South-Eastern Drainage Board (SA) v Savings Bank of South Australia [1939] HCA 40; (1939) 62 CLR 603 (19 December 1939)

The South-Eastern Drainage Board (South Australia) Defendant, Appellant; and The Savings Bank of South Australia Plaintiff, Respondent.

The Real Property Act 1886 is the Torrens statute of South Australia. It provides that the title of every registered proprietor of land shall be indefeasible subject to encumbrances &c. notified on the original certificate of title and to certain qualifications set out in sec. 69 of the Act. Sec. 70 provides that in all other cases the title of the registered proprietor of the land shall prevail notwithstanding the existence in Her Majesty or in any person of any estate or interest whatever whether derived by grant from the Crown or otherwise which but for the Act might be held to be paramount or to have priority. Secs. 71 and 249 refer to other qualifications of or limitations upon the rights of a registered proprietor. Land is defined in sec. 3 to include interests in land and includes therefore the interest of a mortgagee, which is an interest by way of security (sec. 132). Therefore the registered proprietor of a first mortgage takes priority over all other estates and interests in the land not notified on the certificate of title save in the exceptional cases mentioned in the sections to which I have referred.

The South-Eastern Drainage Amendment Act 1900 provides, in sec. 14, that the amount of drainage-construction costs apportioned to a landowner under the Act shall be a first charge on the land of the landholder and that the charge upon the land may be enforced by the Commissioner of Crown Lands (to which the South-Eastern Drainage Board has succeeded under the South-Eastern Drainage Act 1931) as if he were a mortgagee under the Real Property Act 1886. Other statutory provisions make drainage-maintenance rates a first charge on the land. There is no provision in the Real Property Act relating to charges of this character.

In the present case a mortgage was given in 1912 by the registered proprietor of the land to the plaintiff bank. The mortgage was duly registered under the Real Property Act. In 1908 a charge for construction costs had attached to the land under sec. 14 of the South-Eastern Drainage Amendment Act 1900. In and after 1930 maintenance rates were declared and were not paid. These rates, under sec. 65 of the South-Eastern Drainage Act 1926 and sec. 66 of the South-Eastern Drainage Act 1931, also became a first charge upon the land. The Supreme Court of South Australia has held that the mortgage takes priority over the former charge, but not over the latter charge. The board appeals upon the first question, and the bank cross-appeals upon the second question.

The Drainage Acts are subsequent to the Real Property Act 1886, and, according to ordinary principles of construction, effect must be given to their provisions, notwithstanding any contrary provisions in the Real Property Act 1886. If there is an inconsistency between one statute and a later statute, the later statute prevails. In the present case it is plain that the Drainage Acts were intended to apply to all the lands which were improved by drainage schemes under the Drainage Acts. There is nothing to support an argument that lands under the Real Property Act 1886 were excluded. The result, therefore, is that the charges imposed by the later Acts take priority over the mortgages registered under the Real Property Act, whenever those mortgages were so registered. In no other way can effect be given to the clear enactments that the amount of construction costs and maintenance rates is to be a first charge upon the land.

It was argued, however, that it was possible to give effect to the provisions of the Drainage Acts by recognizing that they resulted in a first charge being imposed upon the land under the Real Property Act, but only if such charges were registered under that Act. There is, however, no provision in the Drainage Acts requiring registration of such charges. The charge is created quite independently of registration. Further, sec. 54 of the Real Property Act provides that "the Registrar-General shall not, except as herein otherwise provided, register any instrument purporting to transfer or otherwise deal with or affect any estate or interest in land under the provisions of this Act except in the manner herein provided, nor unless such instrument be in accordance with the provisions hereof." The charge is not created by or dependent upon the existence of any instrument. No form of instrument is provided for the registration of a statutory charge. Such a charge, in my opinion, is not capable of registration under the South-Australian Real Property Act, though it could be the ground of a caveat. To require registration before giving effect to the charge would be to defeat the provisions of the Drainage Acts.

The mortgagee further contended that sec. 6 of the Real Property Act 1886 prevented the application of the Drainage Acts to land which was under the Real Property Act. Sec. 6 is as follows: No law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply "notwithstanding the provisions of The Real Property Act 1886."

The first part of this section plainly operates to prevent the application of any earlier statute to land under the Act so far as it was inconsistent with the Act. It was argued that the latter part, relating to future laws, prevented any later Act from applying to land under the Real Property Act, even if inconsistent with that Act, unless the later Act expressly enacted that it should so apply "notwithstanding the provisions of The Real Property Act 1886." It is recognized as a general principle of English constitutional law that one parliament cannot bind its successors, and it was conceded that the Parliament of South Australia could, after the passing of the Real Property Act, enact provisions inconsistent with that Act, but it was argued that, by reason of sec. 5 of the Colonial Laws Validity Act 1865, subsequent parliaments could not so legislate unless the words prescribed by sec. 6—"notwithstanding the provisions of the Real Property Act 1886"—were included in the subsequent Act.

The Colonial Laws Validity Act 1865, sec. 5, provides: "Every representative legislature shall, in respect to the colony under its jurisdiction, have, and be deemed at all times to have had, full power to make laws respecting the constitution, powers, and procedure of such legislature; provided that such laws shall have been passed in such manner and form as may from time to time be required by any Act of parliament, letters patent, Order in Council, or colonial law for the time being in force in the said colony."

It was urged that sec. 6 of the Real Property Act was a law which prescribed a manner and form for the passing of Acts of parliament and that therefore an Act passed not in such manner and form was not valid. But the proviso with respect to manner and form applies only to laws respecting the constitution of the legislature, the powers of the legislature, and the procedure of the legislature. Sec. 6 is plainly not a provision affecting in any way the constitution of the legislature. Nor does it affect the powers of the legislature. It only purports to prescribe the contents of an Act which the legislature has power to pass. Nor does the section relate to any part of the procedure of the legislature in passing statutes. Accordingly, in my opinion, sec. 6 of the Real Property Act cannot operate to deprive of effect any subsequent legislation of the South-Australian Parliament which, upon the natural construction of its terms, enacts a provision which is inconsistent with the Real Property Act 1886.

The attention of the court was called to many South-Australian statutes which provided that certain moneys due to public bodies should be a first charge upon land. In the present case it is not necessary to attempt to reconcile all these provisions, or to consider what the result would be if three or four charges upon the same land all enjoyed the position of a statutory first charge. I give no opinion upon this question.

The Full Court of the Supreme Court of South Australia decided that the drainage-maintenance rates were a first charge upon the land, taking priority over the mortgage, but that the charge for construction costs did not take such priority. For the reasons which I have given, I am of opinion that the second decision was wrong.

Accordingly, in my opinion, the appeal should be allowed and the cross-appeal should be dismissed. The parties agreed that there should be no order as to costs.

Some time before 1902 a Crown lease of certain lands with a right of purchase had been granted to Peter McArthur. It was issued under the Crown Lands Act of 1888 (51 & 52 Vict. No. 444) or some corresponding prior enactment. A lease with a right of purchase appears to have been a lease for a term with a right of renewal and a right of purchase of the leased land exercisable after a certain period of time at a price fixed by the land board of the district. Upon payment of the purchase money, I gather that the lessee was entitled to a Crown grant of the lands: Cf. Crown Lands Act of 1888, secs. 6, 7, 24, 29, 177. Later Crown Lands Acts have recognized Crown leases with a right of purchase (Crown Lands Act 1903, Part V.; Crown Lands Act 1915, Part VII.; Crown Lands Act 1929-1936, Part VII.). The lease to Peter McArthur had prior to 1907 been transferred or assigned to Archibald Neil McArthur. On 8th June 1912 Archibald Neil McArthur executed a memorandum of mortgage over the lands comprised in the Crown lease to the Savings Bank of South Australia. The purchase of the lands comprised in the Crown lease was completed between 8th June 1912 and 30th August 1912. A Crown grant issued in the name of A. N. McArthur in respect of the lands, and he became the registered proprietor of the lands for the purpose of and within the meaning of the Real Property Act 1886. On 20th September 1912 the mortgage was entered upon the Crown grant in the register book.

The South-Eastern Drainage Amendment Act 1900 (63 & 64 Vict. No. 737) enabled certain drains to be constructed and the cost apportioned among the landholders benefited by the drains. Landholders include lessees of any land held under lease from the Crown. Under this Act a drain known as the Mount Hope drain was constructed and the cost of construction was apportioned among the landholders whose land was benefited by the drain. Amongst these landholders was Archibald Neil McArthur in respect of the land held by him under the lease from the Crown already mentioned. The apportionment was made in the year 1908. The fourteenth section of the Act provides that the proportion of the cost apportioned to each landholder shall be a debt due from each such landholder to the Crown and shall be a first charge upon the land of such landholder benefited by the drain and shall be repaid by such landholder with the interest thereon in equal instalments according to the scale set out in the schedule. The charge upon the land may be enforced by the drainage authority as if it were a mortgagee under the Real Property Act. The appellant is the authority in which the rights and powers under the Act are now vested: See Acts 1926 No. 1781, sec. 8; 1931 No. 2000, sec. 3; 1931 No. 2062, sec. 8. In addition, the South-Eastern Drainage Act of 1931 (22 Geo. V. No. 2062) also provided for certain drainage rates sufficient to pay for the cost of cleaning and maintaining them in a proper state of efficiency and for expenses connected with the care, control and management of the drains and drainage work (sec. 48). "All rates," it is provided by sec. 66, "shall be a first charge upon the land in respect of which they are due, and such charge may be enforced by the board as if it were a mortgagee under the Real Property Act 1886."

Drainage-maintenance rates were declared and levied on all lands within the area called in the Act the South East benefited by drains and drainage works constructed under the Acts for the years 1932 to 1935. The land granted to McArthur and in respect of which he was the registered proprietor was within the South-East area. The rates were, therefore, by force of the Act, a first charge upon the land.

It is well enough settled that the statutory first charge so created is upon "the land—that is, on all the interests of the owners of the land," upon "the entirety of the interests in the premises, the whole of the proprietary interests in the premises": "Such a charge has priority over all other charges on the property" (Birmingham Corporation v. Baker[1]; Paddington Borough Council v. Finucane[2]; Guardians of Tendring Union v. Dowton[3]). But these statutory charges were not created by instruments in the form contemplated by the Real Property Act 1886: See secs. 3, "Instrument," 54, 56, 128. On 6th December 1934 the appellant, however, gave notice to the Registrar-General that it claimed a charge under the Drainage Act on the land comprised in the Crown grant already mentioned for arrears of drainage rates and for the cost of construction of the drain known as the Mount Hope drain. On 24th January 1935 the Registrar-General made an entry upon the folio of the register book relating to the land comprised in the Crown grant as follows:—"Charge No. 1179601. The within land is charged with the arrears of drainage rates and proportion of costs of drain construction under the South-Eastern Drainage Acts 1931-1933. Produced for registration 6/12/34."

The question for determination is whether these statutory charges or any of them have priority over the mortgage of 8th June 1912 given by A. N. McArthur to the respondent and registered on 20th September 1912. A suggestion was heard during argument that the charges operated only upon the interest created by the Crown lease and not upon any interest created by the subsequent grant from the Crown of the fee simple of the land. It is not necessary to consider how far, if at all, a statutory charge could be enforced against the land in case of forfeiture or surrender of the lease to the Crown, because neither event happened. The Crown lease in the present case had incident to it a statutory right to purchase. Subject to any special provision of the Crown Lands Act, the lease with the right incident to it would form part of the estate of the lessee; it would be assignable and also the subject of disposition by will. It may be compared to a contract for the purchase of land which, we are told, in general terms, makes the purchaser the owner in equity of the land. The statutory charge is upon the land and upon the whole of the proprietary interests in the land. The conversion of the leasehold interest into a fee-simple interest, pursuant to the statutory right, enlarges, no doubt, the interest of the landholder in the land but it does not extinguish the charge.

The claim of the respondent that its mortgage had priority over the statutory charges was based, however, upon the well-known provisions of the Real Property Act 1886, which embodies the Torrens system of registration of title to land. One of the objects of the Act, declared in sec. 10, was to secure indefeasibility of title to all registered proprietors except in certain specified cases. So it is enacted that the title of every registered proprietor of land, which includes a mortgage security, shall be absolute and indefeasible subject to certain qualifications, that no instrument shall be effectual to pass any land or to render any land liable as security for the payment of money unless registered as prescribed by the Act, that no unregistered estate, interest, right, power, contract or trust shall prevail against the title of a registered proprietor taking bona fide for valuable consideration or of any person bona fide claiming through or under him: See secs. 3, 69, 67, 70, 71. But the charges in the present case are created by and take their force and effect from the statutes creating them. They are not in the form required by the Real Property Act 1886, sec. 128. It is true that the South-Eastern Drainage Board might lodge a caveat pursuant to sec. 191 of the Real Property Act to protect their charges, and so, perhaps, might the Registrar-General under the power given to him under sec. 220 (5) to enter caveats to prevent improper dealings. The entry of a caveat is to protect the rights of a caveator. But the failure to enter a caveat cannot cut down or interfere with the statutory charges created by the South-Eastern Drainage Acts, whatever effect such a failure may have as between competing equities: Cf. Lapin v. Abigail[4].

Charges are created which depend for their efficacy upon the provisions of the South-Eastern Drainage Acts. The statute declares that the apportioned costs and rates shall be first charges. The charges do not depend upon registration nor upon the execution or entry of any instrument. They are complete and effective by reason of the provisions of the Acts creating them. No room so far is left for the operation of the Real Property Act 1886, and the explicit and express provisions of the Drainage Acts must prevail. The charges are made first charges over the land and all interest therein and have priority over all other charges.

But there is a special provision in sec. 6 of the Real Property Act 1886 which was much relied upon. It is as follows: No law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply "notwithstanding the provisions of The Real Property Act 1886." Legislation in this form was justified, so it was argued, by the Colonial Laws Validity Act 1865, sec. 5 (Attorney-General for New South Wales v. Trethowan[5]). But sec. 5 has nothing to do with ordinary legislation such as is the subject of sec. 6 of the Real Property Act 1886; it deals with laws respecting the constitution, powers and procedure of representative legislative bodies. The argument, however, that sec. 6 of the Real Property Act 1886 is in substance an interpretation section deserves consideration. "The clause, so to speak, should be written into every statute" (In re Silver Brothers Ltd.[6]). Even so, if a subsequent Act chooses to make it plain that the provision of sec. 6 is being ignored or repealed to some extent, then effect must be given "to that intention just because it is the will of the legislature" (Ellen Street Estates Ltd. v. Minister of Health[7]). In the present case, it is plain, I think, that the South-Eastern Drainage Act creates a charge upon all lands benefited by the construction and maintenance of the works mentioned in the Act, whether the lands are subject to the provisions of the Real Property Act 1886 or not and whether the charge is registered under the Act or not. The Act is explicit, and it must prevail. It was suggested that this view is in direct conflict with the provisions of sec. 14 of the South-Eastern Drainage Amendment Act of 1900 and sec. 66 of the Drainage Act of 1931 enabling the statutory charge to be enforced by the board as if it were a mortgagee under the Real Property Act 1886. But these Acts do not constitute the board a mortgagee under the Real Property Act but only confer on it the powers that a mortgagee has under the Real Property Act 1886. Some difficulty may arise in applying the provisions of sec. 135 of that Act, if first charges are created also by various other statutes, as was said to be the case. Counsel for the appellant suggested they would rank pari passu, but we are not called upon to express any concluded opinion upon this matter in the present case.

The result is that the mortgage to the respondent, the Savings Bank, does not take priority over the statutory charges created by the South-Eastern Drainage Act.

So far as the judgment declares such a priority, the appeal should be allowed, but otherwise the judgment of the Supreme Court of South Australia should be affirmed.

The question for decision in this appeal and cross-appeal is whether certain statutory charges have priority over a first mortgage registered under the Real Property Act 1886 of South Australia. The charges are for drainage rates imposed from time to time by the South-Eastern Drainage Board for the purpose of cleaning, repairing and managing a drain called the Mount Hope drain and for, what is a much heavier burden, the unpaid instalments of a due proportion of the cost of constructing the drain.

The statutory provisions by which the land in question is encumbered with these impositions declare them to be a first charge. The mortgagee, however, claims that, as the land is under the Real Property Act and the charges at best are unregistered interests, they cannot prevail against his mortgage which he took bona fide upon the faith of a clean certificate of title. In point of date the charge for construction costs is prior to his mortgage, but the rates for maintenance were declared afterwards and did not form a charge earlier. It will be necessary to examine the statutory provisions creating the charges, which are later enactments than the Real Property Act, but the question how they affect the land and whether they mean to override the priorities established by that Act as between registered and unregistered interests must be determined with reference to the Real Property Act itself. The latter contains a section which provides in advance against the application to land under the Act of future inconsistent legislation of a general nature. It is sec. 6, which is expressed as follows: No law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply "notwithstanding the provisions of The Real Property Act 1886."

Sec. 5 of the Colonial Laws Validity Act 1865 enacts that such a legislature as the Parliament of South Australia shall have, and be deemed at all times to have had, full power to make laws respecting the constitution, powers and procedure of such legislature; provided that such laws shall have been passed in such manner and form as may from time to time be required by (amongst other things) any colonial law for the time being in force in the colony. Sec. 6 of the Real Property Act is, in my opinion, not a law respecting the constitution, powers or procedure of the South-Australian legislature. It is scarcely necessary to say that it has nothing to do with the constitution of the legislature. That it is not a law respecting its powers seems to me to appear clearly enough from its content. It does not profess to limit or qualify the power of the legislature in any way. Nor is it concerned with the procedure of the legislature. Sec. 6 has, I think, neither the purpose nor the effect of limiting the power of the Parliament of South Australia to make laws which, though they do not contain the words "notwithstanding the provisions of The Real Property Act 1886," nevertheless do, according to an intention sufficiently appearing, apply to land under that Act and make provisions inconsistent with it. The section is a declaration as to what meaning and operation are to be given to future enactments, not a definition or restriction of the powers of the legislature.

In interpreting any later enactment which might otherwise be construed as affecting land under the Act in a manner inconsistent with the Real Property Act, in order to give effect to sec. 6 the court should, in the absence from the enactment of the prescribed words, treat the general expressions as not including land under the Act. But, if the later enactment contains clear language from which it is plain that its provisions were intended to apply to land under the Act and to apply in a manner inconsistent with the Real Property Act, then they must operate according to their meaning. For the later enactment of the legislature must be given effect at the expense of the earlier. But, unless it is found impossible to reconcile the later statute with sec. 6, there is no room for the conclusion that the later Act must be regarded as meaning to operate upon land under the earlier Act and to do so inconsistently therewith. In re Silver Brothers Ltd.[8] supplies an example of the control which a provision like sec. 6 has upon the interpretation of a later enactment which might be considered inconsistent with the earlier provision. A Quebec statute imposing a tax for commercial purposes gave to sums due for tax to the Crown in right of the Province a first priority in bankruptcy. A Dominion statute imposing an excise tax for war purposes gave first priority in bankruptcy to the excise tax due to the Crown in right of the Dominion. In a conflict such as these provisions appeared to exhibit, the Dominion statute would prevail. But it was discovered that the Dominion Interpretation Act, an earlier statute, contained a section providing that no provision or enactment in any Act shall affect in any manner whatsoever the rights of His Majesty, his heirs and successors, unless it is expressly stated therein that His Majesty shall be bound thereby. The section was treated as protecting the rights of His Majesty in right of the Provinces as well as in right of the Dominion, and the Privy Council applied it to the Dominion taxing statute so as to control its operation where the priority it gave would conflict with that given by the Provincial statute. In answer to an argument that, to the later Dominion taxing Act, the provision of the earlier Dominion Interpretation Act must give way, in view of the maxim, posteriora prioribus derogant, Lord Dunedin, giving the opinion of the board, said:—"This entirely misses the point that the maxim only applies when the two statutes cannot live together. There is no difficulty in the statute that enacts the section giving preference to Dominion tax living with the Interpretation Act. The clause of the Interpretation Act is, so to speak, written into every statute. Thus the later statute gives perfectly good priority against all and sundry, but says that this priority does not affect the Crown right in the Province"[9].

Notionally to write the earlier provision into the later may be a useful way of testing the consistency of the two provisions, but in its application it must be remembered that, when two apparently inconsistent provisions occur in one Act of Parliament, to reconcile them by interpretation is the only course open. They cannot both receive their full meaning as it is expressed. In other words no-one can say that two provisions cannot live together when the legislature which gave them life found room for them in the one enactment. But, subject to this observation, what Lord Dunedin says represents the principle governing the application of sec. 6 of the Real Property Act to later enactments. It therefore becomes necessary to consider whether, in statutes creating the charge for construction costs and for rates, there is an irreconcilable intention to include land under the Act and to give priority to the charges notwithstanding that the registration system would produce a contrary effect. That the registration system would in the present case produce an effect contrary to that for which the South-Eastern Drainage Board contends, at all events in the case of construction costs, is, I think, quite clear, that is, if the registration system is given full operation on the footing that the statutory charge creates no more than an unregistered interest.

As in all legislation giving effect to the Torrens system, a fundamental provision of the Real Property Act 1886, South Australia, is that which makes the title of every registered proprietor of land absolute and indefeasible, subject to the encumbrances, estates and interests notified on the certificate of title and subject to certain specified exceptions. In the South-Australian Act statutory charges are not included among the specified exceptions: See sec. 69. After this provision comes the emphatic declaration that in all other cases than those specified the title of the registered proprietor of land shall prevail, notwithstanding the existence in the Crown or in any person of any estate or interest whatever derived by grant from the Crown or otherwise, which but for the Act might be held paramount or to have priority (sec. 70).

The unregistered charge for construction costs existed at the time when the appellant bank took its registered first mortgage, and to give it a priority over that security is, I think, in plain opposition to these provisions.

It follows, therefore, that the question upon which our decision must turn is whether in the enactments creating the statutory charges such a clear intention is expressed to include land under the Real Property Act and to give to the charges an absolute and indefeasible priority over all other interests that, notwithstanding sec. 6 of that Act, no course is open but to allow the intention so expressed in the later enactments to be paramount over the earlier Real Property Act.

In my opinion this question ought to be answered that such an intention so plainly appears that no other course is open. This answer depends upon provisions which, as to construction costs, are to be found in the South-Eastern Drainage Amendment Act 1900, an Act which, although repealed, governs the rights and liabilities of the parties in this case: Cf. sec. 16 (1) of the Acts Interpretation Act 1915-1936 of South Australia. The purpose of that statute was to authorize, on the request of a preponderance of the landholders affected, the construction of certain drains for the improvement of land and to apportion the cost among them. The Mount Hope drain was specifically mentioned in a schedule to the Act. The principle, which other provisions develop, was expressed in sec. 7, which provided that the cost of constructing the drain should be deemed to be an advance from the Irrigation Commissioner, whose place is now taken by the board, to all landholders of land to be benefited by the construction of the drain and that such advance should be repaid to him by the landholders with interest.

After setting up machinery for determining the proportion of the cost which each landholder must bear, the statute went on to provide that the amount apportioned should be a debt due from each such landholder to the commissioner and should be a first charge upon the land of such landholder benefited by the drain and should be repaid by such landholder to the commissioner, with interest thereon, in forty-two equal instalments (sec. 14). The same section provided that the charge upon the land might be enforced by the commissioner as if he were a mortgagee under the Real Property Act 1886. The personal liability imposed by this provision attaches only to the landholder in that character. Like the charge, it runs with the land, and, on a transfer of the land, it attaches to the new owner. This appears from sec. 18, a provision of great importance, which gives to the commissioner two remedies for the recovery of instalments, viz., first, a power to distrain and sell any goods and chattels on the land upon which the debt is charged, and, second, a right to sue the landholder of the land for the time being for the recovery of the instalments. As an alternative to the commissioner, the right of suit is vested in the Minister of the Crown controlling drainage works.

(1)

The lands made the subject of the charge are selected by reason of the improvement or benefit they will obtain from the scheme independently altogether of their being under, or not being under, the Real Property Act. If lands were excluded on the ground that they are under that Act, the whole scheme would be defeated. Moreover, in the case of the Mount Hope drain and certain other works, the very drain is specified and the lands affected are thus indirectly indicated by the statute itself. It is therefore impossible to give effect to sec. 6 of the Real Property Act by excluding land under that Act from the charge.

(2)

The first charge is upon the entirety of the interests making up ownership.

(3)

The first charge is vested in the commissioner by force of the statute, and no instrument creates it. It is held by him on behalf of the Crown and supported by statutory remedies, all of which are confided to him in his governmental or administrative character. The charge is not an interest in land capable of alienation. It is not an interest which could be placed upon the register. It is, therefore, impossible to act upon the view for which authority may be found in Assets Co. Ltd. v. Mere Roihi[10] and regard the statutory charge as something intended to be brought into conformity with the general registration system and therefore requiring registration. When sec. 14 speaks of the commissioner enforcing the charge as if he were a mortgagee under the Act it recognizes that he will not take his position on the register as the owner of a registered charge.

(4)

Even if it were possible to postpone the priority given to the charge in favour of a subsequent registered interest, it would not be possible to defeat the liability of all goods and chattels on the land to distress and sale for non-payment of the charge. For that is an independent statutory power vested in the commissioner or the board as his successor.

(5)

The fact that the landholder for the time being is liable for the instalments as a debt shows that the charge cannot be overreached by a dealing however bona fide and whatever reliance was placed upon the state of the register. For under sec. 18 a transfer operates to impose on the transferee a direct personal liability for the instalments falling due while he remains owner. The charge does no more than give an additional remedy against the land to enforce payment of the sum which in any case can be recovered by distress upon the occupier and by action against the owner. If it were true that a mortgagee might gain priority over the charge, nevertheless the following incongruous positions would remain true, viz., (i) that, if the mortgagee foreclosed, he would become personally liable in his capacity as owner for the debt for construction costs secured by the charge; (ii) that, if he entered into possession, his goods would be liable to distress and sale to enforce payment of the debt; (iii) that, if he exercised his power of sale, his transferee would, as owner, become liable for construction costs secured by the charge.

These considerations appear to me to make it impossible to escape the conclusion that the South-Eastern Drainage Amendment Act 1900 created a first and paramount charge quite independently of the nature of the landholder's title, that is, whether the land was under the Real Property Act or under the general law, and conferred upon it such an indefeasible priority and fortified it with such remedies that it cannot be overridden or affected by the provisions of the Real Property Act.

The rates for maintenance, as distinguished from construction costs, were levied under sec. 48 of the South-Eastern Drainage Act 1931 (No. 2062). They are made a first charge by sec. 66. It is unnecessary to discuss the scope of the Act of 1931, which reproduced the substance of many of the provisions of that of 1900. It is enough to say that, as the charge for rates attached after the mortgage, no question of postponing priority arises in relation to the unpaid maintenance rates and, in my opinion, the conclusion of the Full Court was correct, namely, that the rates were charged on the entirety of the interests in the land making up full ownership and as a first charge took priority over the mortgage.

This case presents one peculiarity which struck me as curious. At the time the charge for construction costs attached, the land was held under a Crown lease with a right of purchase but no Crown grant had been made. Afterwards a Crown grant was made which contained no reference to the statutory charge, and then the mortgage was registered. Sec. 2 of the South-Eastern Drainage Amendment Act 1900 makes the Commissioner of Crown Lands the landholder in the case of unleased Crown lands. But, if the Crown lands are leased, the section makes the leaseholder the landholder for the purpose of the Act. It seemed curious, if the Crown was not bound by the charge before the Crown grant, that the land should be bound in the hands of the grantee and that a mortgagee dealing on the faith of a clear Crown grant should find himself postponed to a charge arising before it issued. But the result, however curious, seems to be brought about by the combined operation of sec. 2, sec. 14 and sec. 18. Sec. 2 and sec. 14 together result in the imposition of a charge on one landowner, namely the leaseholder, and sec. 18 shows that every subsequent landholder is exposed alike to the charge and to personal liability for the debt.

For these reasons I think that the appeal should be allowed and the cross-appeal dismissed. The order of the Full Court should be discharged, and in lieu thereof it should be ordered and declared that the objection raised by par. 3 of the reply is bad and ought to be overruled. The plaintiff respondent should pay the defendant appellant's costs of the appeal and cross-appeal to this court and of the proceedings in the Full Court.

By virtue of sec. 14 of the South-Eastern Drainage Amendment Act 1900, the drainage board, which is the present appellant, claims that its statutory "first charge" over certain land "benefited by the drain" is a true first charge, and as such entitled to priority over a mortgage of the respondent bank. The land in question was under the Real Property Act of the State of South Australia. The charge of the drainage board was created by sec. 14 and attached in the month of July 1908; but the existence of the charge was not registered or recorded in any way upon the registered title. The bank's mortgage was made in 1912, and duly registered under the Real Property Act.

It is beyond question that the South-Eastern Drainage legislation was intended to apply to all land in the area which was benefited by the construction of the drain. Sec. 7 of the Act provided that the cost of the construction was to be deemed an advance to the landholders benefited by the construction. The proportion of the cost was to be duly apportioned to each landholder, and the advance was to be "a first charge upon the land of such landholder benefited by the drain" (sec. 14). This section also provided that the charge upon the land might be enforced as if, contrary to the fact, it were a mortgage under the Real Property Act. This last provision means only that the provisions governing the enforcement of a registered mortgage and contained in the Real Property Act may, so far as possible, be applied in order to enforce the statutory first charge. From first to last, everything suggests that all land benefited by the drain is to be affected by the provisions of the statutory scheme.

In my opinion the South-Eastern Drainage Act, having elevated the proportionate cost into a statutory loan and a statutory first charge against the land, does not authorize, still less require, the charge to be registered or noted wherever the land happens to be under the Real Property Act. I am also of opinion that the Real Property Act does not contemplate the registration or notation of such a statutory first charge as is here in question. As Lord Buckmaster said of the Torrens system as applied in New Zealand, "nothing can be registered the registration of which is not expressly authorized by the statute. (By statute would be more correct.) Everything which can be registered gives, in the absence of fraud, an indefeasible title to the estate or interest or in the cases in which registration of a right is authorized, as in the case of easements or incorporeal rights, to the right registered" (Waimiha Sawmilling Co. v. Waione Timber Co.[11])—Cf. The Real Property Act, New South Wales, Beckenham and Harris (1928), p. 95.

Apart from sec. 6 of the Real Property Act, upon which the Full Court mainly based its judgment in favour of the bank, the case of the drainage board would seem to be unanswerable. The statute declares the priority of its charge; first means first; there is no room for a registration of the charge under the Real Property Act, and therefore no room for the charge being defeated by registration of a subsequent interest in the same land.

Sec. 6 of the Real Property Act 1886 provides as follows: No law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply "notwithstanding the provisions of The Real Property Act 1886."

This section addresses itself to the application of certain laws to land under the Real Property Act. Wherever sec. 6, if valid, is to be given an operation, the result must be that some statute passed by the South-Australian Parliament will not apply to land under the Real Property Act. But the statute which will not so apply must be inconsistent with the Real Property Act itself. In the present case, it is said that there is an inconsistency between sec. 14 of the South-Eastern Drainage Amendment Act and the Real Property Act. By virtue of the former Act, the first charge of the board would prevail over the subsequent registered mortgage of the bank. It is said that, although the title conferred on the bank by registration of its mortgage is made indefeasible by virtue of the provisions of Part VI. of the Real Property Act, sec. 14 of the South-Eastern Drainage Amendment Act destroys such indefeasibility in the case of land under the Act.

But inconsistency only arises upon the prior assumption that, on the true construction of the Real Property Act, it is intended that the title of the registered proprietor of a mortgage should prevail over special statutory first charges such as those created by sec. 14. In my opinion, this assumption is erroneous. The "first charge" created by sec. 14 is not created by an "instrument" within the meaning of sec. 67 of the Real Property Act, nor is such "first charge" an encumbrance which is required or permitted to be registered, recorded or notified under the Act: Cf. Beckenham and Harris (supra): note on sec. 42 of the New-South-Wales Real Property Act.

If this is so, sec. 6 of the Real Property Act need not be considered much further. But it is worth while to note what that section purports to do. It purports to control future parliaments of South Australia in any legislation affecting land under the Real Property Act by requiring that unless such legislation is couched in a certain literary form (i.e., containing the words "notwithstanding the provisions of The Real Property Act 1886") it cannot affect land under the Act. For instance, it would not be sufficient if the Parliament used the phrase "In spite of the provisions of the Real Property Act 1886."

In my opinion the legislature of South Australia has plenary power to couch its enactments in such literary form as it may choose. It cannot be effectively commanded by a prior legislature to express its intention in a particular way. Maugham L.J. has, I think, said something to this substantial effect in Ellen Street Estates Ltd. v. Minister of Health[12]. But this is an even clearer case. In my opinion the decision in Attorney-General for New South Wales v. Trethowan[13] has nothing to do with the matter. Sec. 6 is not a mere interpretation section, for it is not expressed to operate only so far as the contrary intention does not appear. It purports to lay down a rigid rule binding upon all future parliaments. It declares that, however clearly the intention of such parliaments may be expressed in an enactment, that intention shall not be given effect to unless it contains the magic formula. I think that the command in sec. 6 was quite ineffective and inoperative.

The conclusion is that the statutory first charge of the board prevails over the subsequently registered mortgage of the bank. The Full Court of South Australia found it easier to concede priority to the board's charge for maintenance rates in respect of which the board also possesses a "first charge" by virtue of sec. 66 of the Act of 1931. I should have thought it more difficult because it is possible to argue that a "first charge" prevailing over charges subsequently created does not necessarily prevail over charges previously created. However that may be, I agree with the conclusion of the majority of the Full Court that the "first charge" in respect of rates is intended to prevail over existing registered mortgages in the case where the land happens to be under the Real Property Act.

The moneys which the appellant claims to recover out of the land with which this case is concerned became debts due to it and, if sec. 6 of the Real Property Act 1886 does not affect its rights, a "first charge" on the land by the operation of the Drainage Acts. The land is subject to the provisions of the Real Property Act. The respondent is the registered proprietor of a mortgage over the land. The question for decision is which of these securities, namely, the appellant's charge and the respondent's mortgage respectively, has priority over the other.

The land is directly charged by the Drainage Acts with the debts made payable to the appellant without any reference to the Real Property Act; they enact that the debts are to be a first charge on the land. It would be inconsistent with the provisions of the Drainage Acts imposing this first charge on the land to say that the respondent's mortgage has by virtue of its registration under the provisions of the Real Property Act priority over the charge. The result is that the provisions of the Drainage Acts, which were passed subsequently to the Real Property Act, prevail against that Act and give the appellant's charge priority over the respondent's mortgage unless the operation of these provisions on the respondent's rights as a registered mortgagee is affected by the omission of the legislature to employ the form prescribed by sec. 6 of the Real Property Act in enacting the Drainage Acts.

One view on which the appellant's charge would not take priority is that it is to be presumed from the omission that parliament did not intend that the Drainage Acts and the Real Property Act should be inconsistent with each other, and that the provisions requiring registration of the charge imposed by the Drainage Acts should be implied in them in order to make these Acts march with the Real Property Act. The provisions of the Drainage Acts do not supply any reason for presuming that Parliament intended that the security of a first charge on land—the security with which it armed the drainage authority for the recovery of public money which it expended under the Acts—was to be rendered completely effectual by some other action supplemental to those provisions, these being sufficient by themselves to perfect the charge and to establish unconditionally its priority. Besides, it is difficult to see how the charge could retain its priority in all circumstances (and it is the obvious intention of the legislation that it should) if the priority of the charge were dependent on the provisions of the Real Property Act determining the conditions under which instruments dependent upon that Act for their complete legal effect take priority over one another. If the charge lost its priority as a first charge for any reason based on the provisions of the Real Property Act, the clear intention of the legislature that the appellant's charge should be an absolute first charge would be defeated. In my opinion, the omission of the legislature to use the form prescribed by sec. 6 of the Real Property Act in framing the Drainage Acts does not raise any presumption of a legislative intention that those provisions of these Acts which are now material should be reconciled with the Real Property Act by implying such other things in the Drainage Acts as would be necessary to make the two sets of provisions work together.

The other view upon which the appellant's statutory first charge does not take priority is that, because of the supposed inconsistency between the provisions of the Drainage Acts and the Real Property Act and the omission to employ the form prescribed by sec. 6 in enacting the former, they cannot validly apply to any land which is subject to the provisions of the Real Property Act. This view is based on sec. 5 of the Colonial Laws Validity Act 1865. The argument in support of it is that sec. 6 of the Real Property Act prescribes a manner and form, which was not observed in the case of the drainage legislation, for passing laws inconsistent with the Real Property Act. The argument fails, in my opinion, because sec. 6 is not a law respecting the constitution, powers or procedure of the legislature. The section enacts a rule of interpretation for Acts which are not cast in the form which it prescribes. But, if a future Act was not cast in that form, yet the Act clearly manifested an intention different from the presumption which sec. 6 intended to supply for the purpose of ascertaining its meaning and effect, the presumption would be displaced by the expression of legislative intention: Cf. Ellen Street Estates Ltd. v. Minister of Health[14]. It is clear that the Drainage Acts were intended to apply to any land, whether it was subject to the provisions of the Real Property Act or not, if the land came within the operation of the Acts because steps authorized by the Act were taken in relation to the land. The land with which this case is concerned was brought within the operation of these Acts, and there can be no doubt that, although the legislature did omit the form prescribed by sec. 6, the provisions of the Acts applied at all material times to the land.

In my opinion the appellant is entitled to enforce in priority to the respondent's mortgage its charge on the land for drainage rates and for so much of the cost of construction apportioned to the land as is due.

Appeal allowed. Cross-appeal dismissed. Order of Supreme Court set aside. Declare that the matters alleged in pars. 5 to 20 of the defence do, in point of law, afford an answer to the plaintiff's claims.

[1] (1881) 17 Ch. D. 782.

[2] (1928) Ch. 567.

[3] (1891) 3 Ch. 265.

[4] [1930] HCA 6; (1930) 44 C.L.R. 166, at p. 205.

[5] [1932] UKPC 1; (1932) A.C. 526.

[6] (1932) A.C., 514 at p. 523.

[7] (1934) 1 K.B., at p. 597.

[8] (1932) A.C. 514.

[9] (1932) A.C., at p. 523.

[10] (1905) A.C., at p. 205.

[11] (1926) A.C., at p. 106.

[12] (1934) 1 K.B., at p. 597.

[13] [1932] UKPC 1; (1932) A.C. 526.

[14] (1934) 1 K.B. 590.

High Court of Australia

South-Eastern Drainage Board (SA) v Savings Bank of South Australia [1939] HCA 40; (1939) 62 CLR 603 (19 December 1939)

HIGH COURT OF AUSTRALIA