Baron v Upton
[2000] TASSC 20
•22 March 2000
[2000] TASSC 20
CITATION: Baron v Upton [2000] TASSC 20
PARTIES: BARON, Thomas Peter
v
UPTON, Richard Austin
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: Original
FILE NO/S: M140/1999
DELIVERED ON: 22 March 2000
DELIVERED AT: Hobart
HEARING DATES: 14, 16 March 2000
JUDGMENT OF: The Master
CATCHWORDS:
Deeds - Mortgage - Alteration after execution - Whether mortgage invalidated.
Pigot's Case (1614) 11 Co Rep 26 b; 77 ER 1177, considered.
Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259; Farrow Mortgage Services v Slade & Nelson (1995 - 1996) 38 NSWLR 636; Morton v Black (1986) 4 BPR 9164, applied.
Aust Dig Deeds [23]
REPRESENTATION:
Counsel:
Applicant: A J Abbott
Respondent: R M Webster
Solicitors:
Appellant: Butler McIntyre & Butler
Respondent: C A Johnston Munnings & Co
Judgment Number: [2000] TASSC 20
Number of Paragraphs: 14
Serial No 20/2000
File No M140/1999
THOMAS PETER BARON v RICHARD AUSTIN UPTON
REASONS FOR JUDGMENT THE MASTER
22 March 2000
The applicant mortgagee has applied for an order that the respondent mortgagor give possession to him of registered land described in the Folio of the Register Vol45069, Folio 3 ("the land") pursuant to the Land Titles Act 1980, s146 ("the Act").
Section 146 provides in its relevant part:
"146 ¾ (1) Where … default is made in the payment of any money secured by a mortgage … for the time specified by this Act or in the mortgage … ¾
(a)a mortgagee as against a mortgagor …
may without any formal demand or re-entry apply to the Supreme Court for an order for possession of the premises in respect of which the default is made.
(2) On application being made under subsection (1), the Supreme Court may issue a summons directed to a mortgagor … referred to in that subsection, calling on him on a day and at a place to be named in the summons, to show cause why the Supreme Court should not order possession … .
(3) Service of an order referred to in subsection (1) stands in lieu of ¾
…
(b)in the case of a mortgagee … against a mortgagor …, the notice required to be given in such a case by this Act.
(4) If the person entitled to redeem the land referred to in subsection (1), or liable for the payment of money under a mortgage … referred to in that subsection, before the return day of a summons referred to in subsection (2), pays the money due under the mortgage … and the costs of the summons, the summons shall be discharged.
(5) If a person referred to in subsection (4) does not make the payment referred to in that subsection and does not at the time specified in the summons referred to in that subsection show good cause why the premises should not be recovered, then on proof of ¾
(a)the service of the summons, if the mortgagor … does not appear to the summons;
(b)default having been made in payment of the money due under the mortgage … for the time specified by this Act, or otherwise provided in this section before the proceedings were commenced;
(c)…
(d)the money due under the mortgage … remaining unpaid,
the Supreme Court may order that possession of the premises mentioned in that summons be given by the mortgagor … to the applicant on or before such day, not being less than 4 weeks from the day of hearing, as the Supreme Court thinks fit to specify, unless within that period all the money due and costs are paid.
…"
On 1 July 1999, the Court ordered that a summons to show cause be issued to the respondent. The summons was personally served on the respondent on 13 July 1999. The matter was eventually set down for hearing for 14 March 2000 at which time the respondent was legally represented.
Several affidavits were read into evidence on behalf of the applicant without objection and a certified copy of the dealing registered under the Act, being mortgage No C40607, tendered. The material shows:
1 The land is registered land within the meaning of the Act.
2 On 17 July 1997, the respondent, as mortgagor and guarantor, executed a mortgage over the land in favour of the applicant and signed, in the presence of a witness, each page of the mortgage.
3 On 28 July 1997, the respondent became the registered proprietor of the land.
4 On 28 July 1997, by dealing No C40607, the mortgage was registered under the Act.
5 The mortgage included the following provisions:
"principal sum one hundred thousand dollars ($100,000.00) How and when Principal sum is to be repaid: On demand but if no demand is made then on 17th day of July 2000 1 That the Mortgagor will pay to the Mortgagee the said principal sum in the manner and at the time above set forth
…
11 Without prejudice to any other provisions hereof this Mortgage shall secure the following monies:
(a) The sum of one hundred thousand dollars ($100,000.00) already advanced or to be advanced to the Mortgagor at the request of the Guarantor:
(b) Also all monies already advanced or paid or now or hereafter advanced or paid by the Mortgagee to for or for the accommodation of or on behalf of the Mortgagor either alone or jointly with any other person or otherwise owing now or hereafter by the Mortgagor either alone or jointly with any other person to the Mortgagee on any account whatsoever;
…
All of which monies are hereinafter collectively described as 'the principal sum' or 'the monies hereby secured' and each of such expressions shall include any part of the monies described in the above paragraphs."
6 The initial advance was for $100,000, being the sum of $96,500 to discharge an earlier mortgage and the additional sum of $3,500. The additional advance was made on 17 July 1997.
7 On 16 October 1998, the applicant advanced to the respondent, the further sum of $30,000.
8 By order of the Supreme Court dated 11 December 1998, Peter Royston Worrall was appointed the manager of the legal practice of the applicant and authorised to deal with the property of that practice. The order has been renewed from time to time and in these proceedings it was an agreed fact that Peter Royston Worrall continues to be the manager of the legal practice of the applicant.
9 On 10 February 1999, Mr Worrall wrote to the respondent advising of his appointment as manager of the mortgagee's legal practice and demanding repayment of the monies due under the mortgage.
10 The respondent did not pay the monies due under the mortgage and on 24 March 1999, Mr Worrall caused the respondent to be personally served with a notice of intention to sell, pursuant to the Act, s77. The notice required payment forthwith of the whole of the principal monies and interest remaining outstanding under the mortgage and stated that if default in payment continued for a further period of one week from the date of service of the notice, sale of the land would be effected.
11 The monies demanded have not been repaid. At the commencement of the hearing, being 14 March 2000, the amount owing was $135,692.81.
The respondent contends that the mortgage has been invalidated. He says that whilst in the control of the applicant, the mortgage has been materially altered. The respondent tendered the document originally executed by him. In that document, original words being:
"principal sum
one hundred thousand dollars ($100,000.00)"
have been altered by a line being drawn through the words "one hundred thousand dollars ($100,000.00)" and adding immediately underneath the hand written words "one hundred & thirty thousand dollars ($130,000.00) 16/10/98". There is also endorsed next to the alteration what appears to be an initial. The respondent made an affidavit, sworn 30 July 1999, part of which was read into evidence. In particular, the following paragraph was read:
"The handwritten 'one hundred & thirty thousand dollars ($130,000.00) 16/10/98' … and the crossing through of the 'one hundred thousand dollars ($100,000.00)' was not written, made or initialled by me and were unknown to me until my recent inspection of the photocopy of C40607 …".
The respondent referred to Pigot's Case (1614) 11 Co Rep 26 b; 77 ER 1177 which contained the following statement on the effect of unilateral alterations to instruments after execution:
"When any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it interlineation, addition, erasing, or by drawing of a pen through a line, or through the midst of any material word, … the deed thereby becomes void …
… if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed is void."
Pigot's Case was considered in Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 by Bray CJ. At 274 and 275, he said:
"In terms Pigot's Case only applies to deeds, but the doctrine was extended to all contracts in 1791 in Master v Miller. This was in many respects a regrettable and unnecessary development. It was harshly criticised by Holmes J in Collected Legal Papers (1921) at pp192 - 194, but we are bound by it.
Originally, I think, the rule springs, as Salmond and Williams say at p573, from an archaic notion of the sacrosanct and talismanic effect of the seal of the obligor on the wax of the parchment of the deed. The deed was surrounded with a magic aura. Anything which violated its integrity destroyed its manna. No doubt also in the 17th Century, and even more so earlier, copies of documents could not be multiplied with the present facility and the only copy of a bond or mortgage would be likely to be the original held by the creditor. There may well have been reasons, which do not exist now, why there should be strong sanctions against tampering with the text of the deed, even in the most immaterial of particulars. No doubt it was for these reasons that Lord Coke said in Pigot's Case that an alteration by or, I presume, with the authority of the obligee would avoid the deed even if the alteration was not material. But it is apparent that even he shrank from the strict logic of this way of thinking when he said that alteration by a stranger would not avoid the deed if the alteration was not material, and so in Pigot's Case itself the Sheriff of Oxford succeeded in his action, since the alteration was made without his privity. If he had out of harmless vanity himself inserted his title after his name in the body of the document, he would have lost the debt. And the rule was never applied to the accidental loss or mutilation of the document, as by the ravages of rain or mice.
But in 1869 in Aldous v Cornwall the Court of Queen's Bench held that an immaterial alteration, even if made with the authority of the party in whose custody the document was, would not avoid it. The learned judges said at p579:
'Not being bound, we are certainly not disposed to lay it down as a rule of law that the addition of words which cannot possibly prejudice anyone, destroys the validity of the note.'
It seems to me that the case represents a new departure. Once it is established that the court is entitled to look at the nature of the alteration it is clear that there can be no automatic sanction for the violation of the document's integrity."
In Farrow Mortgage Services v Slade & Nelson (1995 - 1996) 38 NSWLR 636, Gleeson CJ said, at 640:
"A notable discussion of the modern operation of the rule is to be found in the judgment of Bray CJ in Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259. I would respectfully agree with his Honour's views as to the need, in modern conditions, to confine the nullifying operation of the rule to cases which fall strictly within its ambit, and to interpret the rule as liberally and reasonably as possible."
Counsel for the applicant submitted that the alteration was not material but that even if it was, the mortgage cannot be invalidated by the rule because the mortgage has been registered under the Act. He referred to Morton v Black (1986) 4 BPR 9164. In that case, a mortgagor of registered land complained that a mortgage had been altered by her solicitor after execution in a material way without her authority. Young J said, at 9166:
"There is, of course, an additional reason why the rule in Pigot's Case has nothing to do with the present litigation and this is because that rule has no operation at all in respect of a registered document. The authorities for that proposition are set forth in Williston's article at p110, but it is self-evident because the rationale for the rule is to prevent a person, in whose custody a document is, committing a fraud by proffering an altered deed in court. Once a genuine copy of the instrument is registered there is no purpose to be served by applying the rule."
I adopt what Young J has said. The rights and obligations of the parties are ascertained by reference to the Act and the register. Generally, once a dealing has been registered, there is no need to have recourse to the original document.
In any event, the application of the rule in Pigot's Case since Aldous v Cornwall (1868) LR 3; QB 573 is confined to alterations which are "material". The alteration here was not material. The mortgage, in its original form as executed in cl 11, described the principal sum and the monies secured as including:
"The sum of one hundred thousand dollars ($100,000.00) already advanced or to be advanced to the Mortgagor…"
and
"Also all monies … hereafter advanced or paid by the Mortgagee … for the accommodation of or on behalf of the Mortgagor."
Hence, the amount of the principal sum is ascertained from evidence of the amounts actually advanced and so the alteration to the document by the deletion and the addition of the words referred to earlier, is of no consequence.
For completeness, I mention that at the hearing the following paragraph of the respondent's affidavit was read into evidence de bene esse:
"11 Notwithstanding the reference, on Page 2 of Annexure 'B' to the Affidavit, to the principal sum of $100,000 being repayable 'on demand but if no demand is made then on 17th day of July 2000', I was assured by Thomas Peter Baron in negotiations which resulted in C40607, that no demand would be made prior to 17/7/2000 ie within the usual three year term, if all interest payable thereunder was duly paid; I do not recall the independent Solicitor (Mr Creese), to whom I was sent by Mr Baron to sign the Mortgage in 1997, drawing attention to the Mortgage not being for a three year term; the Applicant appears to acknowledge doubt in such regard in saying, at 2.3 of Annexure 'F' to the Affidavit, 'Your Mortgage is in effect, repayable on demand'; (my emphasis);"
In his submissions, however, counsel for the respondent did not suggest that the evidence in this paragraph, either on its own or in combination with other material, was sufficient for any consequence to result which might defeat the claim for possession. Accordingly, at the conclusion of the hearing I ruled that this evidence was not relevant and, hence, inadmissible.
Default has been made in the payment of money due under the mortgage and the money remains unpaid. The respondent has not shown good cause why the mortgaged premises should not be recovered. In the circumstances, an order for possession should be made.
It is ordered that possession of the premises described in Folio of the Register Vol45069, Fol3, be given by the respondent, Richard Austin Upton as trustee of the Upton Trust, to the applicant Thomas Peter Baron, on or before Thursday 20 April 2000, unless, by that date, all money due under mortgage No C40607 is paid.