Addison v City Mutual Life Assurance Society Ltd [1933] HCA 22; (1933) 49 CLR 106 (4 May 1933)

HIGH COURT OF AUSTRALIA

Addison and Another Plaintiffs, Appellants; and The City Mutual Life Assurance Society Limited and Another Defendants, Respondents.

H C of A

On appeal from the Supreme Court of Queensland.

4 May 1933

Rich, Starke, Dixon, Evatt and McTiernan JJ.

Maughan K.C. and Graham, for the appellants.

Macrossan, for the respondent, The City Mutual Life Assurance Society Ltd.

W. Linton, for the trustee in bankruptcy of the mortgagor,

Maughan K.C., in reply.

The Court delivered the following written judgment:—

May 4

Rich, Starke, Dixon, Evatt and McTiernan JJ.

The appellants, who claim to be entitled to a contractor's lien under the Contractors' and Workmen's Lien Act 1906-1921 Q., obtained in a previous appeal to this Court a declaration that two bills of mortgage, which, otherwise, would take priority of the lien, were, in so far as they gave or purported to give security over the freehold in or in connection with certain licensed premises, contrary to the provisions of the Liquor Act 1912-1926 Q., and unlawful and invalid (see Addison v. Cain[1]). This declaration was made on 30th May 1932, and the order, which contained it, remitted the cause to the Supreme Court of Queensland. The bills of mortgage were registered under the Real Property Acts and included other lands besides the licensed premises. On 4th July 1932, the action was brought on by motion for further hearing before Webb J., who, in the first instance, pronounced a judgment ordering the respondents to execute forthwith all documents necessary to free the lands constituting the licensed premises from the bills of mortgage. But before the judgment was perfected the Liquor Acts Amendment Act of 1932 Q. came into force. This statute, which was assented to on 2nd September 1932, repealed retrospectively sec. 69 of the Liquor Act 1912-1926, the provision which, in the opinion of this Court, had operated to invalidate the bills of mortgage. The enactment established the validity of all securities which had been given contrary to that provision. But the effect of the validating provision was qualified by the following proviso: "Provided that nothing in this Act shall prejudice or affect the rights of any party to any judgment of any Court of competent jurisdiction in any case where such judgment was given prior to the first day of August, one thousand nine hundred and thirty-two, nor prejudice or affect the rights of any party upon appeal from such judgment."

It was evident that, if the judgment pronounced by Webb J. on 4th July 1932 was carried into effect, the land constituting the licensed premises would be discharged from the security for all purposes, for the benefit of strangers to the suit as well as of the parties. A respondent, the mortgagee, therefore applied to Webb J. to reconsider his judgment. As the judgment had not been passed and entered, he had jurisdiction to recall it, and this jurisdiction he exercised. He then made an order which he considered would operate as between the parties to carry into effect the declaration of invalidity made by this Court and at the same time, as against others, would preserve the respondents' security and so give effect to the validating statute. He ordered that the respondents should do at their own expense all things necessary to procure priority in registration in the office of the Registrar of Titles of the appellants' lien over the bills of mortgage. From this order the appellants now appeal. While the appeal was pending the mortgagor, who was joined as a defendant in the suit and as a respondent upon the appeal, became a bankrupt. Her trustee in bankruptcy has since been made a party to the proceedings.

It is not easy to see what the order appealed from requires the mortgagee to do in order to reverse the priorities of the existing instruments. But, if the order were carried out, it would completely postpone the mortgagee to the lien of the appellants which would, therefore, be as effectually protected as if the mortgages did not stand behind it. As the appellants' title to impeach the mortgages consisted in their interest in the land as lienees, it does not appear that they would be aggrieved by the order, if it could be carried out. But the appellants say that they are also creditors of the mortgagor in respect of unsecured debts and that, if the land were discharged of the encumbrances, or if otherwise full effect were given to this Court's declaration of the invalidity of these instruments, they would benefit in their capacity of unsecured creditors. They further say that the rights preserved to them by the proviso include all such consequential rights as may arise from the invalidity of the mortgages as declared by the order of 30th May 1932. However this may be, it is clear that the appellants never were entitled to any substantive relief except for the purpose of protecting the lien which they claim. As lienees, but not as unsecured creditors, they were entitled to complain that an unlawful and void encumbrance was set up and relied upon as having priority to the security given by their lien. No doubt, when the encumbrance was either void or valid as against all alike, an appropriate form of relief was a declaration of invalidity and a consequential order for the execution of a discharge of the land from the bills of mortgage, which would prevent the lien being over-reached by a transfer of the void security to a third person taking it bona fide for value on the faith of the register. But no "right" to this particular form of consequential relief arose from the declaration contained in the order of 30th May 1932. The rights of the parties to that order are protected by the proviso to the validating enactment, but the order appealed from was made after the statute, and upon this appeal we must take account of its provisions unless we are prepared to say that Webb J. ought not to have vacated his unperfected order of 4th July 1932, a course which, in our opinion, it was within his discretion to adopt. In administering consequential relief after that statute, we ought, we think, to go no further than to grant such remedies as may appear necessary for the protection of the appellants' lien from impairment by anything done under the bills of mortgage, but so that any rights as against others which the respondent, the mortgagee, may have in virtue of the validating statute will not be destroyed or adversely affected. Whatever rights the appellants have in virtue of this Court's former declaration stand unaffected. But nothing should be done to prejudice the possible operation of the subsequent statute. It was suggested that, as the mortgagor was a party to the order declaring the bills of mortgage to be invalid, she had a right to have them treated as void, which is preserved and which has passed to her trustee. But she sought no relief in the action and her trustee has asked for none upon this appeal. The question whether she acquired any such right must be litigated elsewhere if it arise as a practical matter, and we should make no order which would prejudice that question. The appellants, therefore, fail in the real object of their appeal. But the order appealed from requires a reversal of the order of priority upon the Register of Titles which, so far as we can see, could not be accomplished unless the existing encumbrances are destroyed. So far from contemplating their destruction, it supposes that they will be preserved, as indeed they must be in order that the rights of the parties should be retained. This order should be discharged. In lieu thereof, it should be ordered as follows:—Declare that in the exercise of any right or power arising under the lien referred to in the pleadings and in the prosecution of any remedy for its enforcement, the plaintiffs are entitled as against the defendants to proceed upon the footing that the bills of mortgage registered numbers A86,804 and A131,905 in so far as they give or purport to give a security over the lands described in certificate of title number 314,521 vol. 1702 fol. 11 are void and that the defendant Society is bound as against the plaintiffs to treat such lien as paramount in all respects over any security given over the said lands by such bills of mortgage or either of them. Reserve liberty to apply. Let the defendant Society pay the plaintiffs' costs of and incidental to the proceedings in the Supreme Court of Queensland after the order of this Court of 30th May 1932 up to and including 4th July 1932. Let all parties abide their own respective costs of all proceedings in the Supreme Court of Queensland after 4th July 1932 up to the date of this order. Let the appellants pay the costs of this appeal.

Order accordingly.

Solicitors for the appellants, O'Shea, O'Shea, Corser & Wadley, Brisbane, by Pigott, Stinson, Macgregor & Palmer.

Solicitors for the respondent The City Mutual Life Assurance Society Ltd., Tully & Wilson, Brisbane, by Barry, Norris & Wildes.

Solicitors for the respondent trustee in bankruptcy, Hobbs, Caine & McDonald, Brisbane, by Ernest Cohen & Linton.

[1] [1932] HCA 17; (1932) 47 C.L.R. 208.