French v Queensland Premier Mines Pty Ltd
[2006] VSCA 287
•14 December 2006
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 4139 of 2002
| WALTER MURDOCH FRENCH | |
| Appellant | |
| v. | |
| QUEENSLAND PREMIER MINES PTY LTD & ORS | Respondents |
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JUDGES: | MAXWELL, P., CALLAWAY and REDLICH, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 7 and 8 March 2006 | |
DATE OF JUDGMENT: | 14 December 2006 | |
MEDIUM NEUTRAL CITATION: | [2006] VSCA 287 | |
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REAL PROPERTY – Mortgage – Separate mortgage and loan agreement – Registered transfer of mortgage – Whether s.62 of Land Title Act (Qld) operates to vest in transferee the right to recover monies under loan agreement – Whether right to recover monies under loan agreement is a “right to recover a debt or enforce a liability under the mortgage” – Whether covenant to pay in mortgage imposes separate obligation from covenant to pay in loan agreement.
STATUTORY INTERPRETATION – Whether “right to recover a debt or enforce a liability under the mortgage” includes right to recover debt or enforce liability secured by mortgage – Presumption that meaning to be attributed to every word of statutory provision – Overriding principle that precise terms of provision will govern.
WORDS AND PHRASES – “Under the mortgage”
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr P.J. Bick, Q.C., with Mr D.K. Shirrefs | Norton Gledhill |
For the Respondents | Dr C.L. Pannam, Q.C., | Oakley Thompson & Co. |
MAXWELL, P.:
The issue which arises on this appeal is as follows: where a mortgage of Torrens land secures the repayment of advances made under a separate loan agreement, and the instrument of mortgage contains a covenant to pay the amounts due under the loan agreement, does the registration of a transfer of the mortgage vest in the transferee the right of recovery of the debt under the loan agreement?
The issue arises in the following way. There were, in fact, two loans, under separate loan agreements, and two mortgages. Under the first loan agreement (dated 30 October 1989), the lender advanced $410,000 to Queensland Premier Mines Pty Ltd (“QPM”) and Mr and Mrs Beckinsale as joint debtors. Under the second loan agreement (dated 24 November 1989), the lender advanced $560,000 to QPM as sole debtor. The respective liabilities of the debtors were secured by two “all moneys” mortgages successively executed by QPM as mortgagor over different parcels of land.
The appellant, French, was not the original lender or mortgagee. He took an assignment of the loans, and the mortgages securing them, from the original lender and mortgagee in 1992. He subsequently assigned the mortgages to Marminta Pty Ltd (“Marminta”), a company associated with QPM and Mr and Mrs Beckinsale.[1] The transfer of the mortgages was registered in January 2004.
[1]French assigned the mortgages as a result of litigation in Queensland, which is described in paragraphs [72-76] below.
French contends that the loan agreements were unaffected by the transfer of the mortgages. Accordingly, he seeks to recover amounts due under the loan agreements. The trial Judge dismissed French’s claims, holding that by operation of s.62 of the Land Title Act 1994 (Qld), the registration of the mortgage transfers had the effect of vesting in Marminta the rights of recovery under the loan agreements. (Certain other issues were also decided, to which reference will be made in due course).
Questions of construction
Resolution of the appeal turns on the construction of s.62, which relevantly provides as follows:
“(1)On registration of an instrument of transfer for a lot or an interest in a lot, all the rights, powers, privileges and liabilities of the transferor in relation to the lot vest in the transferee.
(2)Without limiting subsection (1), the registered transferee of a registered mortgage is bound by and liable under the mortgage to the same extent as the original mortgagee.
(3)...
(4)In this section –
rights, in relation to a mortgage or lease, includes the right to sue on the terms of the mortgage or lease and to recover a debt or enforce a liability under the mortgage or lease.”
The Torrens legislation in each of the other States and the Territories contains an equivalent provision, though none is expressed in exactly the same terms as s.62.[2] (I will refer to these provisions generically as “the vesting provision”). Her Honour considered that the provisions were so similar that a decision on any of the vesting provisions was instructive. Mr Bick for French went so far as to suggest that the question to be resolved was a point of national importance, notwithstanding the textual differences.
[2]Transfer of Land Act1958 (Vic) s.46; Real Property Act 1900 (NSW) s.52; Real Property Act 1886 (SA) s.151; Transfer of Land Act 1893 (WA) s.83; Land Titles Act 1980 (Tas) s.60; Land Titles Act (ACT) s.78; Land Title Act 2000 (NT) s.62.
The trial Judge expressed her conclusion in the following terms:
“...Upon registration of the transfer of a mortgage, s.62 of the Act will ordinarily apply (subject, perhaps, to the contrary agreement of the parties) to vest in the transferee the underlying debts and liabilities secured under it. It is not necessary that the debts or obligations thus secured, or the causes of action in relation to them, are primarily created by the terms of the mortgage instrument. Debts and liabilities owed to the mortgagee by third parties are covered. It is necessary only that the debt or obligation is secured by the mortgage, and thus affects the mortgagee’s estate or interest in land.”
In her Honour’s view, the terms of s.62 –
“...according to their plain or ordinary meaning, do not indicate that only rights to recover debts or liabilities primarily created by the terms of the instrument of mortgage will vest in the transferee. The terms of s.62(4) indicate that the second limb includes subject-matter which is additional to the subject-matter of the first limb, rather than constituting a mere illustration or sub-category of it. Section 62(4) indicates that a transferee will acquire the right to recover a debt or to enforce a liability under the mortgage or lease, irrespective of whether the debt could be recovered, or the liability could be enforced, by suing on the terms of the mortgage.”
With great respect, I do not consider that these conclusions can be maintained. In my opinion, the contractual rights of Mr French as assignee of the loan agreements are unaffected by the registered transfer of the mortgages. My reasons are as follows.
The Torrens mortgage and the covenant to pay
Where Torrens land is mortgaged, the mortgagor retains the legal fee simple and the mortgagee obtains a separate legal interest in the land, a statutory interest brought about by the registration of the mortgage.[3] The statutory charge described as a mortgage is a distinct interest. It involves no ownership of the land the subject of the security. It is a separate interest in land which may be dealt with apart altogether from the fee simple (or other estate or interest) mortgaged.[4]
[3]Fisher and Lightwood’s Law of Mortgage (2nd Australian Ed, 2005) at 121 [4.1].
[4]English Scottish and Australian Bank Limited v Phillips (1937) 57 CLR 302 at 321.
A mortgage under the Torrens system is a creature of statute. Its incidents depend upon the provisions of the statute “and so much of the general law as is availed of by or under those provisions”.[5] At the same time, the Torrens legislation does not, except to the extent of any inconsistency –
“interfere with the ordinary operation of contractual or other personal relations, or the effect of instruments at law or equity.”[6]
As a practical matter, therefore, the general principles of the law of mortgages, and of the law of contract, apply to mortgages of Torrens land.[7]
[5]Phillips at 323.
[6]Groongal Pastoral Co Limited v Falkiner (1924) 35 CLR 157 at 163; Phillips at 315-6; Fisher and Lightwood at 122 [4.2].
[7]Fisher and Lightwood at 122 [4.2]; Fink v Robertson (1907) 4 CLR 864 at 891.
A mortgage transaction has two aspects: the contractual (the covenant to pay) and the proprietary (the mortgage or charge). The debt and the security may be transferred together in whole or in part, or they may be transferred separately and independently.[8] As Latham CJ said in Phillips:[9]
“A mortgage, as a security over and a charge upon land or other property, can quite well exist without any covenant to pay. ...”
In Groongal,[10] the High Court said:
“The mortgage itself... is a security only. The personal obligation [to pay] is independent of the security, but [in the present case] it is contained in and constituted by the statutory deed by which also it is secured.”
[8]Fisher and Lightwood’s Law of Mortgage (11th Ed., 2002) at 379 [14.13].
[9]At 308-9, citing Fink at 871, 872.
[10]At 164.
The mortgage security and the personal obligation to repay are thus conceptually, and contractually, independent of each other, even where (as in Groongal) they are contained in the same instrument. Thus a mortgage can be discharged without discharging the covenant to pay. Whether the discharge of the mortgage also discharges the covenant to pay is a question of construction.[11]
[11]Fisher and Lightwood (2nd Australian Ed. 2005) at 421 [17.11].
In Groongal, the discharge was couched –
“in the most ample terms, apt to express a full and complete discharge of all personal ‘obligation’”.[12]
The High Court held, accordingly, that both the land and the personal obligation were discharged, noting however that a discharge differently worded would not necessarily have had that effect.
[12]At 164.
More recently, in Grundy,[13] the New South Wales Supreme Court came to the opposite conclusion, holding that what was lacking from the particular instrument of discharge was –
“some further expression relating to the personal covenant in order to give the subject discharge of mortgage the effect of releasing not only the land but also the personal liability the mortgagor.”[14]
[13]Grundy v Ley (1984) 2 NSWLR 467.
[14]At 473; see also Callachor v Moses (1931) SR (NSW) 424.
In the absence of an express covenant to pay, there will be implied in a mortgage a covenant to pay.[15] But this implication flows from the making of the loan to the mortgagor,[16] not from the granting of the mortgage security. Thus, where the mortgage secures the liability of a third party, there is no implication of an obligation on part of the mortgagor to repay.[17]
[15]Sutton v Sutton (1882) 22 Ch D 511.
[16]NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481.
[17]Re Midland Bank Ltd [1941] 1 Ch 350.
Two covenants to pay
In the present case, there are two covenants to pay, one in the mortgage, the other in the loan agreement.[18] The loan agreement contains the following term:
“The principal sum or the balance thereof then remaining unpaid shall be due and payable by the borrower to the lender on the 21st day of February 1990.”
There is also a covenant on the part of the borrower to pay interest to the lender at the rate specified.
[18]I refer in the singular to “the mortgage” and “the loan agreement” because the terms of the two mortgages are identical, as are the terms of the two loan agreements.
The mortgage contains a clause in the following terms:
“4.1The Mortgagor shall pay each amount included in the Secured Moneys to the Mortgagee:
(a)on the date fixed for payment of that amount under any Facility Agreement; or
(b)if no date for payment is so fixed on demand in writing by the Mortgagee.
Payment of part of the Secured Moneys shall not affect the Mortgagor’s liability for the remainder.”
The definition of “Secured Moneys” encompasses moneys “owing or payable ... to the Mortgagee by the Mortgagor on any account...,” and includes “all moneys now or hereafter payable to the Mortgagee pursuant to any Facility Agreement.” It was common ground that the term “Facility Agreement”, as defined, covered the loan agreement and, further, that the only “Secured Moneys” were amounts due by the mortgagor to the mortgagee under the loan agreement. (Breach by the mortgagor of the covenant to pay also triggers the mortgagee’s power of sale: cl.9.1).
Counsel for French drew attention to the “no merger” clause in the mortgage, the relevant part of which provided as follows:
“Neither this Mortgage nor anything herein contained shall extinguish merge postpone lessen or otherwise prejudice any Facility Agreement or any Collateral Security or any general or other lien of the Mortgagee for or in respect of any moneys intended to be hereby secured...”
This provision was evidently intended to preserve the loan agreement obligations as separate and distinct from the mortgage obligations. That separateness has been assumed throughout this proceeding.
The loan agreement contains a free-standing covenant to repay (“the agreement covenant”), enforceable in accordance with its terms. The covenant to pay contained in the mortgage (“the mortgage covenant”) is a separate contractual obligation, also enforceable in accordance with its terms. By the mortgage covenant, the mortgagor agreed to pay the amounts due under the loan agreement, on the dates fixed for payment under that agreement. As Callaway JA put it in the course of argument, the mortgagor thereby made a fresh promise to the lender/mortgagee to pay the amounts payable by the debtor(s) under the loan agreement. (The fact that the mortgagor is the debtor under one agreement and a joint debtor under the other does not affect this analysis.)
As a matter of contract, the mortgage covenant would survive the release of the loan agreement. It would be a matter of construction whether the obligation imposed by that covenant had any continuing content following such release, there being (ex hypothesi) no amounts any longer payable under the loan agreement. It is unnecessary to resolve this question since the loan agreement is on foot and the content of the mortgage covenant is unchanged.
Only mortgage rights transferred
Under s.62(1), the registration of the transfer of mortgage operates to vest in the transferee –
“all the rights, powers, privileges and liabilities of the transferor in relation to the [land]”.[19]
[19]Schedule 2 to the Land Title Act 1994 defines “lot” to mean “a separate, distinct parcel of land”.
Subsection 62(4)[20] provides that the rights thus vested in the transferee include:
·“the right to sue on the terms of the mortgage”; and
·“the right to recover a debt or enforce a liability under the mortgage.”
These two parts of subsection (4) were referred to in her Honour’s judgment, and in argument before us, as “the first limb” and “the second limb” respectively. I will adopt the same terminology.
[20]See [5] above.
It is common ground that the first limb is limited to the right to enforce the provisions of the mortgage instrument itself. Clearly, that would include the right to sue on the mortgage covenant. Upon registration of the mortgage transfer, therefore, the right to sue on the mortgage covenant vested in Marminta.
The critical question is whether registration also had the effect of vesting in Marminta the right to sue on the agreement covenant. It is again common ground that the first limb has no application. The agreement covenant is not a term of the mortgage. It is a term of a quite separate contract.
In my view, the second limb is also inapplicable. The right to sue on the agreement covenant is not a right “to recover a debt or enforce a liability under the mortgage”. It is a right to recover a debt under the loan agreement. The fact that the mortgage covenant imposes an obligation to pay amounts due under the loan agreements is nothing to the point. As I have said, they are separate covenants, which confer distinct contractual rights, albeit in respect of the same loan amounts.
To construe the second limb in this way is simply to give the statutory words their ordinary and natural meaning. There can only be a right to “recover a debt or enforce a liability under the mortgage” if the mortgage is the source of the debt or the liability, as the case may be. The mortgage is the source of the liability created by the mortgage covenant. It is not the source of the liability created by the agreement covenant.
A number of High Court authorities support this approach. Thus –
·in Chan,[21] the High Court was concerned with a guarantee of “obligations under this lease”. The Court said:
“The word ‘under’, in the context in which it appears, refers to an obligation created by, in accordance with, pursuant to or under the authority of, the lease.”[22]
·in Sara Lee,[23] the High Court had to construe the phrase “where the asset was disposed of under a contract”, in s.160(3) of the Income Tax Assessment Act 1936 (Cth). Referring to Chan, the majority (Gleeson CJ, Gaudron, McHugh and Hayne JJ) concluded:
“The words ‘under a contract’... direct attention to the source of the obligation which was performed by the transfer of assets which constituted the relevant disposal.”[24]
Since the disposal was effected pursuant to a contractual obligation, the asset was disposed of under that contract.
·In Tang,[25] the statutory phrase in issue was “decision made... under an enactment,” in the Administrative Decisions (Judicial Review) Act 1977 (Cth). The majority (Gummow, Callinan and Heydon JJ) held that, for a decision to be characterised as “made under an enactment”, the decision –
“must be expressly or impliedly required or authorised by the enactment.”[26]
In passing, their Honours noted that a matter may be said to “arise under” a law made by the Commonwealth Parliament, within the meaning of s.76(ii) of the Constitution, if the right or duty in question owes its existence to federal law or depends on federal law for its enforcement.[27]
[21]Chan v Cresdon Pty Ltd (1989) 168 CLR 242 per Mason CJ, Brennan, Deane and McHugh JJ.
[22]At 249.
[23]The Commissioner of Taxation for the Commonwealth of Australia v Sara Lee Household and Body Care (2000) 201 CLR 520.
[24]At 537.
[25]Griffith University v Tang (2005) 221 CLR 99.
[26]At 130 [89].
[27]At 124 [67], and the cases there cited.
The Judge gave the second limb a more expansive reading. In her Honour’s view, to read the words “under the mortgage” in the second limb as meaning “originally or primarily created by terms included in the mortgage” would give the second limb “no effective independent operation”. Her Honour said:
“The principles of statutory construction, coupled with the consistent reasoning expressed in the relevant High Court decisions, indicate that the second limb of s.62(4) refers to rights to recover debts and liabilities which are secured under the mortgage.”
As to statutory construction, her Honour doubtless had in mind what the High Court said in Project Blue Sky,[28] as follows:
“Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was ‘a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent.”[29]
[28]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
[29]At 382 [71] per McHugh, Gummow, Kirby and Hayne JJ (footnotes omitted).
The overriding principle of statutory construction, however, as the High Court has emphasised in recent years, is that the words of the statute govern.[30] There is no substitute for giving attention to the precise terms in which the relevant provision is expressed.[31]
[30]Weiss v The Queen (2005) 80 ALJR 444 at [9]; Stingel v Clark [2006] HCA at [26]-[27] per Gleeson CJ, Callinan, Heydon and Crennan JJ and per Gummow J at [43] and Kirby J at [117]; Central Bayside General Practice Association Limited v Commissioner of State Revenue [2006] HCA 43 at [81]-[84] per Kirby J, and the cases there cited.
[31]Weiss at [31] citing Fleming v The Queen (1998) 197 CLR 250 at 256 [12].
Her Honour’s construction of the second limb of s.62(4) requires substitution of the words “which are secured by” for the word “under”. In my respectful opinion, to do so would amount to rewriting the subsection and would exceed “the proper bounds of statutory interpretation”.[32] As Lord Mersey said in the well-known passage from Thompson v Goold & Co,[33] “[i]t is a strong thing to read into an Act of Parliament words which are not there and in the absence of clear necessity it is a wrong thing to do”.[34] If the words “which are secured by” were read in, the effect of the registration of a transfer of mortgage would be to vest in the transferee, in addition to the rights of the mortgagee under the mortgage, the rights of the mortgagee under any contract with a third party which created a debt secured by the mortgage. Clear statutory language would be required before I could accept that the Queensland Parliament had intended that result.
[32]Smith v The Queen (1994) 181 CLR 338 at 346 per Mason CJ, Dawson, Gaudron and McHugh JJ.
[33][1910] AC 409 at 420.
[34]See also BP Refinery Pty Ltd v Hastings Shire Council (1977) 53 ALJR 20 at 25; Director-General of Education v Suttling (1987) 162 CLR 427 at 433.
The present case partly illustrates the point. Under the first loan agreement, Mr and Mrs Beckinsale are joint debtors with QPM. There is a single, indivisible, obligation to pay French. Under the transferred mortgages, Marminta has contractual rights against QPM only. Yet, on the construction of s.62(4) which the Judge adopted, the transfer of the mortgages also had the effect of vesting in Marminta a contractual right under the first loan agreement as against Mr and Mrs Beckinsale – strangers to the mortgages – in their capacity as joint debtors with QPM.
Three key decisions: Naylor,[35] Phillips[36] and McFadyen[37]
[35](1936) 55 CLR 423.
[36]The English Scottish and Australian Bank Ltd v Phillips (1936) 57 CLR 302.
[37]Measures v McFadyen (1920) 11 CLR 723.
It was common ground that there was no decision of the High Court or other appellate court in point. Nevertheless, her Honour considered that there were statements of general principle in three High Court decisions which could provide guidance on the proper construction of s.62. Her Honour’s careful analysis of the cases and explanation of the relevant passages was strongly supported by senior counsel for the respondents. For the reasons which follow, however, I am, with great respect, unable to agree with her Honour that these decisions, or the particular passages, justify the construction of s.62(4) which she adopted.
In Naylor, the High Court was concerned with the New South Wales equivalent of s.62 (s.51 of the Real Property Act 1900). Under that provision, registration of the mortgage transfer had the effect of passing to the transferee –
“all rights, powers and privileges... belonging or appertaining”
to the mortgage interest of the transferor. By s.52(1), there was transferred –
“the right to sue upon any memorandum of mortgage or other instrument and to recover any debt... thereunder (notwithstanding the same may be deemed or held to constitute a chose in action)...”
The mortgage in question contained a guarantee by Naylor, at whose request the loan had been made to the mortgagor company. Although not stated in the judgments of the Court, it appears that the mortgagor’s covenant to pay was contained in the mortgage. Certainly, there is no reference to any separate loan agreement. Thus, the mortgagee at one point gave notice to the guarantor requiring payment of –
“all principal and interest moneys owing to [the mortgagee] under such mortgages”.[38]
[38]At 426.
The question for the High Court was whether the rights transferred by the vesting provision included the rights of the mortgagee against the guarantor. The Court was unanimously of the view that they did not. In the view of Dixon and Evatt JJ, while the statutory language was wide enough to include the rights under the guarantee -
“... the language should not be so interpreted. The statute is concerned with dealings in land and it is because a mortgage involves such a dealing that the statute prescribes how mortgages may be transferred and with what consequences. It is concerned with the mortgage transaction in its entirety as it affects the land, and, therefore, extends to the personal liability of the mortgagor for the mortgage debt because that liability is intimately connected with the rights of property arising out of the mortgage transaction. A surety’s obligation stands in a different relation to the dealing. His liability is introduced by way of additional security. It is personal and, except as a result of subrogation, does not directly or indirectly affect the land.”[39]
In the view of Starke J, the purpose of the vesting provision was –
“to transfer the mortgage security and the rights, powers and privileges relating to the debt secured by the mortgage. But the provisions do not, I think, extend to collateral obligations, such as guarantees, given by strangers to the mortgage transaction.”[40]
[39]At 434 (emphasis added).
[40]At 432.
In short, the question dealt with in Naylor was quite unlike the question which arises in this appeal. The High Court was there concerned solely with whether the vesting provision had the effect of transferring all of the rights conferred on the mortgagee by the instrument of mortgage. Dixon and Evatt JJ read down the statutory language, so as to exclude the contractual right (under the mortgage) as against the guarantor.
Her Honour drew particular attention to the sentence from the joint judgment which I have highlighted in paragraph [37] above. Her Honour said of this passage:
“The crucial circumstance was thus ‘the personal liability of the mortgagor for the mortgage debt’. There was no suggestion that the section would not apply if that personal liability arose as a surety or pursuant to a transaction external to the mortgage.”
With respect, it is not surprising that no such suggestion was made, since no issue arose in Naylor concerning a liability “pursuant to a transaction external to the mortgage”. The converse is, I think, rather more significant, namely, that the decision conveys no suggestion that the vesting provision would apply in such a case.
What the High Court said in Naylor must be read in its context. The Court was there concerned with two obligations, both imposed by the mortgage instrument itself, namely, the obligation of the mortgagor to repay the loan, and the obligation of the guarantor. What the Court said about the statute extending “to the personal liability of the mortgagor for the mortgage debt” was a reference to the mortgagor’s liability under the mortgage. The statement that the personal liability was “intimately connected with the rights of property” was made in order to distinguish between the two mortgage covenants which were under consideration. The statement was not intended to refer – and cannot be taken to have referred – to personal liabilities arising from transactions external to the mortgage.
Phillips also concerned the transfer of a mortgage containing a personal covenant by the mortgagor to pay. (I set out earlier Latham CJ’s statement that a mortgage can exist without a covenant to pay.[41]) Starke J said:
“The personal liability under the covenants in the mortgage, and the rights given by the security itself, are not coincident. No doubt [the vesting provision][42] passes to the transferee the right to sue upon and recover in his own name any debt or sum of money under the mortgage. A covenant, however, in a mortgage to pay principal and interest does not establish the full extent of the sum named in the covenant is due and owing: it may have been paid off wholly or in part.”[43]
[41]At [12] above.
[42]Real Property Act 1886 (SA) s.151.
[43]At 317 (emphasis added).
Dixon, Evatt and McTiernan JJ said:
“... [L]ike a lease, [a mortgage] involves, or usually includes, personal obligations. It is impossible to treat the personal obligations in the same way entirely as the interest in land is treated by the registration system. ... [N]evertheless, the plan of the legislation is to enable the proprietor to transfer by registration not only the interest in the land, but all the accompanying personal obligations normally incident thereto.”[44]
Their Honours then repeated the statement from Naylor (see paragraph [37] above), that the vesting provision “extends to the personal liability of the mortgagor for the mortgage debt”.
[44]At 321-2 (emphasis added).
Once again, these statements must be understood in the context in which they were made. The question in Phillips was whether, when a mortgagor acquired the mortgage by subsequent transfer to himself, the obligation under the mortgage covenant to pay was extinguished as a result of –
“the benefit of the obligation coming to reside in the obligor”.[45]
In short, the case was concerned only with the enforceability of the covenant to pay under the mortgage. No question arose of any liability under a transaction external to the mortgage. The reference to “accompanying personal obligations normally incident” to the mortgage interest in the land was a reference to, and only to, the personal obligation of the mortgagor imposed by express or implied covenant under the mortgage.
[45]At 324.
Her Honour drew particular attention to the reference by the majority in Phillips to the legislative policy of “ready transfer” of mortgage interests. The relevant passage should be set out in full:
“It appears to us that the plan of the legislation is to treat mortgages as distinct and persisting interests capable of the same ready transfer by registration as estates in fee simple and without any discrimination or concern as to the relation of the transferee or transferor thereof to any other estate or interest in land. Such a legislative plan is, we think, inconsistent with the application of general doctrines of law under which the final extinguishment of obligations results from the benefit of the obligation coming to reside in the obligor. It must, of course, be true that where the person under a liability to another acquires the other’s correlative right he cannot thus incur or come under a liability to himself. But the legislature is not obliged to respect theories of jurisprudence and, when it proceeds to deal with obligations on the analogy of property, it is not likely to do so.”[46]
[46]At 324.
It can thus be seen that what was said about “ready transfer” was directed at the question of extinguishment to which I referred earlier. The conclusion to which their Honours came was that the covenant to pay – in the mortgage – was not extinguished. Nothing said here has any relevance to the question which arises in the present appeal.
In Measures v McFadyen,[47] another case under the NSW vesting provision, the High Court was concerned not with a transfer of mortgage but with a transfer of lease. Before the transfer took place, the lessee had breached a covenant in the lease to erect and complete certain alterations and additions. The question was whether the vesting provision transferred to the transferee the right of the transferor (lessor) to sue for damages for that breach of covenant. The Court held that it did not.
[47](1910) 11 CLR 723.
In the view of Griffith CJ:
“The estate or interest transferred is one thing, and the personal right of action in respect of an antecedent completed breach of contract is another.
... The purpose of the [vesting provision] was to transfer the estate or interest of the transferor in the land with all the rights incidental to present and future possession, but I do not think that it was intended to transfer also mere choses in action in respect of past and completed breaches of covenant.”[48]
[48]At 731.
For his part, Isaacs J said that the object of the vesting provision was –
“only to perfect the transaction effected by the statutory transfer. With respect to personal obligations the [provision] primarily concerns itself with their security upon land for their fulfilment, and having provided a statutory transfer of the benefits of the obligation as between the transferor and the transferee, proceeds in this section to completely effectuate the transfer by affecting the third person, the obligor also. To this end it transfers the right to sue and recover whatever debt, sum of money, annuity or damages (that is, right to damages) has been thereunder transferred.”[49]
[49]At 737 (emphasis in original).
His Honour explained that the vesting provision was intended to put an end to all of the difficulties flowing from the non-assignability of choses in action at common law. The provision was intended –
“to perfect, even in regard to legal procedure, the simplicity and directness which otherwise characterise the Statute.
It was not intended to extend, and its language is not sufficient to extend to so radical and unexpected a change, and probably so unfair a change, as bodily transferring all accrued rights to damages, ... existing independently of the continuance of the obligation under which they arose, and of the land upon which they were originally secured.”[50]
[50]At 737-8.
Once again, McFadyen was concerned only with (breach of) a covenant in the instrument being transferred – in this case, the lease. Like Naylor, McFadyen is a case which reads down, rather than expands, the scope of the vesting provision. As the last extract reveals, Isaacs J was not disposed to interpret the vesting provision as extending to rights which had an existence independent of the land upon which they were secured. To the extent that any guidance can be derived from McFadyen, the case would seem rather to support the conclusion I have reached.
Both before the trial Judge and this Court, counsel for QPM relied on the decision of the Queensland Court of Appeal in Julong Pty Ltd v Fenn.[51] In that case, Atkinson J (with whom McMurdo P and Williams JA agreed) held that s.62 would apply to vest in the transferee of a mortgage the debts of the individual mortgagors, who were jointly liable with a corporate debtor pursuant to a facility agreement secured by a mortgage over their property. In so holding, Atkinson J cited the passage from Naylor set out in paragraph [37] above. The conclusion of Atkinson J is stated in a single sentence. There is no discussion of the point, and it appears not to have been debated before the court.
[51][2002] QCA 529.
For the reasons already given, I do not, with great respect, regard Naylor as justifying the conclusion arrived at by the Queensland Court of Appeal. To the extent that the Court in Julong reached a different conclusion from my own, I would decline to follow the decision as, for the reasons I have given, I regard the conclusion as clearly wrong.
Certain other decisions were referred to in submissions. Like the three principal decisions, they were concerned only with rights conferred by the assigned instrument itself. Thus:
·in Jodaway,[52] the Queensland Supreme Court considered the assignment of a lease, which contained a covenant by the landlord to repay a loan from the lessee. The Court held that assignment of the reversion to a new landlord did not carry with it the landlord’s obligation under that covenant;
·in Gilmour,[53] the New South Wales Court of Appeal[54] held that the transfer of a mortgage did transfer the benefits of a guarantee which was contained in the mortgage and was “an integral part” of it.[55] Without explaining why, the Court thus departed from the view of the High Court in Naylor as to the enforceability of a guarantee contained in an assigned mortgage, but that divergence of opinion has no bearing on the present question.[56]
·Maradona[57] was concerned with the enforceability of the mortgagor’s personal covenant to pay. Applying Naylor, Giles J held that the transfer of the mortgage also transferred the mortgagor’s personal covenant to pay, which (as in Naylor) was contained in the mortgage itself. In his Honour’s view –
“[the] personal covenant was so connected with the estate or interest with respect to which [the transferee] attained indefeasibility that it also achieved indefeasibility, and bound [the mortgagor] notwithstanding that I have upheld the defence of non est factum.”[58]
This decision accords with the construction of the vesting provision which I have adopted. The New South Wales Court of Appeal subsequently applied Maradona in Karacominakis,[59] a case involving assignment of a lease.[60]
[52]Jodaway Pty Ltd v Langton [2004]) 2 Qd R 272.
[53]Gilmour v Pyramid Building Society (in liq.) (1995) NSW Conv R 55.
[54]Meagher JA, with whom Priestley and Clarke JJA agreed.
[55]At 55,763.
[56]The NSWCA’s view is consistent with the language of the vesting provision, since the rights against the guarantor are rights “under the mortgage”. As noted in para [37] above, Dixon and Evatt JJ acknowledged in Naylor that the language could be so read, but excluded the guarantee on the basis that it was not “intimately connected” with the rights of property arising out of the mortgage transaction.
[57]PT Limited v Maradona Pty Ltd (1992) 25 NSWLR 643.
[58]At 681.
[59]Karacominakis v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313.
[60]At [54]-[59] per Giles JA, with whom Handley and Stein JJA agreed.
What was transferred?
For the reasons I have given, the registration of the mortgage transfer had the effect (by force of s.62) of vesting in Marminta the rights which French had under the mortgage covenant, but left unaffected French’s rights under the agreement covenant. Both loan agreements remain on foot, and the debtors remain bound by the respective covenants to pay.
It is not in issue that the debtors have not paid any of the moneys owing under the loan agreements. It follows, in my opinion, that French is entitled to succeed in his claims against the respective debtors to recover the amounts due, with interest. I see no contractual or other obstacle to the enforcement of the loan agreements in accordance with their terms.
Senior counsel for the respondent debtors argued that, by analogy with Deauville,[61] it was impossible to achieve a “surgical separation” of the loan from the mortgage. As it happens, the appellant also sought to derive assistance from Deauville but I do not regard that decision as assisting either side.
[61]Hutchens v Deauville Investments Pty Ltd (1986) 68 ALR 367.
The facts in Deauville were quite different. A finance company had made advances to the borrower company, of which Hutchens was a director. Hutchens had guaranteed the company’s indebtedness, and had given the lender a mortgage to secure his own liability as guarantor. The lender assigned the principal debt, together with the director’s guarantee and mortgage, to another company, Helvetic, which in turn assigned the director’s mortgage to Deauville. There was no express transfer of the principal debt or of the director’s guarantee (which the mortgage secured) but the High Court[62] assumed (without deciding) that the benefit of the guarantee had been transferred. [63]
[62]Gibson CJ, Mason, Wilson, Brennan and Deane JJ.
[63]At 370.
The Court concluded that it was “simply impossible” for the benefit of the guarantee and the mortgage to have passed to Deauville and the principal debt to have remained with Helvetic (the assignor). The Court said:
“That suggestion would seem to lie ill with the basic principle that the debt owed by a guarantor, upon default by the principal debtor, is and remains the same debt as that owing by the principal debtor. Put differently, it would seem to be simply impossible, as a matter of basic principle, to assign the benefit of a guarantee or the security for it (as distinct from the property secured) while retaining the benefit of the guaranteed debt and thereby to convert the one debt owing by both principal debtor and guarantor to the one creditor into two debts, one owing by the principal debtor to the creditor and the other owing by the guarantor to the assignee. If it were otherwise,... a creditor could effectively divorce the guarantor’s liability from that of the principal debtor and effectively deprive the guarantor of the rights which flowed from his position as such including (where available) his rights of subrogation.”[64]
[64]At 372-3.
It can be seen immediately that there is no analogy between that case and the present. Here there is no “divorcing” of a surety’s liability from the liability of the principal debtor. Nor does the separation of the mortgage and the debt, which occurred here upon the assignment of the mortgage, have the effect of converting one debt into two. There is but one debt, owing under the loan agreement.
It might have been thought that the separate existence of the mortgage covenant would, following the assignment of the mortgage, result in there being two debts. After all, the effect of the mortgage covenant when originally entered into was that QPM made a separate promise (as mortgagor) to pay to the mortgagee the amounts payable (by the debtors, including itself) under the loan agreement.[65]
[65]See [20] above.
As transferee of the mortgage, Marminta has the contractual right under the mortgage covenant to require QPM, as mortgagor, to pay any “Moneys Secured” which are unpaid. On examination, however, no amount is payable by QPM (as mortgagor) to Marminta (as mortgagee by transfer) pursuant to that covenant.
QPM is obliged to pay to Marminta “each amount included in the Secured Moneys”. The relevant part of the definition of “Secured Moneys” in cl. 2.1 of the mortgage is:
“(b)all moneys now or hereafter payable to the Mortgagee pursuant to any Facility Agreement;” (emphasis added)
When French was the mortgagee, this clause applied to the moneys payable by QPM (but not the Beckinsales) to French pursuant to the loan agreement. (It will be recalled that the original lender had assigned both the loan agreement and the mortgage to French[66]). Now that Marminta is mortgagee,[67] however, this clause has no application. Put simply, there are no moneys payable to “the mortgagee” pursuant to any facility agreement and, hence, no “Secured Moneys” to which QPM’s obligation under the mortgage covenant can attach.
[66]See [3] above.
[67]As the trial Judge noted at [167], “mortgagee” is defined in cl 1.1(l) of the mortgage to include the successors and assigns of the original mortgagee.
In short, the mortgage covenant – although valid and enforceable by Marminta against QPM – is empty. QPM is not indebted to Marminta. On this analysis, following the assignment the mortgage secured nothing and it was liable to be discharged. That is what occurred.
The position might have been different had the agreement (between French and Marminta) for the transfer of the mortgages also made provision for the transfer to Marminta of the benefit of the loan agreements. But Marminta has long since abandoned any contention that the agreement so provided. That contention did form part of Marminta’s statement of claim in the Queensland proceeding (which resulted in French being ordered to transfer the mortgages), but the contention was not pressed at trial. The trial Judge upheld Marminta’s claim that there was an agreement for the transfer of the mortgages. That conclusion was not challenged on the appeal, which concerned only the question whether the agreement should be specifically enforced. The Court of Appeal held that it should be. The Court rejected Marminta’s attempt, at the last minute, to have the Court’s order varied so as to alter the scope of the agreement ordered to be specifically enforced.[68] In this Court, both in their pleadings[69] and in argument, the defendants relied solely on s.62 as the basis for the vesting in Marminta of the right to recover moneys under the loan agreement.
[68]AB C485ff.
[69]Defence at [16] (adopting [34] of the statement of claim); counterclaim at [2] and at [A] of the prayer for relief.
The only question raised before the Judge concerning the agreement to transfer the mortgages was whether the parties had evidenced an intention to “contract out” of the operation of s.62, it having apparently been common ground that the parties to a transfer of mortgage could agree that the vesting provision did not apply. Her Honour assumed, without deciding, that this was so.[70] The argument for the defendants (now respondents) was that the correspondence constituting the agreement disclosed no such intention. Her Honour agreed, holding that there was –
“nothing in the correspondence constituting the agreement to transfer the mortgages, or in the terms of the mortgages, to establish an agreement or intention to exclude the transfer of the rights to recover the debts under the loan agreements.”[71]
[70]Reasons [161].
[71]Reasons [170].
On the view I have taken of the proper construction of s.62, no question arises about “contracting out”. Suffice it to say that, before there could be an effectual contracting out of the statute at law, it would be necessary to read into the unqualified terms of s.62 suitable words of qualification – “Unless otherwise agreed between the transferee and the transferor...”.[72] Prima facie that would, once again, involve an impermissible rewriting of the statute.
[72]cf. for example, Partnership Act 1958 ss.95, 96(1).
The claim for rates and taxes
In his statement of claim in this court, French alleges that he was compelled, as mortgagee, to pay in respect of the mortgaged properties –
(a) unpaid land tax for the period 1990 – 1999; and
(b) unpaid municipal rates for the period 1990 – 1 August 2003.
He makes a claim in debt against QPM (as mortgagor) for payment of those amounts, which total almost $300,000. French makes an alternative claim against Marminta for approximately $170,000, on the ground that Marminta has been unjustly enriched by French’s having paid those amounts at a time when Marminta “was in fact a mortgagee in equity of the properties”.
As to the claim made by French against QPM, her Honour expressed the view that, by operation of s.62, the right to recover all debts and liabilities of the mortgagor secured by the mortgage would vest in the registered transferee. Her Honour said:
“[246]The fact that an obligation within the definition of ‘moneys secured’ may have a separate or independent basis would not, in my view, exclude it from the operation of s.62.
[247]I am therefore satisfied that the mortgagor’s obligations to repay the rates and land tax paid by Mr French were comprehended in the right to sue on the terms of the mortgages, and to recover a debt or enforce a liability thereunder. As such, they vested in Marminta upon registration of its transfers pursuant to s.62 of the Act.”
I respectfully agree with Callaway JA, for the reasons which his Honour gives, that this conclusion was not correct. French’s claim against QPM did not vest in Marminta on the transfer of the mortgages.
The reasons for judgment record a concession by the respondents at trial that, if French succeeded in his claim under the loan agreements, he would also be able to recover from QPM the rates and land tax paid.[73] That result must now follow, given that the latter claim is unaffected by the vesting provision.
[73]Reasons at [244]. No defence of Anshun estoppel was pleaded in relation to the claim against QPM.
As to the claim against Marminta, French had previously raised the rates and taxes issue at the very end of the Queensland proceedings in which Marminta sued French seeking specific performance of the agreement to sell the mortgages. That claim failed at first instance but was upheld on appeal. On 5 December 2003, the Queensland Court of Appeal made the order for specific performance, in accordance with minutes prepared by counsel for both parties. Liberty was reserved to the parties to make submissions as to the form of the orders and as to costs.
Pursuant to the liberty reserved, on 19 December 2003 counsel for French raised with the Court of Appeal the question of the rates and land tax which French had paid. He contended that –
“[I]t really would be a case of unjust enrichment to say that this transferee [Marminta] will have the benefit of something over a quarter of a million dollars of actual expenditure by [French], which enhances the value of the security without paying for that benefit.”[74]
[74]AB C287.
Before that Court, counsel for French conceded – properly – that this matter had not been pleaded by French in the proceeding and had not been raised as a ground of cross-appeal. Counsel acknowledged that it “would have been by far a preferable course” if that had been done.[75] Counsel for Marminta pointed out – and counsel for French did not dispute – that in the course of the trial counsel for French had cross-examined Mr Beckinsale about non-payment of land tax by QPM.[76] The issues “could and should have been litigated below”, he argued.[77]
[75]AB C289; see also C298.
[76]AB C293.
[77]AB C295.
Counsel for French asked the Court of Appeal to deal with the issue itself. The Court of Appeal made clear, however, that if the matter of rates and taxes was to be investigated, the proceeding would have to be remitted to the trial Judge. Counsel for Marminta foreshadowed that, if the proceeding were to be reopened, Marminta would seek to make a claim for interest in consequence of French’s delay in settling the sale of the mortgages.
The Queensland Court of Appeal rejected French’s application to reopen, saying:
“One facet of the administration of justice is bringing proceedings to a close by a reasoned judgment as promptly as possible, and in the circumstances justice is done and equity is achieved by leaving the orders... in the unchallenged form in which they were presented to this Court on the appeal...”[78]
In a footnote to this part of its reasons, the Court stated:
“This is the reasoning underlying the decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; if there was a full reopening each party would have to overcome the principle referred to in that case.”
[78][2003] QCA 577 at [7].
In her reasons for judgment, the learned trial Judge recounted what had occurred before the Queensland Court of Appeal, as set out above, and concluded as follows:
“228.I am satisfied that the Court of Appeal entertained the broad arguments put by the plaintiff and Marminta in relation to their claims and in particular, the justification for re-opening those issues despite the difficulties posed by Anshun.
229. The Court of Appeal by order conclusively dismissed both the applications. It clearly intended its existing orders to stand, unaffected by those claims, for the reasons expressed. In my view, the plaintiff’s unjust enrichment claim should not be entertained by this Court because the Court of Appeal itself, by final order, dismissed the application. For the same reason, Marminta’s claim in paragraph 3 of its counterclaim should not be entertained.”
The respondents have argued that her Honour’s decision should be understood as “a simple application of the doctrine of res judicata.” On that view, they argue, the Court of Appeal’s decision – that in the interests of finality of litigation neither party would be permitted to raise new issues – is a permanent bar to either party raising those issues in any other forum. They rely on Blair[79] and Gibbs.[80]
[79] Blair v Curran (1939) 62 CLR 464 at 510 and 531-2.
[80]Gibbs v Kinna [1999] 2 VR 19 at 26-7.
I do not agree. As counsel for French correctly contended, the decision of the Court of Appeal was made in the exercise of a discretion on a procedural issue. It was a decision not to reopen – or permit the reopening of – the Queensland proceeding. The effect of the decision was confined to the Queensland proceeding itself, which came to an end with the Court of Appeal’s decision that the agreement should be specifically performed.
The Court of Appeal did not address the merits of either French’s claim for rates and taxes or Marminta’s claim for interest. There is no res judicata with respect to the substantive issues. Nor did the Court of Appeal address the question of Anshun estoppel with respect to those claims. As the Court’s footnote makes clear, the Anshun question would have had to be addressed by the Queensland trial judge had the Court of Appeal agreed to permit the proceeding to be reopened. But the proceeding was not reopened, and the Anshun question was left unanswered.
Counsel for French conceded that, if this Court concluded that his rates and taxes claim against QPM did not vest in Marminta, French would not persist with his (alternative) unjust enrichment claim against Marminta.[81] It is accordingly unnecessary to deal further with that claim.
[81]Outline of submissions at [39].
I would therefore allow the appeal. I would order that there be judgment for French against the first three respondents for the balances outstanding under the respective loan agreements. I would direct that those balances be assessed by the learned Judge on a date to be fixed. I would further order that there be judgment for French against the first respondent for the amounts claimed in respect of rates and taxes. I would hear counsel on the final form of the order.
CALLAWAY, J.A.:
I have had the considerable advantage of reading in draft the reasons for judgment prepared by the learned President. I agree with his Honour that the appellant should succeed against the first, second and third respondents for the balance outstanding pursuant to the first loan agreement and against the first respondent for the balance outstanding pursuant to the second loan agreement and in his claim against the first respondent for rates and land tax.[82] It may be that my
reasoning is not identical with the President’s, so I shall endeavour to state it briefly in my own words. For simplicity, I shall do so as if there were only one loan agreement and one mortgage.
[82]The first respondent is Queensland Premier Mines Pty. Ltd., the second and third respondents are Mr and Mrs Beckinsale and the fourth respondent is Marminta Pty. Ltd.
The debt arises from the loan agreement and the advance made thereunder. The mortgage secures repayment of the debt. The covenant to pay in the mortgage is purely collateral. The debt delimits the extent of the proprietary interest created by the mortgage.
The debt is not “a debt or … a liability under the mortgage” within the meaning of s.62(4) of the Land Title Act 1894 (Qld). Both limbs of that provision address the same issue. In the case of a debt, the first limb says that the transferee may sue and the second limb says that the transferee may not only sue but also recover. That is the natural construction of the words. As the President explains, it is not precluded by authority.
When a mortgage is transferred, it will very often be the case that the debt is transferred too. That is not a consequence of s.62 but of the agreement, express or implied, between the parties. In the present case that agreement was relied on only to exclude s.62. No doubt that could be done by agreement, at least in equity,[83] but there was no need to do so in relation to the debt.
[83]See, by analogy, the exclusion of s.141 of the Property Law Act 1958 (Vic.) discussed by Bongiorno, J. in G. & A. Lanteri Nominees Pty. Ltd. v. Fishers Stores Consolidated Pty. Ltd. (2005) V.Conv.R. 54-708 at [15]-[25]. Strictly speaking, the section is not excluded. It is given full effect at law, but the transferee holds the relevant right on trust for the transferor.
The transfer of the mortgage served a useful commercial purpose. It effectively disencumbered the land. As the mortgage was then discharged, it is unnecessary to consider what rights, if any, it conferred on the fourth respondent.
The further amended notice of appeal shows that the appellant’s claim for
rates and land tax is made primarily against the first respondent and only in the alternative, on the basis of unjust enrichment, against the fourth respondent. Unlike the debt, the first respondent’s liability for rates and land tax is prima facie “a liability under the mortgage” within the meaning of s.62(4). The difficulty is that it is not the kind of liability intended to be transferred, the breach of the relevant clause of the mortgage having been committed before the transfer. That breach gave rise to a cause of action in contract that enured to, and was not lost by, the appellant.[84]
[84]Compare Measures v. McFadyen (1910) 11 C.L.R. 723 at 731, 732-733 and 737-738.
In the Trial Division the respondents conceded that, “if they failed on the s.62 argument”, the appellant would succeed in his claim against the first respondent for rates and land tax. The appellant was not, in my opinion, obliged to make that claim in the proceedings in Queensland to which the first respondent was not a party. He was entitled to take the risk of losing his alternative claim against the fourth respondent without forfeiting his claim against the first respondent. It is unnecessary to consider the argument based on s.24 of the Land Tax Act 1915 (Qld) or whether the Queensland proceedings did result in the appellant’s losing his claim for unjust enrichment.
REDLICH, J.A.:
I have had the considerable benefit of reading the draft reasons for judgment of Maxwell P and those of Callaway JA. I agree that the appeal should be allowed and that there should be judgment for the appellant against the first, second and third respondents for the balance outstanding pursuant to the first loan agreement dated 30 October 1989 and judgment against the first respondent for the balance outstanding pursuant to the second loan agreement dated 24 November 1989.
None of the parties in either the Queensland or Victorian proceedings contended that there was an agreement to transfer or assign the loan agreement debts. For the reasons given by Maxwell P and Callaway JA, I am of the view that the right to recover the debt or enforce the liability under either loan agreement was not a right which vested in the transferee upon registration of the mortgage. Registration of the transfer of mortgage by the mortgagee conferred upon the transferee only the rights which the mortgagee had under the mortgage.[85] It was the right to sue “on the terms of the mortgage” and “to recover a debt... under the mortgage”[86] which vested in the transferee upon registration of the mortgage.
[85]Katsikalis v Deutsche Bank (Asia) AG [1988] 2 QdR 641 at 646 per Andrews CJ.
[86]S.62(4)
The learned trial Judge placed particular reliance upon passages in the judgments of the High Court in Naylor, Phillips and McFadyen. The cases to which the learned trial Judge referred support the conclusion that provisions such as s. 62 are intended to transfer the interest in land and the powers incidental thereto – that is to say rights which belong to the estate or interest transferred.[87]
[87]Naylor at 432 per Starke J and at 434 per Dixon and Evatt JJ; McFadyen at 730 - 731.
Despite her Honour’s careful analysis of those judgments and the language which appears to give support to her Honour’s conclusions, I am, with great respect, unable to agree with her Honour that they are authority for the proposition that personal rights outside the terms of the mortgage become enforceable under the mortgage by virtue of registration. The covenant to pay in the mortgage was a covenant to comply with the obligation under the loan agreements.[88] It did not confer a direct right of action. The mortgage did not create a personal liability in the mortgagor for the mortgage debt. The right to enforce the personal liability under the loan agreements was not, in my view, a right which could be said to be “intimately connected with rights of property arising out of the mortgage transaction.”[89]
[88]Clause 4.1(A).
[89]Naylor at 434.
In relation to the first loan agreement, the Beckinsales were joint borrowers with QPM. The promise to pay under the first loan agreement was, as the learned trial Judge found, an indivisible joint debt. The Beckinsales had no interest in the mortgaged land and were not parties to either mortgage. Even if s. 62 were to be construed in the manner found by the learned trial Judge, it would not vest a right in the transferee of the mortgage to sue the Beckinsales on the terms of the mortgage or permit recovery of the debt from them under the mortgage. That is to say, the mortgage contained no personal covenant, either by the Beckinsales or by all three joint borrowers, to pay the debt. The transfer of the mortgage did not constitute an assignment of the debt owed under the first loan agreement.
I am also of the view that the appeal should be allowed with respect to the appellant’s claim for rates and land tax from QPM. For the reasons given by Maxwell P and Callaway JA, the appellant’s right to recover such rates and land tax from the first respondent was not lost upon registration of the transfer of mortgage. The respondents conceded at trial that if they failed on their claim under s. 62, the appellant was entitled to succeed against the first respondent, whether the claim be based upon the doctrine of practical compulsion, s.24 of the Land Tax Act (Qld) or as a consequence of the application of the principle in McFadyen. It was not suggested at trial or before this Court that the conduct of the Queensland proceedings or Anshun principles precluded the appellant from proceeding with his claim for rates and land tax against the first respondent. I would therefore order judgment for the appellant against the first respondent in the amount of $173,202.02 for rates and land tax paid by the appellant in respect of the land mortgaged by the first respondent to the appellant together with interest thereon.
For completeness, I should state that, like the President, I am not persuaded that the Queensland Court of Appeal, in refusing to permit the appellant to pursue his claim against the fourth respondent, made any finding or order which would have prevented the appellant from proceeding with his claim that the fourth respondent had been unjustly enriched by the appellant’s payment of unpaid land tax and unpaid rates. But as it was the appellant’s position that if he obtained judgment against the first respondent, he would not pursue this alternative claim against the fourth respondent, it is unnecessary to give that claim any further consideration.
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