Money, B.A.L.V. v Westpac Banking Corporation
[1988] FCA 184
•28 MARCH 1988
Re: BRIAN ALEXANDER LANGTREE VENN MONEY and WESTPAC BANKING CORPORATION
And: WESTPAC BANKING CORPORATION; SUZANNE FINUCANE MONEY; WESTPAC BANKING
CORPORATION and BRIAN ALEXANDER LANGTREE VENN MONEY
No. WAG98 of 1985
Trade Practices - Property
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)
CATCHWORDS
Trade Practices - misleading and deceptive conduct - banker and customer - husband and ex-wife joint tenants of matrimonial home - wife with exclusive possession and ultimate sale order - grant of mortgage to secure advances to wife's business - husband misled into believing advances limited - mortgage providing for unlimited advances - mortgage terms to be varied under s.87 - non est factum - mistake - rectification.
Property - joint tenancy - order for exclusive possession by one joint tenant and sale thereafter - whether severance of joint tenancy.
Trade Practices Act 1974 ss. 52, 87
Meagher Gummow & Lehane - Doctrines and Remedies para.2606
Megarry and Wade - The Law of Real Property 4th Ed. p 399
Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77
Glorie v W.A. Chip & Pulp Co. Pty Ltd (1981) 39 ALR 67
Inca Office Supplies Pty Ltd v Nashua Australia Pty Ltd (1978) ATPR 40-095
Kennard v AGC (Advances) Ltd (1986) ATPR 40-747
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216
Taco Company of Australia Inc. v Taco Bell Pty Ltd (1982) 42 ALR 177
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302
Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601
Sutton v A.J. Thomson Pty Ltd (in liq) (1987) 73 ALR 233
Petelin v Cullen (1975) 132 CLR 355
Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336
Australasian Performing Right Association Ltd v Austarama Television Pty Ltd (1972) 2 NSWLR 467
Hooker Town Developments Pty Ltd v Director of War Service Homes (1973) 47 ALJR 320
Commerce Consolidated Pty Ltd v Johnstone (1976) VR 724
Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd (1981) 1 NSWLR 429
Pukallus v Cameron (1982) 43 ALR 243
NSW Medical Defence Union Ltd v Transport Industries Insurance Co. Ltd (1986) 6 NSWLR 740
Money and Money (1986) FLC 91-700
Re Shannon's Transfer (1976) Tas SR 245
Mullane v Mullane (1983) 45 ALR 291
HEARING
PERTH
#DATE 28:3:1988
Counsel for the Applicant: Mr R. Pringle with Mr S. Ellis
Solicitors for the Applicant: Freehill Hollingdale & Page
Counsel for the First Respondent: Mr D.R. Williams Q.C. with Mr S.R. Paterniti
Solicitors for the First Respondent: Parker & Parker
Mrs S.F. Money appeared on her own behalf.
ORDER
The application be adjourned to 8 April 1988 at 9.15 am for submissions as to the forms of orders.
Note: Settlement and entry of orders is dealt with
in Order 36 of the Federal Court Rules.
JUDGE1
Introduction
On 29 October 1982 Mr Brian Money signed a mortgage over land he owned jointly with his former wife, Suzanne. The mortgage, in favour of Westpac Banking Corporation, was to secure advances to Admiralty Travel Services Pty Ltd, a company operated by Mrs Money. According to its terms, there was no limit on the amount that might be advanced. Mr Money, who did not realise this at the time, says he signed the document on the understanding, induced by the Bank, that advances to Admiralty would not exceed $35,000. He says that the failure by the Bank to draw to his attention the unlimited nature of the security amounted to misleading and deceptive conduct in contravention of s.52 of the Trade Practices Act 1974. He alleges common and unilateral mistake and asserts that the Bank is estopped from exercising its remedies under the mortgage save as to the sum of $35,000 and interest thereon from the date of demand.
He relies also upon subsequent dealings with the Bank to say that, even if his liability under the mortgage exceeds $35,000, it does not exceed amounts advanced to Admiralty at the time of those later dealings.
He claims various forms of relief under s.87 of the Trade Practices Act and at common law. The Bank has cross-claimed for the sum of $96,639.58 together with interest from 1 October 1985.
Before turning to the various claims and cross-claims it is necessary to review the history of the transactions between the parties as to which there is not, in the end, a great deal of dispute.
History of TransactionsBrian and Suzanne Money were married on 16 February 1965 and divorced on 29 November 1976. They were then, and still are, the registered proprietors as joint tenants of a residential property at 8 Andrews Place in Cottesloe.
The property remained in their joint names but an order of the Family Court of Western Australia made on 15 March 1977 allowed Mrs Money exclusive use, possession and enjoyment of that home for a time and on various conditions, the terms of which will be referred to later. That exclusive possession has continued up to the hearing of the action. It was a further term of the order that upon termination of Mrs Money's exclusive possession, the home be sold and the net proceeds divided equally between husband and wife.
Mr Money is a pastoralist and operates a sheep station called "Yundamindera" which is north of Kalgoorlie. After they separated, his ex-wife began to carry on the business of a travel agent through a company called Admiralty Travel Services Pty Ltd ("Admiralty"). Its principal intended activity seems to have been the provision of travel booking services to US Navy personnel on leave in Western Australia.
On 26 July, with her accountant, Kim Bradbury, Mrs Money approached the West Perth Branch of Westpac to seek finance for the business. It was the practice of the Bank to maintain a manager's diary recording details of dealings with customers and instructions from the manager or assistant manager to various members of the Bank's staff. Mr Denis Haughan, the then Assistant Manager at the branch, noted in his diary that the proposal then put was:-
"...for a $25,000 "overdraft" against a second mortgage over house at 8 Andrews Place, Cottesloe said to be worth $100,000..."
There was already a first mortgage over the house in favour of Perth Building Society, securing some $22,000, and a second mortgage securing $5,000 owing to G.S. Alexander and R. Evans. Haughan was persuaded that the business had exceptional profit potential, despite some early indications of mismanagement. However before the request for the "overdraft" could be considered, he required financial information about the business, a valuation of the house and clearance of the existing second mortgage. The amount sought was later increased to $35,000.
Mrs Money approached her ex-husband about taking a second mortgage over the house to secure the proposed advance from the Bank. She told him she needed $35,000 for the business but could not borrow against her equity in the house unless he agreed to sign a mortgage with her. She said that if she could not use the house to secure an advance to her, then she would sell it.
Mr Money agreed to sign a second mortgage on condition that, if he were ever called on to pay anything under it, the house would be sold within 2 years of that time and he would be reimbursed for what he had paid from her share of the proceeds. He also stipulated that she should repay in that event whatever debts she owed him at the time.
Pending preparation of formal documentation by the Bank the company sought interim financial assistance. On 10 August Haughan instructed his branch legal officer to prepare a guarantee of interim borrowings on the current account of the company and "all mortgage documentation necessary for the formal arrangement as outlined in D/M 26.7.82". This was a reference to his entries in the manager's diary of 26 July. At about this time Haughan took over as relieving manager of the branch and Mr Robert Overington filled the role of relieving assistant manager. He gave an instruction to Overington as follows:-
"We await:
. advice of interim needs from Kim Bradbury - not to be made available until guarantee is executed.
. details 1-3 as outlined in D/M 26.7.82 to enable us to decide upon and formalise an approval under DDL (or AGC in need).
Meantime, no commitment has been given."
On 13 August 1982 Bradbury called Overington to advise the company's requirements. Overington's record of the conversation in the manager's diary includes the following:-
"Kim Bradbury called.
Subject Borrowing facility to $35,000. $25,000 immediately and possible further $10,000 on registration of mortgage documents."
Information about the company's financial position was provided. The diary records that Overington approved the interim advance:-
"Decision: Approved $25,000 immediately on current account with D & I guarantee as security.
On completion of mortgage documentation debt to be on a FDA $25,000 with say reduction of $10,000 first quarter and $15,000 second quarter. The need for come and go limit $10,000 seems apparent however, this has not been approved at this stage and will depend on trading requirements."
At the same time he gave a further instruction to the Manager's Assistant-Legal:-
"You are attending preparation of mortgage. Mr Money will be available to sign mortgage on 20.8.82."
The diary note as typed also bore the words "I agree" over the initials of Haughan, still acting as relieving manager. To this time there had been no contact between Mr Money and the Bank in relation to the proposed advance.
Before a second mortgage could be registered in favour of the Bank it was necessary to clear the existing second mortgage securing an amount of $5,000. It seems from Mr Money's evidence, that the money owing under that mortgage had fallen due. The amount secured had been for the benefit of Mrs Money. Mr Money's accountant, Robert Casey, contacted him and they discussed what would happen if she could not pay. In the event, Mr Money paid the amount to his accountant who paid out the second mortgagees.
In the meantime Mrs Money and her mother, Mrs Woollacott, signed an acknowledgement of the interim financing arrangements on 1 September 1982.That document bore, inter alia, the following endorsement:-
"I/We hereby note that the amount of my/our advance limit is the sum of $25,000 (Twenty five thousand dollars) during the pleasure of the Bank...."
and further:-
"A peak debt of $35,000 may be reached prior to finalisation of securities to expire on completion of securities: Limit then to be transferred to FDA account 10-139".
In a diary entry of 9 September 1982, Haughan endeavoured to set out the then current and proposed arrangements.
"The story so far is summarised as follows:-
FDA of $25,000 approved against security of the Cottesloe house and with problems in having mortgage executed by Mr Money, we agreed to :
. carry the position on current account against guarantee by Susy Money pending completion of the mortgage.
. further phone calls from Susy Money and Kim Bradbury and our subsequent discussion with both of them reveals that finance required was in fact $35,000 (i.e. $25,000 FDA and $10,000 current account) - their submission and our file does evidence this but nothing much was done about it.
ADMIRALTY TRAVEL SERVICES PTY LTD AS TRUSTEE FOR THE ADMIRALTY TRAVEL SERVICES TRUST (CONT...)
To set the record straight, the proposals are as follows:
(1) F.D.A. limit: $25,000
=======
Drawdown:in full upon completion of mortgage documentation - funds to be applied to current account.
Interest
rate 14.5%
Reductions ($1500 p.m. (P & I) - periodical payment authority from current account to be taken).
Term 18 months
Establishment fee Scale + $50.00
(2) Current account
Overdraft limit of $10,000 Interest rate: 14.5%
Review 30.6.82 Balance Sheet and Accounts by 15.9.83.
Establishment Fee: Scale
Security for both accounts to be our second mortgage over the Cottesloe house - guarantee to be retained until such time as the mortgage documentation is complete."
The diary note concluded with an instruction to the then relieving assistant manager, Mr Peter Earl, who had evidently replaced Overington. That instruction was as follows:-
"Peter; Peak debt on current account is to be held at $30,000. Existing $5000 second mortgage is yet to be paid out."
At some time Casey spoke to Earl concerning the payout of the existing second mortgage. As a result of that discussion it was agreed that the $5,000 paid to clear the existing second mortgage would be repaid out of the $35,000 advanced to Admiralty Travel Services. The $5,000 was paid by Mr Money on or about 25 October 1982 by which time Mrs Money had signed an authority to the manager at the West Perth branch of the Bank to repay that sum to him as a final distribution from the loan of $35,000. Casey forwarded the signed authority to the Bank under cover of a letter dated 29 October.
In his diary note of 7 October, Haughan, who had reverted to the position of Assistant Manager, referred to occasions over the preceding weeks on which the trust account had become overdrawn. He advised Mrs Money and her office manager, Roger Snelling, that the Bank had had enough of the need of supervision of the trust account and that future cheques would be returned. Indeed 3 cheques were returned unpaid on 19 and 26 October and 4 November 1982.
At about 11 am on 29 October 1982, Mr Money, in answer to a telephone message, went from Yundamindera to the Kalgoorlie branch of Westpac and there spoke with Mr Neil Landwehr, the Managerial Assistant - Legal for the branch. Landwehr had received, through the Bank's internal mail system for execution by Mr Money, a mortgage, a sureties' acknowledgement of existing liabilities and an authority for the Bank to inspect the secured property. He could not recall the transaction but told the Court that it was his usual practice to ask the customer if he knew what he was signing. Mr Money recalled the documents being shown to him. However he was expecting to see something signed by his ex-wife, reflecting their agreement that if he were called upon to pay anything under the mortgage the house would be sold within 2 years of that time and he would be reimbursed from her share of the proceeds. As there was no such paper among those produced by the Bank, he declined to sign anything. Landwehr then rang the manager of the West Perth branch and explained the position. He also rang Money's accountant, Casey, and gave the phone over to Money. Money told Casey he needed an "agreement" to be signed by his wife and explained its content. Casey prepared a memorandum for signature by Mrs Money and had it executed before 1 pm on the same day. Money rang him back at that hour and was told that the appropriate document had been executed. He then went back to the Westpac branch office and told Landwehr that he was ready to sign the documents. Landwehr told him that one was a mortgage and that the Bank could take his house if repayments were not kept up. There was a reference to Admiralty Travel, which Money did not understand. However he was told that the company would be the recipient of the loan moneys and that the amount borrowed was $35,000. Although Money could not recall the entire content of the explanation given to him by Landwehr, it was, he said, clear and precise, although delivered in a manner that he regarded as "abrupt". Of Landwehr he said:-
"He did not have a spare word about anything. He did not assist me in any other way. I thought his attitude was a little strange."
The sureties' acknowledgement bore on it the typewritten endorsement:-
"We hereby acknowledge that the advances may peak at $35,000 (Thirty five thousand dollars)."
This endorsement appeared just above the space provided for signatures by Mr Money and his wife. It had been initialled by Mrs Money but Mr Money was not asked to do likewise. He did not read the document and apart from the reference to Admiralty Travel Service recalls no specific explanation of it. When he finished signing Landwehr asked him "do you understand what you have signed?". He believes his reply was "Yes, I have guaranteed a loan to my ex-wife for $35,000". He recalled wondering at the time why Landwehr should ask him after he had signed the documents if he understood why he had signed them. His understanding of the effect of what he had signed was that the former matrimonial home would be encumbered to the extent of a further $35,000 which would also represent his maximum liability as surety. He was given, he said, and I accept, no indication that his liability was potentially unlimited. Had he appreciated that fact he would not have signed.
It was understood between Mrs Money and the Bank that, of the additional money raised on the mortgage, $5,000 would be applied to repay Mr Money for the $5,000 he had advanced to discharge the prior second mortgage over the subject land. However, as at 5 November 1982, the current account for Admiralty was in debt $33,874. Haughan, the assistant manager at the time, advised Mrs Money accordingly on that day.
According to Casey he rang Earl about the $5,000 on 11 November 1982. He was told, in effect, that the money could not be paid over because it would take Admiralty beyond its credit limit of $35,000. Earl did recollect discussing the matter of the $5,000 with Casey, but could not remember saying that payment would have taken Admiralty over the limit. Accepting that he had told Casey that the limit would be exceeded, he agreed that he would have been quite content for him to report to Mr Money to that effect. I am satisfied on Casey's evidence and the documentary evidence of the state of Admiralty's account at the relevant time, that the conversation took place substantially as he recounted it. I have no doubt that he would have communicated the substance of it to Mr Money.
On 18 November Earl told Mrs Money that the Bank would cover wages only to the extent of $800 to $900. It would, he told her, look sympathetically at Admiralty's liquidity problems in the event that he could obtain some written commitment of financial support from the W.A. State Government. On 3 December at a further meeting, Mrs Money told Earl that the cash flow position had not improved and that Admiralty's telephone service had been cut off as a result of recently dishonoured cheques. She did make reference to an impending export grant anticipated at $12,000. Earl said that if they could get proof of the grant the Bank would advance some $5,000 to $6,000 against it. On 24 December Admiralty sought a temporary excess of $10,000 on its current account to be fully cleared by 31 January 1983 from receipt of an export grant of $12,000 or from refinancing. Earl approved the application for temporary accommodation and directed the Manager's Assistant - Legal to arrange to have the mortgage upstamped to $45,000 and to obtain the sureties' consent to the variations. At that date, the Admiralty current account was $10,713.99 in debit. It owed $25,000 on the fully paid advance and had a credit of $612 in its trust account.
On 29 December 1982 a letter was sent to Mr Money at Yundamindera Station at Leonora from the Manager of the West Perth Branch of Westpac in the following terms:-
"Admiralty Travel Services Pty Ltd as trustee for the Admiralty Travel Services Trust
We have recently approved a temporary excess of $10,000 on the above account with full clearance of the excess by 31/1/83 from a Government Grant.
Your consent as Surety is required for the new arrangement and we enclose usual letter for signing and return."
A surety consent form was enclosed with the letter. The form provided for a consent "to the Bank making or continuing to make any advances or incurring or continuing to incur any obligations to or on behalf of the Debtor or permitting the Debtor to incur any further obligations whatsoever to the Bank to any extent the Bank may think fit during its pleasure..."
Money did not sign the form or otherwise respond to the letter. He thought it was "someone having a try". The Bank did not pursue the consent form request. At the date the letter was sent, that is, 29 December 1982, the current account was $10,861.49 in debit. At 18 February that debit had become $26,351.69. There was $23,400 owing on the Fully Drawn Advance Account and the trust account was in debit to the extent of $6,235. The excess of $10,000 which had been approved on 24 December 1982 had not been repaid as arranged by 31 January 1983 and had been exceeded by more than $6,000 on the current account. There was no record in the manager's diaries of any decision- making process directed to the further extension of the credit available to Admiralty and the non-enforcement of the terms of the $10,000 extension.
For some reason which did not emerge clearly in the evidence, Money visited the offices of Admiralty in Perth on or about 18 February. It seems that he may have been asked by Mrs Money, who was then in Honolulu, to persuade one of the women on the staff to stay on for the time being. During this visit he was told that the company's borrowings were up and that it was borrowing a lot. He became concerned and decided to get in touch with the Bank. This was not before, it seems, he had offered to guarantee the wages of one of the female staff for a week in order to keep the office going until Mrs Money returned from Honolulu.
He made contact with Earl, whether personally or by telephone is not clear, and queried the extent of his liability under the guarantee. After some circumlocution Earl told him that the Bank was in a position to hold him responsible for whatever amount it lent to Admiralty. Money pressed him to disclose the amount then owing and was informed that it was in excess of $55,000. He told Earl that he wanted the account closed at that level. Earl agreed to do so. Money arranged to see him the following day at the Bank and at that meeting told him that his guarantee had been limited to $35,000 and that if the papers which had been signed in Kalgoorlie said anything different then they must have been the wrong papers. He mentioned the letter of 29 December, pointing out that the Bank had sought his signature to raise the lending by $10,000. Earl's response was "we did not need that". Earl, he said, agreed to "draw the line at $55,500". At the same time there appears to have been some discussion about the undesirability of the Admiralty business folding up while Mrs Money was out of the country and Money confirmed to Earl that he had agreed to guarantee one girl's wages at the office for a week. He later agreed to cover two further small advances by the Bank to meet Overseas Telecommunications Commission charges of $300 and a bill from the Sheraton Hotel for $68.
Earl's recollection of these conversations is very hazy. His diary record for 18 February tended generally to corroborate Money's account of their first conversation. According to that note Money stated that he wished to keep the business going until Mrs Money returned from Honolulu where she was negotiating a $7.2m providore/charter operation with the US Navy. He did not want the debt to exceed its present level but was prepared to guarantee wages. The diary also contained the observation that the Bank had been informed at the time of the increase in the overdraft by $10,000 "that Mr Money was aware of the increase and that he agreed to it". Earl reiterated his concern that Money had not been informed of the position as the Bank had been assured he had. He added the note: "Bank's position is covered by the mortgage and surety's consent held from other Surety - S. Money".
On 25 February 1983 Money telephoned Earl and advised that he was returning to Yundamindera and indicating his willingness to cover the OTC and Sheraton accounts. Earl noted:-
"This exercise is academic as our security covers full debt and his liability is as joint surety therefore he is jointly and severally liable."
The Bank subsequently met cheques for wages and for $300 and $68 respectively for the OTC and Sheraton. There was also repayment of $1,600 being an amount deposited in the trust account for a prospective traveller which, according to Money, he agreed to guarantee.
In cross-examination Earl accepted that he would have assumed that Mr Money was entering into the mortgage transaction pursuant to some agreement with his ex-wife. He also accepted that there would have been some limit in the agreement as between the Moneys:-
"...but as a general proposition you and the rest of the people in your Branch must have known that there was a limit as between the two mortgagors?--- Yes, I think they would because the facilities were approved at a set level.
Yes. And do not you think that it is also almost inevitable that the limit that had been discussed between the two mortgagors would have been the limit Mrs Money had discussed with the managers and other officials in the West Perth Branch of Westpac in those months?--- At that time; yes.
Yes. So that your Bank would have been prepared to put its head on the block if asked that all three parties knew the limit was $35,000?---At the time it was approved; yes."
It appears that Earl had not seen the documents nor had anything to do with their approval before they were sent to Kalgoorlie, or on their return fully executed. He did not recall any telephone conversations with Money following that of 23 February. There were, however, further contacts between Mrs Money and the Bank in April 1983 at which there was some discussion of the possibility that Mr Money would purchase Mrs Money's interest in the Cottesloe house. In his evidence Mr Money said he was prepared to buy the house but could not do so while there was a dispute as to who owed what and to whom.
Negotiations between Mr and Mrs Money with respect to a financial settlement embodying a purchase of her interest in the house were apparently protracted over many months but ultimately proved fruitless.
Correspondence between Mr Money's solicitors and the Bank and its solicitors began on 14 June 1983 and on 11 August 1983 the Bank wrote to Messrs. Muir Williams Nicholson, acting for Mr Money, and advised:-
"Further to your letter of 5th July we advise that Mr Money's liability under mortgage dated 1/9/82 is Joint and Several with Mrs Money and is limited to $35,000 plus interest.
Mrs Money will continue to be severally liable for the full amount of the Company's liability."
On 10 August 1983 the Manager of the West Perth Branch of Westpac received a memorandum from the Regional Manager seeking a full review of the position by 15 August 1983, the review to advise how the debt had escalated to the present level, what arrangements there were for clearance, the security position and an answer to the following question:-
"Why was Surety Brian Money's consent to variations not obtained 12/1/83 in view of consent dated 1/9/82 restricting advances to $35,000 and why were further advances permitted in view of this?"
Mr Earl responded on 1 September 1983 and in response to the last question said:-
"Branch Assistant Manager and Relieving Managers were not aware of the limiting clause on the T105 Surety's Acknowledgment re existing liabilities and this only came to light at time of request for information by Mr B.A.L.V. Money in February/March this year. Since then account has only increased by wages paid with concurrence of Mr Money ( our diary records details), Bank interest and fees. Cheques have been returned to control as required. All payments made from account are now made against cleared funds."
The reference to a "limiting clause" was a reference to the typed acknowledgement appearing just above the signatures in the sureties' acknowledgement form signed by Mr and Mrs Money.
Correspondence ensued between the Bank and Mr Money's solicitors but did not resolve their differences. On 23 July 1984 the Bank sent a formal demand to Mr and Mrs Money claiming an amount due under the mortgage of $79,174.09.
On 5 May 1987 and in the course of the hearing, a certificate was tendered pursuant to the terms of the mortgage certifying that the total amount then secured by the mortgage was $135,311.76, being the total of the debit balances in the Admiralty Travel Services Pty Ltd accounts at that date. Interest was accruing thereafter at the rate of $85.15 per day.
On 23 October 1984, the solicitors for Mr Money had written to the Bank's solicitors advising that should the Bank attempt to sell the property pursuant to the mortgage Mr Money would oppose the action on the basis that the mortgage was limited to providing security for $35,000 plus interest and that he was then prepared to tender that amount in return for a discharge of the mortgage. The letter went on:-
"Mr Money has therefore instructed us to make an open offer to pay $35,000.00 plus interest on that amount, in return for a discharge of mortgage. This would of course be on the basis that your client would be entitled to pursue Mrs Money, personally, for the balance of her indebtedness to the Bank.
We would appreciate your advice as to whether your client is prepared to resolve matters on the above basis and, if so, would appreciate your advice of the amount which your client claims is payable by way of interest on the $35,000.00, together with details as to how this figure has been calculated."
The offer was not accepted.
Misleading and Deceptive ConductAlthough pleaded in the alternative among various causes of action, it is convenient to begin with a consideration of the alleged contravention by the Bank of s.52 of the Trade Practices Act. As appears from paras.13 and 13A of the re-amended statement of claim, Mr Money contends that the Bank made certain representations and promises to him. Paragraph 13 refers to the acknowledgement of interim financing arrangements signed by his ex-wife and her mother, Mrs Woollacott on 1 September 1982 and says that by that acknowledgement the Bank represented to and promised him that:-
(a) it intended not to advance more than $35,000 to Admiralty on the security of the mortgage;
(b) it intended to bind itself not to advance more than $35,000 to Admiralty on the security of the mortgage without his prior consent;
(c) it would not seek to enforce its rights under the mortgage to an extent greater than the recovery of up to the balance of $35,000 and interest thereon from demand;
(d) the Bank was precluded from advancing more than $35,000 to Admiralty on the security of the mortgage; and
(e) the liability of the applicant to the first respondent pursuant to the mortgage was limited to the balance of $35,000 and interest thereon from demand.
He goes on to complain that the Bank failed to disclose to him that the mortgage was unlimited, was a continuing security and that his consent to further advances was not required. In para.13A, he refers to the arrangement between his accountant, Casey, and the Bank in October 1982 whereby he paid $5,000 to discharge the previously existing second mortgage on the basis that he would be repaid out of the Bank's advance to Admiralty. He says that by making that arrangement and later refusing to reimbuse him on the basis that Admiralty's indebtedness would have exceeded $35,000, the Bank impliedly represented that it was not entitled to advance more than $35,000 under the mortgage. The misleading and deceptive conduct alleged is set out at para.20 and particularised as follows:-
"(a) It failed to disclose to the applicant before or at the time he executed the mortgage and the acknowledgement at the request of the first respondent (when he was given some information concerning the transaction) that (as were the facts) that over $30,000.00 had already been advanced to Admiralty, that Admiralty's cheques had recently been dishonoured, that Admiralty had a trust account which had been in overdraft, that there had been irregularities in Admiralty's operation of its trust account and that the first respondent was concerned about the way in which Admiralty operated its accounts with the first respondent; by failing to disclose these matters or any of them the first respondent impliedly and falsely represented that it was unaware of anything unusual about the accounts to be guaranteed by the applicant.
(b) It obtained the execution of the mortgage and acknowledgement for the purposes and on the basis of securing advances of no more than $35,000.00 to Admiralty.
(c) It made the said representations and promises and failed to make the said disclosure pleaded in paragraphs 13 and 13A above.
(d) It failed to inform the applicant of the change in its intention as to the amount to be advanced to Admiralty, before making advances of more than $35,000.00 in the aggregate.
(e) By letter dated 29th December 1982, the first respondent requested the applicant's approval (which was withheld) as a surety to the making of advances to Admiralty exceeding $35,000.00 in the aggregate, and represented to the applicant that his consent to the making of the advance was necessary.
(f) It failed to inform the applicant before 18th February, 1983 (as was the fact) that further advances had been made to Admiralty (so that at that date its indebtedness to the first respondent was $55,000.00 or thereabouts);
(g) The mortgage which the first respondent by its conduct induced the applicant to execute provided for a continuous and unlimited guarantee by the applicant, and his consent to any further advances to Admiralty was unnecessary to render the applicant liable under the terms of the mortgage."
In the alternative it is alleged by para.21 that Money became aware in February 1983 that the Bank had advanced sums exceeding $35,000 to Admiralty and that at his request the Bank by Mr Earl agreed that it would not make and had no intention of making further advances to Admiralty. The making of further advances to Admiralty in breach of this agreement is also said to constitute misleading and deceptive conduct.
Mr Money seeks relief under ss.87 and 82 of the Act.
In analysing the evidence which was not the subject of significant dispute, it is appropriate to consider initially his state of mind when he signed the Bank's mortgage at Kalgoorlie on 29 October 1982. It is, in my opinion, clear that he did not know that the mortgage provided that the amount secured by it was not limited. It is also clear that had he known that he would not have signed. He believed that he was encumbering the house to the extent of $35,000 and interest and exposing himself to that liability on his personal covenant. This was the basis upon which he had agreed to go along with Mrs Money's proposal to use the house as a security to raise funds for Admiralty. It was reflected in his answer to Mr Landwehr, who asked after the documents had been executed - "Do you understand what you have signed?" Money believes he replied - "Yes I have guaranteed a loan to my ex-wife for $35,000". Accepting that was the question Landwehr asked, it is more probable than not that the reply was along the lines indicated. Landwehr who had no independent recollection of the transaction, could hardly have been disturbed by that answer for the sureties' acknowledgement accompanying the mortgage bore the endorsement:-
"We hereby acknowledge that the advances may peak at $35,000 (Thirty five thousand dollars)."
It is difficult to imagine why the sureties would be asked to acknowledge such a peak, unless they were being asked to acknowledge the maximum advances that could be made and that those advances could go as high as $35,000.
This view of the acknowledgement is supported by Mr Earl's concession in cross-examination, that the relevant officers of the Bank must have known that there was a limit as between the two mortgagors and that it was almost inevitable that the limit discussed as between them was the same limit, namely $35,000, discussed between Mrs Money and the bank officers.
So far as Money was concerned he was being asked at 29 October 1982 to execute a security to cover advances not exceeding $35,000 to Admiralty. What was tendered for his signature by the Bank was a security to cover advances without limit. It is appropriate to observe that there is no suggestion that the conduct of the bank officers in preparing and tendering the mortgage was in any sense dishonest. Mr Denis Haughan, the Assistant Manager at the West Perth Branch, had given instructions to his Manager's Assistant - Legal on 10 August 1982 for the preparation of the documents. The instruction as given was brief but, according to usual Bank practice, sufficient to enable the documentation to be prepared without the need for further detail. Haughan did not recollect anyone coming back to him for further advice in relation to the instruction. None of the officers involved appear to have adverted to the question whether the mortgage should be expressed to secure advances without limit.
Sub-section 52(1) of the Trade Practices Act provides that:-
"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
There is no issue that the Bank is a corporation for the purposes of the Trade Practices Act. Nor can there be any dispute that the transaction and conduct of the Bank in relation to it was conduct in trade or commerce. The critical questions are whether any element of the conduct of the Bank in or in connection with the tendering of the mortgage document was misleading and deceptive and if so, whether Mr Money has suffered or is likely to suffer loss or damage by virtue of that conduct (ss.82 and 87(1A)).
The central test for characterisation of conduct as misleading or deceptive is whether it has the capacity to lead into error - Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77, 81. That capacity may be assessed by reference to the context in which the conduct occurs - Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77, 84 (Bowen CJ), 98 (Lockhart J.), 102 (Jackson J.); Glorie v W.A. Chip & Pulp Co. Pty Ltd (1981) 39 ALR 67, 77 (Morling J.); Inca Office Supplies Pty Ltd v Nashua Australia Pty Ltd (1978) ATPR 40-095 at 17,950 (St. John J.)
The mere presentation of a mortgage document for signature may, according to circumstances, including prior representations, convey a representation as to its terms - Kennard v AGC (Advances) Ltd (1986) ATPR 40-747 at 48,131 (Pincus J.).
There was no evidence to suggest that the Bank intended to mislead or deceive Mr Money in any way. But to establish a contravention of s.52 it is not necessary to show either intent to mislead or deceive or awareness that the conduct is misleading or deceptive - Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; Taco Company of Australia Inc.v Taco Bell Pty Ltd (1982) 42 ALR 177; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. It is necessary however to bear in mind that if the innocent act of a corporation were given a false significance by circumstances arising entirely from the antecedent representations of a third party, it would be difficult to see how the corporation could have engaged in misleading and deceptive conduct.
In the present case the Bank had been involved in negotiations with Mrs Money for the provision of advances limited to $35,000. It dealt with her and, I find, indirectly through her with Mr Money on a common assumption that the advances were to be so limited. That this was the basis of the transaction is borne out by Mr Earl's concession, by the acknowledgement signed by Mrs Money and her mother on 2 September 1982 and by the peak advances provision in the sureties' acknowledgement signed by Mr Money on 29 October. In the light of that common assumption the presentation of the mortgage for signature by Mr Money carried with it the risk that Mr Money would be led into believing, as he was, that the security to be provided was limited to $35,000 and interest thereon. And it is for that reason that the unqualified tender of the mortgage amounted to misleading and deceptive conduct as to its terms. It is no answer to this characterisation to argue that the terms of the mortgage were there for Mr Money to read. At best the presence of a term spelling out the extent of the mortgagor's liability may constitute evidence that he was not misled - if he read it. In this case he did not. The characterisation of conduct as misleading or deceptive does not depend upon whether the person affected by such conduct is careless or could by making his own inquiries have avoided being misled or deceived. Nor does the entitlement to relief depend upon any finding that the respondent has taken reasonable care to look after his own interests - Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302, 309 (Pincus J.); Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601, 612-613 (Wilcox J.); Sutton v A.J. Thomson Pty Ltd (in liq) (1987) 73 ALR 233, 241 (Full Court).
If I am wrong as to the implied representation arising from the tender of the mortgage document, there remains Mr Money's response to Landwehr's question just after execution, and the absence of any corrective comment. Had he then been disabused of the notion that he was doing no more than guaranteeing a loan to his ex-wife for $35,000 he could, and I think would, have called upon the Bank to cancel the transaction immediately. Alternatively, he could have given notice under cl.39(a) of the mortgage of his desire to discontinue any further liability. Landwehr's silence which may well have stemmed from his own lack of appreciation of the actual mortgage terms was, in the circumstances, misleading and deceptive, albeit innocently so.
Although it was Money's evidence that he did not read the sureties' acknowledgement on 29 October 1982, I find it difficult to accept that he would have missed the reference to advances peaking at $35,000, which had been initialled by his ex-wife and appeared immediately above the space provided for his signature. It would not, of course, have struck him as unusual because it was in its terms quite consistent with his understanding of the nature of the transaction into which he was entering. In my opinion it is probable that he did see it and seeing it would have been reinforced in his belief as to the limit of the liability being undertaken.
If not for the Bank's conduct Mr Money would not have signed the mortgage. In the circumstances he has by reason of that conduct suffered and is likely to suffer loss or damage.
Before turning to the question of relief, it is appropriate to review some later events relied upon in the statement of claim. The communications between Casey and the Bank in November 1982 concerning reimbursement of $5,000 previously outlaid by Mr Money, were consistent with his belief as to the limit of advances. However they did not, in my opinion, give rise to misleading and deceptive conduct on the part of the Bank for they were equally consistent with a simple refusal by it to extend further advances to Admiralty at that time.
The letter dated 29 December seeking Money's consent to an advance of a further $10,000 is in a different category. It expressly stated to him that "Your consent as Surety is required for the new arrangement...." (emphasis added). In doing so it plainly misstated his position under the mortgage. It was consistent with and served to reinforce his conviction that his liability was limited and subject to his control. If the events of 29 October 1982 did not involve misleading and deceptive conduct on the part of the Bank, this letter plainly did. Insofar as it conveyed to Mr Money that the Bank was contemplating an increase in advances to Admiralty beyond the ceiling of $35,000, it also conveyed to him that if his consent were not forthcoming the advances would not be made, or at least not made on the security of the mortgage. Confident in that belief, Mr Money did not bother to respond or make further enquiries. The opening words of the letter:-
"We have recently approved a temporary excess of $10,000..."
do not detract from the overall message that the implementation of that approval depended upon his consent.
It might be said that the letter had no effect on Mr Money's conduct. He was, after all, already of the belief that his liability was limited. If the letter had not been sent he would not have acted differently. However, in my opinion, the letter did two things. The first thing it did was to warn him of an intention to advance to Admiralty a further $10,000. Apprised of that information and nothing else, he would have acted to prevent any increase in his liability. Reassured by the statement that his consent was required, he did not act. In my opinion the necessary causal connection is shown. His failure to move to limit his liability following the letter is a result of the reassurance contained in it. His exposure to an increased debt flows from it. Assuming that there was no contravention of s.52 as at 29 October, his loss or damage flowing from the letter is measured by advances made (including the additional $10,000) beyond that date. As at 29 December the Admiralty current account was in debit to the extent of $10,861.49, the trust account was in credit and the Fully Drawn Advance Account stood at $25,000. Money's potential liability was then $35,861.49.
As to the events of February 1983, I am satisfied that Money did ask Earl, save in certain minor aspects, not to make any further advance to Admiralty and that Earl agreed to draw the line at the then existing liability which was $26,228.09 on the current account, $23,400 on the Fully Drawn Advance Account and a debit balance of $6,803.80 in the trust account, making a total of $56,431.89 although it seems he may have agreed to round this off to $56,000. Further advances to Admiralty beyond that date were, in the circumstances, unauthorised and remain unexplained except for small amounts expressly approved by Mr Money. In that respect there was a sum of $300 payable to the Overseas Telecommunications Commission and $68 to the Sheraton Hotel. He had also indicated that he would guarantee the wages of the girl in the office for one week if such payment took the total Admiralty debt over $56,000. The amount of wages actually paid in that respect does not appear from the evidence. I accept that Mr Money did not offer to guarantee the payment of all wages in respect of Admiralty Services for any indefinite period. He also told the Court that he had agreed to guarantee payment of the sum of $1,600 deposited by a prospective traveller in the Admiralty trust account.
Non Est Factum, Mistake and RectificationIn view of my finding with respect to the contravention of s.52 and the consequential loss or prospective loss to Mr Money, and given the amplitude of the relief available under s.87, it is not necessary to consider the further pleas of non est factum, mutual and unilateral mistake, estoppel by representation and the claim for rectification which were all raised by the re-amended statement of claim.
In case the matter should go further however, I should say that in my opinion, the claim of non est factum could not succeed. In Petelin v Cullen (1975) 132 CLR 355 at 359-360 the limitations on this plea, which is usually raised as a defence to action on a document, were made clear in the judgment of the Court when it said:-
"The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence."
Whilst accepting that the difference between Money's belief as to the nature of the documents he was signing and its true nature was significant, it was not, in my opinion, a radical difference of the kind contemplated in Petelin v Cullen.
I have found that the Bank dealt with Mr Money on the basis that it would advance no more than $35,000 to Mrs Money on the security of the mortgage. From the Bank's point of view of course, a mortgage securing unlimited advances is as good a protection in respect of a $35,000 advance as is a mortgage expressed to secure only that amount plus interest. Despite the common assumption to which I have already referred, it does not follow that there was a common intention that the mortgage would be expressed only to secure $35,000. While the tender of the mortgage for execution in Kalgoorlie on 29 October 1982 conveyed a misleading impression to Mr Money in the circumstances, that characterisation is independent of the intention to be attributed to the Bank at the time. To attract the remedy of rectification it is no longer necessary to show the existence of an antecedent agreement, but it is necessary to show that the agreement for which rectification is sought does not reflect the common intention of the parties - Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, 350 (Mason J.), (Menzies J. agreeing at 346):-
"What is of importance is that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately. And there has been a firm insistence on the requirement that the mistake as to the writing must be common to the parties and not merely unilateral, except in cases of a special class to which I shall later refer.
It is now settled that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification. It may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties, but does not reflect their common intention (Shipley Urban District Council v Bradford Corporation (1936) Ch.375; Slee v Warke (1949) 86 CLR 271)."
The existence of a common intention as a necessary condition for this form of relief is well established - Australasian Performing Right Association Ltd v Austarama Television Pty Ltd (1972) 2 NSWLR 467, Hooker Town Developments Pty Ltd v Director of War Service Homes (1973) 47 ALJR 320, 323-4; Commerce Consolidated Pty Ltd v Johnstone (1976) VR 724, 731 - and see generally Meagher Gummow & Lehane - Doctrines and Remedies para.2606.
It does not appear to be necessary that the common intention has to have been the subject of any outward expression of accord or any communication between the parties - Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd (1981) 1 NSWLR 429 at 431 (Yeldham J.), Pukallus v Cameron (1982) 43 ALR 243, 247 (Wilson J.); NSW Medical Defence Union Ltd v Transport Industries Insurance Co. Ltd (1986) 6 NSWLR 740 at 751-752 (Clarke J.).
It was said in Bishopsgate that the common intention must be one that has been manifested in the words or conduct of the parties and not merely one which remained undisclosed in the course of negotiations. Whether or not that latter proposition embodies any principle of law, it plainly reflects a recognition of practical evidentiary requirements in establishing common intention for the purpose of seeking rectification.
Allowing for the absence of any need for expression of accord, I am of the opinion that the relevant common intention is not made out between the Bank and Mr Money so far as the terms of the mortgage are concerned. I am not satisfied that this is a case of mutual mistake. The claim for rectification would therefore fail.
A major difficulty with the mutual mistake and unilateral mistake pleaded lies in the attribution of the relevant state of mind to the Bank in each case. The functions of negotiation, preparation of the mortgage document and tender of the document for execution, were each carried out by different bank officers. I could not be satisfied on the evidence that the Bank should be regarded as having been aware of the discrepancy between Mr Money's expectations and the content of the mortgage. The plea of unilateral mistake fails.
As to the estoppel plea, very little was said about that by Mr Money's counsel in his final address. Given that Mr Money has made out his cause of action under the Trade Practices Act, it is unnecessary and in these circumstances, undesirable to say more about that issue.
Severance of the Joint TenancyOn the assumption that the Court might take the view that Mr Money's liability under the mortgage and the extent of the security over his interest in the land were or should be limited, senior counsel for the Bank submitted that although shown on the Register as joint tenants, Mr and Mrs Money signed the mortgage as tenants in common. This situation arose, it was submitted, because orders of the Family Court affecting the former matrimonial home severed the joint tenancy.
The orders in question were made orally on 15 March 1977 but not issued by the Registrar of the Family Court of Western Australia until 3 February 1986. They were issued upon Mrs Money's application and in the face of an unsuccessful attempt by Mr Money to have them varied. The proceedings in this regard are reported in Money and Money (1986) FLC 91-700. It is plain from the report of the Chairman of Judge's reasons for judgment in that case, that his Honour regarded his oral orders as taking effect from the date upon which they had been pronounced and I accept that they did so operate. The orders as issued by the Registrar upon the direction of the court, included the following:-
"(c) That the wife have the exclusive possession, use and enjoyment of the former matrimonial home situate at and known as 8 Andrew Place, Cottesloe so long as there is resident with the wife a dependent child under the age of eighteen (18) years, or over that age but engaged in full time education and in any event only until the end of the academic year in which such child attained the age of 21 years, or until the happening of one of the following events:
(i) the wife remarrying; or
(ii) the wife entering into a de facto relationship.
(d) That upon the termination of the wife's exclusive occupation the home be sold and the net proceeds divided equally between the husband and the wife.
(e) That during the period of the wife's exclusive occupation the husband pay the rates and taxes, the premiums on the insurance of the home and contents and the mortgage instalments on the home.
(f) That during the period of the wife's exclusive occupation the wife be responsible for all repairs to the home, the purchase of the children's school uniforms and all other requirements of the children not specifically mentioned in sub-paragraph (b) hereof."
Mrs Money also sought, in the Family Court of Western Australia, a declaration that the orders made by Barblett C.J. on 15 March 1977 so far as they concerned the former matrimonial home were orders for the provision of maintenance and not orders for an alteration of property interests. This application was rejected on the basis that the Court did not have jurisdiction to make such a declaration.
I was referred to Re Shannon's Transfer (1967) Tas.SR 245, a case involving a decree nisi which provided, in respect of a matrimonial home of which husband and wife were joint registered proprietors:-
"By consent - that the Respondent's one half undivided share of and in the matrimonial home ... be settled upon the Petitioner whilst she remains resident in the premises dum sola et casta, with liberty to either party to apply."
No formal documents were drawn up pursuant to the order. The question arose whether the joint tenancy had been severed by the decree and Neasey J. held that it had, as the wife had a right under the order to exclusive possession and unity of possession was destroyed. At 254 Neasey J. said:-
"...on the authority of Blackstone, it follows that upon one joint tenant being lawfully ousted from possession by the other, pursuant to the execution of appropriate documents carrying the settlement into effect for an indefinite term depending upon residence dum sola et casta, the joint tenancy would be severed in law because of destruction of the unity of possession; and when one joint tenant becomes entitled to oust the other by virtue of the court's decree the effect must be to sever in equity."
However His Honour left open the question whether there was a mere suspension of the jointure or a permanent severance in view of the second marriage of the wife and the consequent determination of the settlement.
Insofar as the reasoning in that decision depended upon the proposition that the interests of the spouses were severed when one was granted exclusive possession, it must be doubted in the light of the decision of the High Court in Mullane v Mullane (1983) 45 ALR 291. In that case an order was made in 1967 under the Matrimonial Causes Act 1959 granting to the wife exclusive occupation of the matrimonial home until the children of the marriage became self supporting or she remarried. In 1978 the wife applied to the Family Court for an order for the sale of the home and division of the proceedings, two thirds to herself and one third to her husband. By virtue of transitional provisions in the Family Law Act 1975 the original order was to be treated as though made under that Act. The question for the High Court was whether the order should be characterised as one "altering the interests of the parties in the property" and therefore to be treated as if made under s.79 of the Act and, by virtue of s.79A subject to variation only in special circumstances such as fraud. The Court held that s.79 on its proper construction referred only to orders which work an alteration of the legal or equitable interest in the property of the parties or either of them:-
"It follows, then, that s.79 does not authorize a mere modification of a liberty to enjoy property. An order which merely excludes one spouse from the enjoyment of property, albeit for many years, in order to permit its better enjoyment by the other does not alter an interest in that property, though a spouse acquiring an interest in property under a s.79 order may be entitled, in virtue of that interest, to exclude the other from its enjoyment." (297)
In Money and Money (supra) Barblett C.J. said that the orders made in respect of Mr and Mrs Money's matrimonial home were originally dealt with as though made under s.79. The impact of Mullane's case upon their proper characterisation was left open by his Honour. However, insofar as the order provided for temporary exclusive possession in favour of Mrs Money the decision of the High Court is authority for the proposition that it altered no interest. Whether it is authority which binds here may be arguable as the Court did not address the impact of an exclusive possession order upon joint tenancy. The sale order raises another question. Prima facie it contemplates an eventual sale and an unqualified entitlement on the part of both husband and wife to equal shares in its proceeds. A grant of land "in equal shares" or "equally" between two or more persons has been regarded as creating a tenancy in common - Megarry and Wade - The Law of Real Property 4th Ed. p 399.
It may be argued that para.(d) simply imposed personal obligations on husband and wife in the event of their survival to termination of the exclusive occupation upon the happening of one or more of the specified events. Barblett C.J. himself left open the possibilty that paras. (c) and (d) might in the light of Mullane's case be no more than maintenance orders. However in my opinion, the better view is that the order effected a severance of the joint tenancy.
It is, I think, undesirable, if avoidable, that the Court should purport to determine the meaning of an order of the Family Court where its construction and effect may be open to debate. In this case however, matters would be left in an unsatisfactory state of uncertainty if no determination were made on the issue. I find therefore that the effect of the order of the Family Court when it was made, was to sever the joint tenancy so that Mr and Mrs Money became in equity tenants in common in equal shares. I should add that the submission was made, although not argued, that the grant of the mortgage itself effected a severance of the joint tenancy, because being a joint and several mortgage it was contemplated that the parties might be dealt with differently in respect of the security as well as the personal covenants. The land in question being subject to the Transfer of Land Act 1893 the operation of the mortgage was governed by the provisions of s.106 thereof which provides in substance that a mortgage under the Act when registered should have effect as a security and not as a transfer of the land mortgaged. The mere registration of a mortgage by joint tenants does not effect a severance of interests - Lyons v Lyons (1967) VR 169; Whalan - The Torrens System in Australia at 106. No basis for departing from that general proposition arises from the fact that the mortgagors are defined in the mortgage so that their obligations are joint and several.
It follows from the preceding that I approach the grant of relief under s.87 of the Trade Practices Act upon the basis that Mr Money's liability should be limited to $35,000 plus interest from the time of demand which, in this case, was first made by notice dated 23 July 1984. He should also be treated as liable for the additional small advances which he expressly authorised together with interest thereon. I will hear from the parties as to the rates of interest to be applied. As to Mr Money's claim against Mrs Money, this is based upon the agreement they made prior to their execution of the mortgage. She does not contest the claim or the relief sought. In substance, Mr Money seeks from her out of the proceeds of any sale of the house the sum of $10,353.98, representing net payments made by him on her behalf over and above his liability under the mortgage. He also claims to be repaid out of the proceeds of the sale of the house, any moneys paid by him to the Bank in discharge of his liability under the mortgage.
As to the Bank's cross-claim against Mr Money, that will be dealt with on the basis that his liability under the mortgage should be limited as already indicated.
If the parties can suggest appropriate orders, it would seem that the most convenient course is for the house to be sold and the proceeds of sale applied to reduction of the respective liabilities of Mr and Mrs Money under the mortgage and as between themselves on the basis that Mr Money's liability will be limited to the amounts previously indicated.
As to the precise form of the orders needed to achieve this objective, I will hear from the parties.
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