New South Wales Supreme Court CITATION : Hypec Electronic v Registrar-General (No 2) [2008] NSWSC 138 HEARING DATE(S) : 21 February 2008 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 21 February 2008 DECISION : Further submissions to be served on each party. CATCHWORDS : PROCEDURE - Miscellaneous procedural matters - Further Submissions - Effect of registration of transfer of mortgage to B upon debt due by A and B to former mortgagee CATEGORY : Procedural and other rulings English Scottish and Australian Bank Ltd v Phillips (1936 1937) 57 CLR 302 Chambers v Kingham (1878) 10 Ch D 743 Commissioner for ACT Revenue v Perpetual Trustee Co (Canberra) Ltd (1993) 118 ACTR 1 CASES CITED : Brydges v Brydges (1796) 3 Ves Jun 120 Merest v James (1821) 6 Madd 118 In re Radcliffe (1892) 1 Ch 227 Ingle v Vaughan Jenkins (1900) 2 Ch 368 TEXTS CITED : Meagher Gummow & Lehane, 4th ed, 40 025 Wen Hua Tsui - First Cross Claimant Hypec Electronics Pty Ltd (In Liquidation) - First Cross Defendant Colin Anthony Mead - Second Cross Defendant Lucy Guitar Mead - Third Cross Defendant Mei Chen Yang - Fourth Cross Defendant Yang Shiow Ging (also known as Grace Yang) - Sixth Cross Defendant PARTIES : Third Cross Claim Colin Anthony Mead - Cross Claimant Wen Hau Tsui - First Cross Defendant Hypec Electronics Pty Ltd - Second Cross Defendant Registrar-General of Department of Lands - Third Cross Defendant Shiow Ging Yang - Fourth Cross Defendant FILE NUMBER(S) : SC 4413/05 Mr P Walsh - First Cross Defendant COUNSEL : Mr V Bedrossian - Second Cross Defendant Mr G Moore - First Cross Claimant Dennis Wing & Solicitors - First Cross Claimant SOLICITORS : Etheringtons Solicitors - Third Cross Claimant on the Third Cross Claim Deakins Solicitors - First Cross Defendant - 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J THURSDAY 21 FEBRUARY 2008 4413/05 HYPEC ELECTRONICS PTY LTD (IN LIQUIDATION) v REGISTRAR GENERAL OF THE DEPARTMENT OF LAND & ORS (No 2) EX TEMPORE JUDGMENT 1 I require the parties to provide me with further submissions, in addition to those already provided, on the effect of the transfer of the mortgage over the Laughtondale property to Grace Yang on the debt formerly owed by Mrs Mead and Grace Yang to the Commonwealth Bank of Australia. 2 This is not a case of the owner of the fee simple and creator of a mortgage becoming the registered transferee of the mortgage. English Scottish and Australian Bank Ltd v Phillips (1936-1937) 57 CLR 302 does not directly apply. 3 The Laughtondale property was owned by Mr and Mrs Mead. A mortgage had been granted over it to CBA to secure the debts of Mrs Mead and Grace Yang. Presumably the covenants of Mr and Mrs Mead were given as sureties for the due repayment of the debt by Mrs Mead and Grace Yang. 4 When the mortgage to Grace Yang was registered, she became entitled to the rights of CBA under the mortgage. It may be that there was no merger of the bank's right under the loan agreement and no question of extinguishment of the debt owed by Grace Yang. There may be a distinction between the rights under the mortgage and the loan obligations to CBA of Mrs Mead and Grace Yang. 5 Merger is the incorporation of one right in another. The question here is whether Grace Yang's acquisition of the rights of the mortgagee extinguished her liability that was secured by the mortgage. It is unlikely to be a case of merger. 6 Further, if a question of merger arises, there is the proposition that merger only occurs if the legal and equitable estates are co-extensive and commensurate and it is for the benefit of the party in whom the estates reside (Chambers v Kingham (1878) 10 Ch D 743, Commissioner for ACT Revenue v Perpetual Trustee Co (Canberra) Ltd (1993) 118 ACTR 1, Brydges v Brydges (1796) 3 Ves Jun 120, Meagher Gummow & Lehane, 4th ed, 40-025, Merest v James (1821) 6 Madd 118, In re Radcliffe (1892) 1 Ch 227, Ingle v Vaughan Jenkins (1900) 2 Ch 368). 7 The debt was owed by Grace Yang in her personal capacity. The mortgage was transferred to her as trustee for Mrs Tsui and her Taiwanese investors. 8 I require the parties to provide me with further submissions on this issue and at greater depth than the cursory submissions on behalf of the liquidator and Mr Mead. 9 The orders I make are these. I direct the parties to serve on each other and deliver to my Associate written submissions on the issue whether the transfer and registration of the mortgage over the Laughtondale and West Ryde properties to Grace Yang affected the debt formerly owed by Lucy Mead and her to CBA by no later than 4pm on Wednesday 27 February 2008. I stand the matter over before me for consideration of these submissions and the entry of final orders at 9.30 am on Friday 29 February 2008. I reserve the costs of today's proceedings. I release Mr Mead from the obligation to comply with these orders. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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