate or interest in the said land, and for an order that he transfer the land to them. The ground for this application was that, twenty years having elapsed since the date of the sequestration order, s. 98 (3) of the Bankruptcy Act barred any claim by the official receiver to the land and vested the land in the applicants. Section 98 (3) is as follows:

"After the expiration of twenty years after the date of the
sequestration of the estate of a bankrupt, no claim shall be made by
the trustee of the estate, to any estate or interest in any land
which is part of the property of the bankrupt, and that estate or
interest shall, subject to the rights (if any) of any person in
possession of the land, be deemed to be vested in the bankrupt or
any person claiming through or under him, as the case may be." (at p670)

3. The Bankruptcy Court (Gibbs J.) dismissed the application (1967) 10 FLR 431 . This is an appeal against that order. (at p670)

4. The decisive facts seem to me to be that the official receiver is not making, and has no reason now to make, any claim to the land. The land is fully his by virtue of the transmission of the title to his predecessor. The official receiver is doing no more than resisting the appellants' present claim to the land. By virtue of s. 60 of the Bankruptcy Act, upon sequestration "the property of the bankrupt" is vested in the official receiver. "The property of the bankrupt" includes "all property which belongs to or is vested in the bankrupt at the commencement of bankruptcy, or is acquired by or devolves on him before his discharge", s. 91. The official receiver took the necessary steps to get in the title to the land and so became the owner in law of the land already vested in him by s. 60. Henceforward the title of the official receiver for the time being was complete and there was no claim to be barred by s. 98. (at p670)

5. There is, in the judgment of Gibbs J., an examination of the cases which it is said have some bearing upon the contention of the appellants that any estate or interest in land, the property of the bankrupt, is, upon the expiration of twenty years from the sequestration order, divested from the trustee and revested in the bankrupt or the persons claiming through him, notwithstanding that the trustee has become registered as the proprietor of the land under the Real Property Act of New South Wales. The decisions in the cases referred to do not, as it seems to me, touch the question here, and the observations made in general terms about the section, but without reference to the problem which has now arisen, do not, I think, assist in the solution of that problem. (at p671)

6. It seems to me that the subsection, recognizing (1) that land, being the property of the bankrupt, has become vested in the trustee by virtue of the Act, and (2) that the trustee may not have perfected his title so he may still be in the position of having to make a claim thereto, provides that (1) no such claim shall be made after twenty years and (2) the land not claimed, which was nevertheless vested in the trustee by or under the Bankruptcy Act, should, after twenty years, revest in the bankrupt or those claiming through the bankrupt. This reading of the subsection affords no support for the appellants' case. The section, although it operates of itself to revest land, the title to which is still outstanding, makes no provision for the trustee transferring land to which he has a complete title. (at p671)

7. I agree with Gibbs J. that the subsection does not support the application made by the appellants and am of the opinion that the appeal from the order made by the Court of Bankruptcy must be dismissed. (at p671)

WINDEYER J. In my opinion this appeal should be dismissed. The judgment of Gibbs J. was, I consider, right in law. I have nothing to add to what my brother Menzies has said. (at p671)

OWEN J. For the reasons given by my brother Kitto I am of opinion that the appeal should be dismissed. (at p671)

ORDER

Appeal dismissed with costs.