Coorey v Jalglade Pty Ltd

[1994] QCA 231

IN THE COURT OF APPEAL	[1994] QCA 231
SUPREME COURT OF QUEENSLAND

Appeal No. 254 of 1993

Brisbane

Before Macrossan C.J. McPherson J.A. Demack J.

[Coorey v. Jalglade P/L.]

BETWEEN

LORRAINE MARY COOREY

(Second Defendant) Appellant

AND

JALGLADE PTY LTD.

(Plaintiff) Respondent

REASONS FOR JUDGMENT BY THE COURT

Judgment delivered the Twenty-Eighth day of June 1994

This appeal by the second defendant Mrs Coorey is brought from a decision given against her in the District Court at Brisbane for: (1) a sum of $125,000 together with interest amounting to $108,767.12; (2) a declaration that the plaintiff Jalglade Pty. Ltd. is entitled to be registered as mortgagee over certain registered land at 15 Eysford Street, Carindale; and (3) other orders, which may be summarised by saying that their effect is to require Mrs Coorey to do what is necessary to enable Jalglade to be so registered. At the same time, although it does not distinctly appear from the formal order in the record on appeal, the learned trial judge must also have given judgment dismissing Mrs Coorey's counterclaim. It was in substance the obverse of Jalglade's claim in the action, in that it sought cancellation of a bill of mortgage dated 12 June 1989 and delivery up of the certificate of title to the land. The notice of appeal seeks orders for such relief in the event that the appeal is successful and the judgment in the action is set aside.

Stated as briefly as is possible the facts giving rise to the action are these. In 1988 Mrs Coorey and her former husband were registered as joint proprietors of the Carindale land, which had been the matrimonial home. She alone was, however, entitled to it by virtue of a deed sanctioned by the Family Court in 1985 when their marriage was dissolved. The land was subject to registered mortgages all of which have since been released. The only one that need be mentioned here is a mortgage in favour of the National Australia Bank, which was discharged in the course of the ensuing transactions using funds provided by the plaintiff Jalglade.

Late in 1988 Mrs Coorey was approached by an acquaintance named Schneider, who put a proposal to her. It was that she execute two "buy-back" contracts, as he called them, and that the mortgage in favour of the Bank would be paid out and she would receive a windfall of $20,000 on settlement of the contracts. The contracts, which are in the standard printed REIQ form but not dated, provide in the case of one of them for the sale by Mrs Coorey of her land to Jalglade for $115,000 with completion to be effected on 14 February 1988; the second is for the sale by Jalglade back to Mrs Coorey of the same land for the same price with completion to be had on the following day, i.e. 15 February 1988. As the contracts were not executed until December 1988, the completion date in February 1988, which is given in each of them is evidently a mistake for the same date in 1989. Nothing turns on that.

At about the time or soon after the contracts were executed, steps were taken to pay out the Bank mortgage and have it released. The certificate of title was delivered to solicitors MacGillivrary & Co., who delivered it to Schneider pursuant to an authority executed by Mark Coorey acting under power of attorney dated 30 December 1988 from his mother Mrs Coorey, who was out of Queensland at that time. Mark Coorey is one for whom, as his evidence discloses, legal practice has little attraction. Although admitted as a solicitor in 1986, he was at the time of the trial working as a labourer. According to his account of it, as well as that of his mother, the certificate of title was needed to enable Schneider to effect transfer of the land from the joint names of Mrs Coorey and her former husband into her name as sole proprietor. Schneider, however, delivered the certificate of title to Bonifant, who was the principal of the plaintiff company Jalglade.

Meanwhile, in the early months of the new year, the time for completion of the buy-back contracts was approaching. It was extended on two occasions ultimately postponing it until the end of May 1989. On each occasion the extension was arranged by Schneider as intermediary acting between Jalglade and Mrs Coorey. In June 1989 she was working as a checkout attendant at a shop when she received at her workplace a telephone call from Schneider, who told her that Mr Bonifant was threatening to "sell her up".

On the following day Schneider repeated this statement to Mrs Coorey in person, saying that Bonifant required a mortgage from her, or he would sell her up. According to her account of it, Schneider told her that the mortgage document she was then asked to sign was not intended to be acted upon or registered but was to be used by Bonifant simply to show to his bank, which was putting pressure on him. Mrs Coorey, who claimed to have been at the time in a state of severe shock at the threat of being "sold up" and so of losing her house, was induced to sign the bill of mortgage (ex. 9), which was presented to her by Mr Schneider.

According to the date it bears, the bill of mortgage (ex. 9) was signed by Mrs Coorey on 12 June 1989, her son Mark (who was present during the conversation) obligingly acting as witness to his mother's signature. The instrument is in printed form with numbered spaces to be completed by insertion of the requisite particulars. In this way the mortgagee is identified at (4) as the plaintiff Jalglade Pty. Ltd. At (8) the "consideration" is stated as $125,000; "rate of interest" as 25%; and what is said to be the "period of loan" is given as "The principal sum together with any interest is to be repaid in full on or before the 30th June 1989".

These particulars in the form are then followed by a statement at (9) that:

"The mortgagor for the above consideration hereby covenants with the mortgagee in terms of ... and memorandum No. H 902333 filed in the office of the Registrar ... and charges the estate or interest herein specified in the land above described with repayment/payment of all sums of money referred to in item (8) above in the manner therein expressed."

Memorandum H902333, which forms part of ex.9, comprises printed conditions, of which only cl.1 is relevant as containing an undertaking by the mortgagor to pay the moneys secured in instalments or on demand.

It was on this bill of mortgage that Jalglade founded its action against Mrs Coorey which ended in judgment against her. The cause of action pleaded against her, as it appears in the amended version of the plaint on which the trial took place, alleges (para. 18) no more than that "the plaintiff is an equitable mortgagee" of the land at Carindale, the particulars given being that the mortgage was created by the written bill of mortgage dated 12 June 1989 signed by the defendant, in conjunction with the deposit by Mrs Coorey with Jalglade of the certificate of title, with the intention of charging the property with the sum of $125,000 "loaned by the plaintiff to the first defendant with interest...". Apart from a further allegation in para. 24 that Mrs Coorey had failed to pay the sum of $125,000 and interest pursuant to the equitable mortgage, the matter pleaded against her in the plaint included no other allegation in any way relevant to this appeal.

It is difficult to understand how Jalglade could on the allegation pleaded expect to succeed against Mrs Coorey in its claim for $125,000 and interest without proving it had lent her the principal sum. The bill of mortgage was not executed as a deed and would not take effect as such until registered. Even if it had been executed as a deed, it contained no clause acknowledging receipt of the principal sum. And if it had contained such a clause, it would not have been conclusive evidence against Mrs Coorey that she had received the sum stated : Burchell v. Thompson [1920] 2 K.B. 80, 86. Equity has always permitted the maker of a deed to go behind a receipt clause provided no estoppel in favour of third parties is involved : Norton on Deeds, 2nd ed., at 226-228. In the present case Jalglade never paid Mrs Coorey the sum of $125,000 or any other sum by way of loan or any other account. No one ever suggested that it did, nor was any evidence in support of such a suggestion offered at the trial apart from the bill of mortgage (ex. 30) itself, which afforded no evidence at all of such a payment.

What had really happened is not relevant to any claim against Mrs Coorey for $125,000 except perhaps as helping to demonstrate just how far from establishing such a claim Jalglade happened to be. Jalglade was the creature of Bonifant, who was also a principal of the company whose name appears on the "buy-back" contracts as the vendor's real estate agent. Schneider is a man who, when not following the calling of a Commonwealth public servant, had from about 1981 been engaged in property dealing. In that capacity, he or the first defendant Ochowl Pty. Ltd., which he managed, agreed in about 1988 to buy a shopping centre at a price of several millions of dollars. Bonifant or his firm were the estate agents for the vendors in the transaction and as such stood to earn a large sum by way of commission if the sale was completed.

By late 1989 it was becoming clear that Ochowl might not be able to find the money to settle the shopping centre contract. Bonifant offered to negotiate an arrangement with the vendors for an extension of time for completion in return for an increase in the price together with a succession of monthly payments each of $10,000. Schneider and Ochowl did not have the necessary funds to pay, but Jalglade, which Bonifant controlled, offered to provide the money that was needed. On behalf of Jalglade, however, he required some form of security for its payments on that account. The "buy-back" contracts, which were his idea, were the result. So far as one can gather, they were not intended to operate primarily as sales according to their terms, but rather as security. The scheme was that on settlement of the first contract, Jalglade would pay the purchase moneys of $115,000 for the Carindale land but only after deducting any amount it had previously paid to or on account of Ochowl. It would then demand a transfer of the land from Mrs Coorey, paying her only the net balance, with the consequence that she would not have enough money from that source to enable her to buy the land back on settlement of the second contract, which was due on the following day.

Alternatively, if she did raise the money with which to settle, Jalglade would use it to make good the sum it had lent to Ochowl. It would thus either be repaid or receive title to her land as security for repayment by Ochowl.

Between about December 1988 and May 1989, a total of some $106,000 had been paid by Jalglade to or on account of Ochowl. The latter was, as matters turned out, unable to raise the finance necessary to complete the shopping centre purchase, and it is now in liquidation. It was when that transaction fell through that Bonifant demanded execution of the mortgage, which was signed by Mrs Coorey at the instance of Schneider after warning her of Bonifant's threat to sell her up. It is not easy to know where, in all of this, the truth, if any, really lies. There is reason to suppose that Schneider, who is now bankrupt, deceived one or other, or perhaps both, of Bonifant and Mrs Coorey. There is no basis for suspecting that Bonifant was involved in what appears to have been the deception practised on Mrs Coorey; indeed, he seems to have studiously avoided taking part in what went on between Schneider and her. There was never any direct communication between Bonifant and Mrs Coorey. Schneider acted throughout as the intermediary. It would probably have been fatal to the claims of either party to have it found that Schneider was his or her agent. His Honour declined to make such a finding against the plaintiff, and there appears to us to be no persuasive evidence that in what Schneider did he was ever authorised to act on behalf of either Jalglade or Mrs Coorey. The better view probably is that he was acting only on behalf of Ochowl.

The learned trial judge rejected evidence from Mrs Coorey that she thought that the documents she signed (including the buy-back contracts and the bill of mortgage) were not intended to operate according to their tenor but were designed simply to be shown to Bonifant's bank. He accepted that she knew the buy-back contracts were intended to assist Schneider in some business dealings that he had, and that she must have known there was some risk that she would lose her property. The trial judge also found she was prepared to accept that risk, and consequently that there was no basis for any equitable intervention to rescue her from what she had claimed was an unconscionable bargain.

Unfortunately for Jalglade, none of these findings or conclusions establishes its claim to recover $125,000 and interest from Mrs Coorey. On the contrary, they tend, if anything, to prove that the only loans that in any way resembled that amount were those totalling some $106,000 made to Ochowl and not to her. It was this indebtedness due to Jalglade that Bonifant was attempting to secure on her land by means of the bill of mortgage ex. 9; but there is nothing at all to show that Mrs Coorey ever agreed to guarantee its payment, or to indemnify Jalglade, or otherwise to pay or become liable in respect of it.

Without proof of any agreement by her to pay $125,000, Jalglade is not entitled to succeed in the action against Mrs Coorey. It was submitted that an agreement to pay $125,000 could be found by combining the covenant to pay in the bill of mortgage (ex. 9) with the forbearance of Jalglade to sue on the buy-back contracts, which led to Mrs Coorey's signing the bill of mortgage. In the course of his reasons his Honour made a finding to that effect. It is difficult, however, to understand how such a finding can be justified by reference to anything in the plaintiff's pleading, which as we have said relied exclusively on the assertion that the plaintiff was an equitable mortgagee of the Carindale land. The plaintiff's case was not pleaded as one in which, in consideration of the plaintiff's forbearing to sue on the buy-back contracts, the second defendant had on 12 June 1989 agreed to pay $125,000 with interest at 25% some 18 days later on 30 June 1989. No agreement to that effect was alleged; none was proved to have been entered into; and none was found at the trial.

In deciding in favour of the plaintiff, what the learned judge said in his reasons was simply that he found "the consideration flowing to Mrs Coorey for her execution of the mortgage was the forbearance to sue on the part of the plaintiff, thus the plaintiff is entitled to succeed in the action against the second defendant". That falls short of a finding that there was an agreement consisting of a promise by her to pay or repay $125,000 in return for a forbearance to enforce whatever rights Jalglade may have had under the buy-back contracts as security for the loan to Ochowl. The bill of mortgage itself contains no promise to pay $125,000 in return for such a forbearance, nor is it evidence of such a promise. All it does is to identify a "consideration" of $125,000, which is described as the "principal sum" of a "loan". Parties may use whatever language they choose to describe their transactions; but if the words used depart from the meaning they bear in ordinary usage, the onus of proving there was a common intention to that effect lies on the party who puts it forward : cf. Frederick E. Rose (London) Ltd.v. William H. Pim [1953] 2 Q.B. 450, 461.

Here there never was a loan to Mrs Coorey of a principal sum of $125,000 that was capable of being the consideration for her promise to pay or repay that sum. It is true that it is always open to a party to prove additional consideration for a promise going beyond that stated in the instrument and not inconsistent with it; but that does not mean that Mrs Coorey is somehow to be taken to have received the consideration expressed in the bill of mortgage when in fact she has never done so. The point scarcely requires authority; but the decision in Wall v. Cockerell (1863) 10 H.L.C. 229; 11 E.R. 1013, will serve that purpose. It was a case in which the respondent trustees entrusted £15,000 to Messrs Hall their solicitors to invest on mortgage; instead of doing so, the solicitors misappropriated £5,000 of it. When pressed by the respondents to deliver the mortgage securities, they induced the appellant, who was another of their clients, to execute deeds of mortgage in favour of the respondents, to whom they were delivered.

In proceedings by the appellant to have the deeds
cancelled, the House of Lords reversed a decree refusing
such relief. Lord Chancellor Westbury said (11 E.R. 1013,

1018):

"The appellant swears that he knew nothing of the deeds, and that he must have executed them on the representation of Messrs Hall that they were instruments of a different nature. But it is not necessary for him to put his case so high; it is sufficient to suppose that he executed the deeds in the faith that the respondents had paid, or would pay the consideration monies to Messrs Hall as solicitors and agents.

The legal estate comprised in the mortgage deeds was and is outstanding, and the deeds would operate only upon such equitable interest as the appellant was entitled to. But no interest whatever would pass to the respondents until the consideration monies were either actually paid or applied to or for the use of the appellant, or paid under such circumstances as would estop the appellant from denying that he had received them."

His Lordship went on to say that the case was "exceedingly plain and simple". Nothing at all had been paid by the respondents in return for the security contained in the mortgage deeds because, by the time the deeds were executed by the appellant, the money entrusted by the respondents to Messrs. Hall had already been misappropriated by them to other purposes. In agreeing with that opinion, Lord Chelmsford said at (11 E.R. 1013, 1020):

"This cannot, therefore, be said to be a case in which the agents of the Appellant had received money for him, and had merely omitted to perform their duty by not paying it over. But the money of the respondents which had been given to Messrs. Hall, not to invest in a specific security, but generally for investment, had been misappropriated by them before the transactions with the appellant. The appellant's equity is, that the Messrs. Hall procured him to execute deeds for a supposed consideration of £5,000 in the whole, and handed these deeds over without receiving any value in respect of them from the respondents, who continue to hold the deeds, without having given any consideration for them, although they were received, or supposed to have been so, by means of their money placed in the Messrs. Hall's hands."

The case is indistinguishable from the present. Apart from the $14,000 applied in discharging the mortgage to the Bank, Mrs Coorey as mortgagor has received no part of the consideration of $125,000. The claim of Jalglade to be considered as equitable mortgagee of the Carindale land is accordingly confined to the sum of $14,000 paid to the Bank on her account. As to that, Jalglade is entitled to the benefit of the presumption that, in paying out the Bank's mortgage, it was intended to keep it alive for its own benefit. See Ghana Commercial Bank v. Chandiram [1960] A.C. 732, 745. In coming to equity to have her mortgage cancelled, Mrs Coorey is herself bound to do equity. Her right to cancellation of the bill of mortgage (ex. 9) and the return of the certificate of title to the land is therefore subject to her discharging the equitable mortgage that Jalglade now has over that land in consequence of having applied $14,000 of its own funds to pay out the Bank.

It is, we think, also the case that Jalglade is, until payment of that sum is received, entitled to interest at the rate that Mrs Coorey would have been charged by the Bank. We do not know what that rate was; but, in the absence of evidence of it, we are prepared to allow interest calculated on monthly rests at a rate of 8% on $14,000 from 1 January 1989 until the sum of $14,000 is paid to Jalglade.

We do not find it necessary to consider various other matters raised by the appellant. The appeal must be allowed with costs. The judgment against the second defendant should be set aside with costs. In lieu there must be judgment in the action with costs in favour of the second defendant; and also judgment for the second defendant on the counterclaim for relief as follows:

(a)  A declaration that, upon payment to the plaintiff for the sum of $14,000 together with interest calculated on monthly rests at the rate of 8% from 1 January 1989, the second defendant is entitled to land described as Lot 7 on Registered Plan 156329 free of the mortgage dated 12 June 1989 and of any other interests in the land in favour of the plaintiff arising from that mortgage.

(b) An order that upon such payment the plaintiff -

(i) deliver up for cancellation the bill of mortgage

executed by the second defendant on 12 June; and

(ii) deliver up to the second defendant the certificate

of title relative to the land.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 254 of 1993

Brisbane
[Coorey v. Jalglade P/L.]

BETWEEN

LORRAINE MARY COOREY

(Second Defendant) Appellant

AND

JALGLADE PTY LTD.

(Plaintiff) Respondent

Macrossan C.J.

for the respondent

Solicitors:  O'Neill & Tegg for the appellant
Wheldon & Associates for the respondent

Hearing Date: 1 June 1994

McPherson J.A.

Demack J.

Judgment delivered 27/06/94
Reasons for judgment by the Court

APPEAL ALLOWED WITH COSTS. JUDGMENT AGAINST THE SECOND DEFENDANT SET ASIDE WITH COSTS. IN LIEU THERE MUST BE JUDGMENT IN THE ACTION WITH COSTS IN FAVOUR OF THE SECOND DEFENDANT; AND ALSO JUDGMENT FOR THE SECOND DEFENDANT ON THE COUNTERCLAIM FOR RELIEF AS FOLLOWS:

(A) A DECLARATION THAT, UPON PAYMENT TO THE PLAINTIFF FOR THE SUM OF $14,000 TOGETHER WITH INTEREST CALCULATED ON MONTHLY RESTS AT THE RATE OF 8% FROM 1 JANUARY 1989, THE SECOND DEFENDANT IS ENTITLED TO LAND DESCRIBED AS LOT 7 ON REGISTERED PLAN 156329 FREE OF THE MORTGAGE DATED 12 JUNE 1989 AND OF ANY OTHER INTERESTS IN THE LAND IN FAVOUR OF THE PLAINTIFF ARISING FROM THAT MORTGAGE.

(B) AN ORDER THAT UPON SUCH PAYMENT THE PLAINTIFF -

(I) DELIVER UP FOR CANCELLATION THE BILL OF MORTGAGE

EXECUTED BY THE SECOND DEFENDANT ON 12 JUNE; AND

(II) DELIVER UP TO THE SECOND DEFENDANT THE CERTIFICATE

OF TITLE RELATIVE TO THE LAND.

CATCHWORDS	MORTGAGES - EQUITABLE MORTGAGE - Respondent claimed $125,000 as equitable mortgagor - Appellant signed bill of mortgage with loan of $125,000 as 'consideration' - No evidence that respondent lent any money - Not executed as a deed - No receipt clause - Whether an agreement to pay constituted by respondent's forbearance to sue - Appellant bound to do equity when seeking mortgage cancellation.
Counsel:	J. P. Kimmins for the appellant P. Keane Q.C., with him D. Boughen,