Ward v McDonald

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROPERTY LIST

S ECI 2023 05140

BETWEEN:

SAMANTHA JANE WARD	Plaintiff
v
MARGARET LUCY McDONALD, in her capacity as Executor of the deceased estate of TRACEY SUSAN ELLERY & ANOR (according to the attached Schedule)	Defendants

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JUDGE:	Finanzio J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 March 2025
DATE OF JUDGMENT:	16 April 2025
CASE MAY BE CITED AS:	Ward v McDonald
MEDIUM NEUTRAL CITATION:	[2025] VSC 186

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MORTGAGE – Discharge of mortgage – Moratoria – Whether effect of Memorandum of Common Provisions excludes the operation of limitations provisions – Limitations of Actions Act (Vic) ss 8, 18, 20(1) - Price v Spoor (2021) 270 CLR 450 - Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Purton of Counsel	DSA Law
For the Defendants	Mr M Black of Counsel	Aitken Partners

HIS HONOUR:

Introduction

Samantha Ward (‘the Plaintiff’) is the registered proprietor of the property at 100 Aberdeen Street, Geelong West, Victoria (‘the Property’). In substance, Ms Ward is seeking orders for removal of the mortgage registered over the Property on the basis that any rights the mortgagee might have are now statute barred.
Ms Ward and Wayne Ellery began a relationship in 2000 and began living together in 2001. They initially lived on a farm owned by Mr Ellery’s sister, Tracey Ellery, and her husband, Evan Thornley. In around 2004, Ms Ward was told by Mr Ellery that his sister, Ms Ellery, and Mr Thornley wanted the couple to leave the farm. Ms Ward and Mr Ellery sought to acquire their own place. They borrowed money from Ms Ellery and Mr Thornley to buy the land at 100 Aberdeen Street, West Geelong. On 4 June 2004, Ms Ward and Mr Ellery entered into a written loan agreement (‘the Loan Agreement’) with Ms Ellery and Mr Thornley. The stated purpose of the loan was to purchase the Property. The Loan Agreement was executed as a Deed.
The Deed records that, as at 4 June 2004, Ms Ward and Mr Ellery had already received $55,000 from Ms Ellery and Mr Thornley, and would receive an additional sum of $306,306.11, bringing the total amount borrowed to $361,306.11.
Ms Ward alone was to become the registered proprietor of the Property, notwithstanding that Mr Ellery was intended to live with her at the Property.
The Loan Agreement provided that the loan would be secured by a mortgage in favour of Ms Ellery and Mr Thornley as Mortgagees. The Mortgage was executed on 4 June 2004 (‘the Mortgage’). Ms Ward, as sole registered proprietor and mortgagor, provided the Mortgage over the Property. Mr Ellery was noted on the Mortgage as a co-debtor.
The Mortgage incorporated the Memorandum of Common Provisions AA 429 (‘MCP’).
On 10 June 2004, Ms Ellery and Mr Thornley advanced $306,306.11 and settlement of the Property occurred. The Mortgage was registered against the Property on 28 June 2004. Ms Ward has remained the sole registered proprietor of the Property since that time.
Under the terms of the Loan Agreement, the loan was to be repaid by 10 June 2006. The loan was not repaid at that time and remains unpaid. No steps have been taken to recover the Property, nor is there evidence of a demand having been made under the Loan Agreement or Mortgage since that date.
In the time between 4 June 2004 and the commencement of these proceedings:
(a)The relationship between Ms Ellery and Mr Thornley came to an end in about 2019. In the distribution of assets which followed, Ms Ellery became, in effect, the sole mortgagee, with all rights of the mortgagee passing entirely to her.
(b)Ms Ellery died on 17 March 2020. On 17 August 2021, the Supreme Court of New South Wales granted probate to Margaret McDonald (‘the First Defendant’) as the executor of Ms Ellery’s estate.
(c)On 17 September 2021, Ms Ward and Mr Ellery separated, leaving Ms Ward as the owner of the land subject to whatever claims, if any, might be made by Mr Ellery. This Court understands no more than that the distribution of assets, as between Ms Ward and Mr Ellery, is now the subject of separate Family Court proceedings. Mr Ellery continues to reside in the Property.[1]
(d)On 15 September 2022, this Court issued a Certificate of Reseal with the result that in these proceedings, Ms McDonald represents the estate of Ms Ellery.
[1]On the day of hearing in this matter, Mr Ellery sent an unsolicited email to the Court. The email stated that Mr Ellery was the sole resident of the Property. He asserts in the email that he is the only investor in the Property. Mr Ellery advised that he was a signatory to the Mortgage, that he did not dispute the Mortgage, and that he sought the opportunity to settle the Mortgage using his own funds. Mr Ellery is not a party to these proceedings and appeared not to have sent his email to the representatives of the parties. A copy of the email was given to the parties and, at the commencement of the hearing, the matter was stood down for the parties to consider whether the matter should be adjourned. Upon resumption of the hearing, both parties agreed that the matter should proceed on the basis that the necessary parties were before the Court. Although Mr Ellery was a signatory to the Loan Agreement and the Mortgage, he is not the registered proprietor nor is he the Mortgagor. According to those representing the estate of Mr Ellery’s sister, the present position of Mr Ellery, as stated in the email to this Court, would not obviate the need for a resolution of the issues raised in these proceedings, and that the proper contradictor (namely the Mortgagee) was a named defendant in the proceeding and ready to proceed. On that basis, the parties agreed that no adjournment was necessary and the hearing proceeded.
On 1 November 2023, Ms Ward commenced these proceedings. In substance, Ms Ward seeks to have the Mortgage discharged, and the recording of the encumbrance removed from the title to the Property. She commenced this proceeding by originating motion, seeking orders for production of the certificate of title for the Property, for the purpose of registering a Discharge of Mortgage. The originating motion seeks orders requiring either that the representatives of Ms Ward’s estate provide a Discharge of Mortgage, or directing the Registrar of Titles to remove the Mortgage from the title.
On 17 November 2023, the Registrar of Titles advised in writing that it did not intend to take an active part in these proceedings and would abide by the decision of the Court.
The originating motion was supported by the affidavit of Ms Ward sworn on 31October 2023. While other affidavit material was filed, the matter proceeded on the basis of an agreed statement of facts.
Whether the relief sought by the Plaintiff is available turns, in large part, on the operation of the Limitation of Actions Act 1958 (Vic) (‘LAA’); and more particularly, on the proper construction of the specific provisions of the MCP which forms part of the Mortgage.

Relevant legislation

Section 8 of the LAA relevantly provides:
8 Action to recover land
No action shall be brought by any person to recover any land after the expiration of fifteen years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person[.]
Section 18 of the LAA provides:
18 Extinction of title after expiration of period
Subject to the provisions of section eleven of this Act, at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action or an action to compel discharge of a mortgage) the title of that person to the land shall be extinguished.
Section 20(1) of the LAA relevantly provides:
20 Actions to recover money secured by a mortgage or charge
(1) No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on property, whether real or personal, after the expiration of fifteen years from the date when the right to receive the money accrued, notwithstanding that the money is by any Act or instrument expressed to be a charge until paid.
It is common ground between the parties (and plainly correct) that the benefit conferred by the provisions of the LAA:
(a)is procedural in effect rather than substantive — in the sense that they do not oust the jurisdiction of the Court to consider a proceeding brought by a mortgagee, notwithstanding that time has run, but rather empower a mortgagor to raise the provisions of the LAA as a defence to such a claim;
(b)is amenable to waiver by a party, expressly or by their conduct; and
(c)can be excluded from operation by agreement.

Issues for determination

The Plaintiff contends that:
(a)but for any term in the Mortgage to the contrary, time has run such that ss 8 and 20 of the LAA would be satisfied, and the Mortgagee is statute barred from seeking to recover either the land or the principal sum borrowed;
(b)as a consequence of time having run, the Mortgagee’s interest in the land is extinguished by operation of s 18 of the LAA; and
(c)the combined effect of ss 8, 18 and 20 is that the Mortgage is no longer enforceable against the Mortgagor, and should therefore be discharged.
The First Defendant says that:
(a)on the proper construction of the Mortgage, the Mortgagor agreed not to rely on the provisions of the LAA, such that the Mortgagee’s right to recover both the land and the principal are preserved; and
(b)even if that is not the case, a cause of action has not yet accrued and time has not yet begun to run against the Mortgagee.
The proper construction of the terms of the Mortgage is a question of law to be determined having regard to the usual principles pertaining to the construction of written agreements. Those principles were summarised by Kiefel CJ and Edelman J in Price v Spoor, a case concerned with a similar provision in a mortgage, as follows:[2]
An objective approach is required to determine the rights and liabilities of a party to a commercial contract, by reference to its text, context and purpose. The meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean.[3]
[2](2021) 270 CLR 450, 464 [27].
[3]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656–7 [35]. See also Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85, 111 [78]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544, 551 [16]–[17], 554–5 [24]–[25].
In the earlier decision of Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd, French CJ, Nettle and Gordon JJ provided a similar description of the applicable principles:[4]
The rights and liabilities of parties under a provision of a contract are determined objectively,[5] by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.[6]
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean.[7] That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.[8]
[4](2015) 256 CLR 104, 116 [46]–[47].
[5]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35].
[6]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 350 (citing Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989, 995–6; [1976] 3 All ER 570, 574), 352. See also Sir Anthony Mason, ‘Opening Address’ (2009) 25 Journal of Contract Law 1, 3.
[7]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35].
[8]Ibid 656–7 [35].
It is convenient to deal with the central questions of construction as follows:
(a)Does clause 16.1 of the MCP, properly construed, exclude the operation of the LAA?
(b)Even if that is not the case, do the terms of the Mortgage, properly construed, have the effect that time has not yet begun to run under the LAA?

Clause 16 of the MCP

Clause 16 of the MCP provides as follows:
MORATORIA
16.1The Mortgagor shall not claim the benefit of any statute or any proclamation establishing a moratorium or suspending payment of debts or reducing or fixing rates of interest or in any other way adversely affecting the rights remedies powers and authorities conferred on the Mortgagee.
16.2 All such statutes and proclamations aforesaid are excluded from operation in respect of this Mortgage it being the express intention of the parties that each and every one of the terms stipulations covenants powers rights and remedies herein contained or implied shall be enforceable by the Mortgagee notwithstanding any legislative enactment.
Ms Ward submits that the phrase ‘any statute or proclamation’ cannot be construed as a reference to the LAA because:
(a)clause 16.1 is a provision of narrow import applying specifically to statutes or proclamations temporarily impeding the ability of the Mortgagee to exercise their rights, which she says is the effect of the phrase ‘establishing a moratorium or suspending payment of debts or reducing or fixing rates’;
(b)a reasonable business person would not have understood the cl 16.1 to have excluded the operation of the LAA;
(c)clause 16 is directed to statutes and proclamations, such as moratoria, which affect the substantive rights of the Mortgagee, whereas the LAA is said by her to be procedural in nature - in that the clause does not preclude the Mortgagee from bringing a claim, rather it is concerned exclusively with statutes establishing moratoria — being statutes which authorise the postponement of payments;
(d)it is said that, had cl 16 been intended to prevent the Mortgagor from raising a limitation defence under the LAA, it would have done so clearly and with explicit reference to the Limitation of Actions Act, or by simply stating that the Mortgagor shall not plead a limitations defence in response to the exercise of any right conferred by the Mortgage; and
(e)finally, it is said that the clause lacks the character and specificity of the clause considered by the High Court in Price v Spoor, where use of the word ‘defeat’ in the relevant clause was described by the Court as ‘apt to capture the effect of the limitation provisions’.[9]
[9]Price v Spoor (2021) 270 CLR 450, 464 [29].
It is convenient to deal with the last point first.

Price v Spoor formulation

In Price v Spoor, the Court was concerned with the effect of a clause in a mortgage expressed in the following terms:[10]
The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.
[10]Ibid, 464 [26] (Kiefel CJ and Edelman J), quoting cl 24 of the mortgage (annotations in original).
Kiefel CJ and Edelman J made the following observations about the language used in that clause:[11]
28Clause 24 is expressed to apply to all statutes affecting the mortgagee’s rights and remedies and the obligations of the mortgagor. The effects spoken of include the defeat or extinguishment of rights. Where this occurs, the parties agree that the statute “shall not apply hereto” and shall be regarded as “expressly excluded”.
29The word ‘defeat’ is apt to capture the effect of limitation provisions, as the Court of Appeal observed.[12] It is often used in this context. In Verwayen,[13] Brennan J spoke of whether the limitation provision had been abandoned so that it was beyond the capacity of the Commonwealth to “defeat” the plaintiff’s claim by invoking the provision. McHugh J[14] likewise framed the question as whether the Commonwealth could rely on the statute to ‘defeat’ the plaintiff’s claim.
[11]Ibid 464–5, [28]–[29] (emphasis added).
[12]Spoor v Price (2019) 3 QR 176, 192 [64].
[13]Commonwealth v Verwayen (1990) 170 CLR 394, 426.
[14]Ibid 504.
It is clear that the Court was not laying down a formula or prescribing the form of clauses which have the effect of excluding limitations legislation in a mortgage context. It is true that the words ‘defeat’ and ‘extinguishment’ are ‘apt to capture the effect of limitations provisions’ in the context of the clause under consideration in Price v Spoor, but the decision is not authority for the proposition that such clauses will only be effective to exclude the limitations provisions if they use similar formulations. The High Court referred with approval to observations made by the Queensland Court of Appeal in the decision under appeal. Those observations, taken in context, illustrate the point. In that decision, Gotterson JA stated that:[15]
[15]Spoor v Price (2019) 3 QR 176, 192 [62]–[65] (Gotterson JA, Sofronoff P and Morrison JA agreeing).
[62]It is the past participle “defeated” in the passive voice that is used in cl 24 to describe the requisite result, namely, that the power, right or remedy may be defeated. In that way, the clause accommodates conduct by the mortgagor to trigger the operation of the statutory provision with the result that the mortgagee’s power, right or remedy might be defeated. As well, the words “may be”, rather than the word “is”, are used to describe the result. Those words have a flexibility that comprehends a decision on the part of the mortgagor whether or not to plead a statutory provision in order for the mortgagee’s power, right or remedy to be defeated by operation of the provision.
[63]There are instances at the highest judicial level in Australia where the effect of a limitations provision when pleaded has been described as “to defeat” a cause of action. For example, in Verwayen, Brennan J observed:
The next question is whether the defence of s 5(6) was waived, that is to say, abandoned so that it was beyond the capacity of the Commonwealth thereafter to defeat the plaintiff’s claim by invoking s 5(6).[16]
[16]Commonwealth v Verwayen (1990) 170 CLR 394, 426.
In the same case, McHugh J said:
It follows, therefore, that, if the Commonwealth can rely on the Limitation Act to defeat the plaintiff’s action, he will suffer detriment.[17]
[64]These statements are, to my mind, illustrations that according to ordinary usage, the word “defeat” aptly describes the effect of limitation provisions. A more recent illustration is to be found in the decision of the Court of Appeal of Western Australia in Belgravia Nominees Pty Ltd v Lowe Pty Ltd.[18] In setting out principles established by a number of other cases, the Court included as one of them, the following:
(f)however, in a case in which a defendant indicates an intention to plead a limitation defence to a cause of action barred by statute at the time it is proposed to be added by amendment, the court will disallow the amendment if there is no doubt that such a defence would defeat the claim.[19]
[65]I infer from these references that their Honours considered that a limitation provision was the means whereby the cause of action was defeated, notwithstanding that it was for a defendant to plead it for that to happen. In other words, they did not consider that a need for the provision to be triggered by a pleading of it has the consequence that the provision is not the means by which the cause of action is defeated.
[17]Ibid 504.
[18](2017) 51 WAR 341.
[19]Ibid 353–4 [46].

The Queensland Court of Appeal referred to use of the word ‘defeated’ in the mortgage as an apt descriptor of the effect of the limitations provisions. In doing so, the Court drew on the observations of McHugh J in Verwayen in describing the effect of the limitations provisions generally. Verwayen was concerned with the Commonwealth’s waiver of the right to rely upon the limitations provisions, and not the effectiveness or otherwise of a contractual term like the one under consideration in Spoor (or in this case). The passages in McHugh J’s judgment, as relied upon by the Queensland Court of Appeal, go no further than generally describing the effect of the limitations provisions in the absence of a waiver. The Queensland Court of Appeal undoubtedly took comfort from the explicit use of the word ‘defeated’ in the clause that it considered, (understandably so, given the observations of McHugh J); but neither the decision of the Court of Appeal, nor ultimately, that of the High Court in Price v Spoor, can be taken to mean that such a clause will not have the effect of excluding the limitations provisions unless it uses the word ‘defeated’ or ‘extinguished’.

Language used in clause 16.1

It would be easier if the clause in the current case had used language like ‘defeated’ or ‘extinguished’ in a manner similar to that used in Price v Spoor; but the question of construction in each case is whether the language used is ‘apt to capture the effect of the limitation provisions’ in describing the statutes or proclamations, the benefit of which the mortgagor agrees to forego.
Here, cl 16.1 provides that the Mortgagor will not claim the benefit of any statute or any proclamation which has the specified effect on the Mortgagee’s rights. The clause proceeds to describe statutes or proclamations of a certain character — namely, statutes or proclamations ‘establishing a moratorium or suspending payment of debts or reducing or fixing rates of interest’. The clause then contains a ‘catch-all’ to describe statutes or proclamations other than those specifically described. Clause 16.1 concludes with, ‘or in any other way adversely affecting the rights remedies powers and authorities conferred on the Mortgagee’.
Taking the last part of the clause (or the catch-all) on its own, it is difficult to describe that part of the clause as not ‘apt to describe the effect of the limitation provisions’. The language could not be clearer — ‘any statute or any proclamation … in any other way adversely affecting’ all of the rights of the Mortgagee, which are somewhat exhaustively referred to as ‘the rights remedies powers and authorities conferred’. This part of the clause explicitly includes the rights and remedies conferred on the Mortgagee.
The limitations provisions under the LAA confer upon the Mortgagor the right to plead a defence that would defeat the Mortgagee’s claims for recovery of land, rent and principal. It is, if anything, an understatement to describe such legislation as adversely affecting the rights and remedies conferred on the Mortgagee. The limitations provisions would have a terminal effect on the Mortgagee’s rights and remedies unless excluded from operation by a term of the Mortgage. It is of no consequence that the clause does not use the word ‘defeat’ or ‘extinguish’. Taken on its own, this part of the clause sufficiently describes a category of legislation within which the limitations provisions clearly fall.
Ms Ward submits that the first part of the clause narrows the breadth of the statutes and proclamations captured by the clause, such as to exclude the limitations provisions. She says that the first part of the clause describes statutes or proclamations which only have a temporary effect on the rights and remedies of the Mortgagee; and that, as a consequence, the second part of the clause must be read down as being limited to types of legislation which have only a temporary effect on the Mortgagee’s rights. This construction confronts a number of challenges.

Semantic challenges

In her written submissions, Ms Ward places much emphasis on the use of the word ‘moratoria’ in the heading to cl 16. It is said that the natural and ordinary meaning of ‘moratoria’ denotes delay or postponement of legal obligations, and that only statutes or proclamations falling within this description are covered by cl 16.1.
The emphasis given to the heading of the clause is misplaced. Counsel for Ms Ward properly conceded that the heading was of limited utility in light of cl 1.2 of the MCP, which states that: ‘Headings are for convenience of reference only and shall not affect the interpretation of this Mortgage’. It was pressed by Ms Ward that the heading was not wholly irrelevant, but it was agreed that whatever weight might be placed on the heading, it could not undermine the language of the clause itself.
It is true enough that cl 16.1 describes some categories of statutes or proclamations which might have a temporary effect on the rights and or remedies of the Mortgagee, but it does not exclude legislation the effect of which might be permanent.
Clause 16 does not contain any punctuation save for a full stop at the end of the sentence. The absence of punctuation is a feature of the MCP generally. The clause deploys adjectival phrases to describe the types of legislation to which it applies. The structure of the clause is cumbersome but it is nonetheless possible to discern that the statutes and proclamations with which it is concerned are not necessarily those which create only a temporary impediment upon the rights of the Mortgagee.
Where the clause speaks of statutes or proclamations ‘establishing a moratorium or suspending payment of debts or reducing or fixing rates of interest’, it might be reasonably inferred that there are some categories of legislation which might have only a temporary effect on the rights of the Mortgagee.
The phrase ‘establishing a moratorium’ describes legislation which may have a temporary effect in delaying the performance of the Mortgagor’s obligations in some way.
The Oxford English Dictionary (‘OED’) defines ‘moratorium’, generally, to mean ‘[a] postponement, an agreed delay, a deliberate temporary suspension of some activity, etc’. More specifically, as it relates to law, the OED defines ‘moratorium’ to mean ‘[a] legal authorization to a debtor to postpone payment for a certain time; the period of such a postponement’.[20] Similarly, the Macquarie Dictionary (‘Macquarie’) defines ‘moratorium’ to include ‘a general suspension of some type of legal obligation’, and ‘the period of such a suspension’.[21] The use of such a word might imply that rights or obligations subject to suspension or postponement will eventually be restored.
[20]‘Moratorium (n.)’, Oxford English Dictionary (online at 1 April 2025).
[21]‘Moratorium (n.)’, Macquarie Dictionary (online at 1 April 2025).
Equally, legislation concerned with ‘suspending’ the payment of debts is of a character that might be regarded as temporary. The OED defines ‘suspend’ to include:[22]
I.1.aTo debar, usually for a time, from the exercise of a function or enjoyment of a privilege; …
I.2.aTo put a stop to, usually for a time; esp. to bring to a (temporary) stop; to intermit the use or exercise of, put in abeyance. … to suspend payment: to cease paying debts or claims on account of financial inability …
I.2.eTo cause (a law or the like) to be for the time no longer in force; to abrogate or make inoperative temporarily.
[22]‘Suspend (v.)’, Oxford English Dictionary (online at 1 April 2025) (emphasis in original).
Similarly, Macquarie defines ‘suspend’ to include:[23]
5. to defer or postpone, as sentence on a convicted person.
6.to cause to cease, or bring to a stop or stay, usually for a time: to suspend payment.
7.to cause to cease for a time from operation or effect, as a law, rule, privilege, or the like.
[23]‘Suspend (v.)’, Macquarie Dictionary (online at 1 April 2025) (emphasis in original).
Like the use of ‘moratorium’, the use of ‘suspending’ implies that whatever rights it attaches are to be restored after a period of suspension. The limitations provisions could not be described as legislation which contemplates the restoration of suspended, delayed, or postponed obligations or rights.
The same cannot be said for the next part of the clause, which describes legislation reducing or fixing interest rates. Nothing about the words ‘reducing’ or ‘fixing’ necessarily implies that the effect of the legislation will be temporary in nature. Put another way, legislation that permanently reduces or places a cap on interest rates would be caught by the clause. Neither the heading ‘Moratoria’, nor the phrase ‘establishing a moratorium’ in the earlier part of the clause, can counter the possibility that the clause contemplates a statute or proclamation with the potential to have a permanent (as opposed to temporary) effect; namely the fixing or permanent reduction of interest rates.
Properly construed on its own terms, cl 16.1 identifies possible areas of legislative interference with the Mortgagee’s rights that are peculiar to mortgages (payment of debt, postponement of obligations generally, interest rates), which may be both temporary and permanent in nature. The clause then goes on to embrace all areas of legislative interference with the Mortgagee’s rights. The language of the clause taken as a whole is apt to capture the effect of the limitation provisions. This construction is also in harmony with the second part of cl 16. Clause 16.2 provides that:
All such statutes and proclamations aforesaid are excluded from operation in respect of this Mortgage it being the express intention of the parties that each and every one of the terms stipulations covenants powers rights and remedies herein contained or implied shall be enforceable by the Mortgagee notwithstanding any legislative enactment.
The phrase ‘all such statutes and proclamations aforesaid’ renders cl 16.2 dependent for its operation on the scope of statutes and proclamations embraced by cl 16.1. That said, the emphatically stated express intention of the parties to preserve the rights of the Mortgagee ‘notwithstanding any legislative enactment’ (without any express limitation) does not sit comfortably with the narrow construction of cl 16.1 pressed by Ms Ward.

Consistent with the purpose of the agreement

The narrow construction advanced by Ms Ward is also not consistent with the purpose the agreement having regard to the objectively ascertainable context in which the Mortgage was created.
The context of this agreement is not a business one in the conventional sense. Here, the borrower (Mortgagor) is the girlfriend of the lender’s (Mortgagee’s) brother. It was intended that the Mortgagor would be the registered proprietor of the land purchased with the borrowed funds, even though the Mortgagee’s brother was to cohabit with the Mortgagor. Although it might be said that this was an arrangement as between family members, it is clear that the Mortgagee did not intend to give the money to either her brother or his girlfriend as a gift. Rather, the Mortgagee sought the security of a registered mortgage on the terms set out in the Loan Agreement and the MCP. Those terms make good Ms McDonald’s submission that the purpose of the Mortgage, indeed the sole purpose of the Mortgage, was to preserve the Mortgagee’s security vis à vis the girlfriend of the Mortgagee’s brother. This overarching purpose of the Mortgage is manifest in other clauses.
For example, cl 2 of the MCP provides:
TIME OF THE ESSENCE
Time shall be of the essence of each and every covenant express or implied on the part of the Mortgagor to be paid performed or observed under or pursuant to this Mortgage and shall continue so to be notwithstanding any waiver forbearance indulgence or extension of time that may from time to time be granted by the Mortgagee to the Mortgagor.
Further, cl 3 outlines the powers of the Mortgagee, with cl 3.1 providing:
3.1The Mortgagee’s powers shall not in any way be affected prejudiced or restricted nor shall any extension of time or waiver or variation of this Mortgage be deemed to have arisen or been accepted or agreed to by the Mortgagee if the Mortgagee at any time:
3.1.1delays in making or fails to make any demand that the Mortgagee is entitled to make;
3.1.2delays in exercising or fails to exercise any of the Mortgagee’s powers;
3.1.3acquiesces in or accepts the remedying by the Mortgagor of any default of the Mortgagor; or
3.1.4has not first required payment by or taken any steps or proceedings against any other person in any way liable to the Mortgagee for payment of the whole or any part of the Secured Moneys or has not first had recourse to any other security for the whole or any part of the Secured Moneys.
Clause 5 refers to the payment of Secured Moneys, with cl 5.1 providing:
5.1The Secured Moneys shall be paid by the Mortgagor to the Mortgagee as provided in the Facility Agreement or otherwise at the time and in the manner from time to time agreed between the Mortgagor and the Mortgagee PROVIDED THAT if there shall be no such provision or agreement in relation to any part of the Secured Moneys the same shall be payable on demand.
In addition, cl 7 provides for continuing security, as follows:
7.1This Mortgage shall be a continuing security notwithstanding any intermediate settlement or adjustment of account or any other agreement or matter or thing whatsoever entered into or occurring or done by or between all or any of the parties hereto or otherwise and shall remain in force until a complete discharge of it has been executed by the Mortgagee and delivered to the Mortgagor.
7.2The Mortgagor shall not be entitled to a discharge of this Mortgage at any time while there are outstanding and unpaid any moneys that fall within the definition of “Secured Moneys” in this Mortgage.
Taken together, the terms of the Mortgage are directed to preserving the security of the Mortgagee notwithstanding the effluxion of time. A construction of cl 16 which is consistent with that objective is in harmony with the Mortgage read as a whole.
Substantive versus procedural rights
Ms Ward sought to draw a distinction between what she called the substantive rights of the Mortgagee (which she says cl 16.1 seeks to protect), and the merely procedural effect of the limitations provisions, which depend upon the Mortgagor pleading a defence based on the limitations provisions. The distinction does not advance the case of Ms Ward.
The observations of Kiefel CJ and Edelman J in Price v Spoor are apposite:[24]
30The fact that the Limitation Act does not of itself have the effect of defeating the respondents’ rights to claim under the mortgages and that a plea by the appellants is required to do so does not take the matter outside the purview of the clause. It is clear that the parties intended that it have a wide operation and that it extend to any consequences flowing from a statutory provision (“whereby or in consequence whereof”) which would defeat the mortgagee’s rights. It was clearly intended that provisions which might have that result were not to apply to affect the rights and obligations of the parties. It is not difficult to infer that it was intended to apply to a benefit given by statute to a defendant by which the mortgagee’s right could be defeated. By agreeing to the terms of cl 24 the appellants effectively gave up the benefit provided by the Limitation Act.
[24]Price v Spoor (2021) 270 CLR 450, 465 [30].
As the passage from Price v Spoor makes clear, the distinction between substantive and procedural rights can be a distraction. Whether the distinction is important depends upon the language of the clause in question. In all cases the real question is whether the clause describes statutes or proclamations in a way which is sufficient to embrace the effect of the LAA.

Conclusion on the effect of Clause 16

Accordingly, cl 16 is effective to prevent the Mortgagor from claiming the benefit of the LAA. It follows that it cannot be said that no money is owing to the Mortgagee under the Mortgage, nor can it be said that the Mortgage is extinguished. The Plaintiff is not entitled to a discharge of the Mortgage until the amount due under the Mortgage is paid.
For these reasons, Ms Ward’s application should be dismissed.

Has time commenced to run?

The Mortgagee contends that she is not required to discharge the Mortgage because, even if the Mortgagor can claim the benefit of the LAA, time has not begun to run under the LAA.
It is fair to say that this aspect of the argument was not the subject of detailed attention in the hearing. It might also be said that, given my finding that the proper construction of cl 16 of the Mortgage is that the Mortgagor cannot claim the benefit of the LAA, it is not necessary for me to decide this point to dispose of the matter. That said, as the matter has been raised in written argument, it is appropriate to address it briefly.

Ms Ward’s submissions

Under the terms of the Loan Agreement, Ms Ward says that, as Mortgagor, she was required to repay the outstanding amount (being the principal plus interest and costs) by 10 June 2006 but failed to do so, which was an event of default under the terms of the Mortgage. Ms Ward submits that, on default, the Mortgagee was entitled to serve a notice under s 76 of the Transfer of Land Act 1958 (Vic) (‘TLA’) and take possession of the Property. Accordingly, Ms Ward submits that the Mortgagee’s right to recover the Property accrued on 10 June 2006, and expired fifteen years later on 10 June 2021.
Ms Ward submits that the Mortgagee’s interest in the Property is contingent on the right to recover possession; if the Mortgagee’s right to recover the Property has expired, then having regard to s 18 of the LAA, it follows that the Mortgagee’s interest in the Property has been extinguished.

Ms McDonald’s submissions

Clause 14.2 of the MCP

If the Mortgagor is able to rely upon the LAA, Ms McDonald submits that, nevertheless, she is not obliged to provide the Mortgagor with a Discharge of Mortgage, because: (i) the sum due under the Mortgage has not yet been paid, and (ii) time has yet to commence under the LAA. Ms McDonald relies upon cl 14.2 of the MCP and s 8 of the LAA.
Clause 14.2 provides:[25]
[25]Emphasis added.
14.2 If the Mortgagor has failed to pay on demand any of the Secured Moneys when due or any other default occurs hereunder and such non-payment or other default continues for a period of seven days the Mortgagee may thereupon or at any time thereafter serve on the Mortgagor a notice pursuant to Section 76 the Transfer of Land Act 1958 and if such non-payment or other default continues for seven days after the service of such notice or demand the Mortgagee may exercise all or any of the powers contained in Clause 14.2 hereof and in the case of all or any of the powers other than contained in Clause 14.2.1 with or without entering into possession:
14.2.1enter upon and take possession of the land or any part or parts thereof and exercise and do all or any of the acts powers and authorities vested in or given to mortgagees by the Transfer of Land Act 1958 or the Property Law Act 1958 or vested in landlords pursuant to the provisions of the Landlord and Tenant Act 1958 the Retail Tenancies Act 1986 or the Residential Tenancies Act 1980[.]
14.2.2 manage and use the land …
14.2.3 lease … the land …
14.2.4 receive the rents and profits thereof …
14.2.5 sell the land …
14.2.6 appoint a receiver …
Ms McDonald frames the right to take action for the purposes of the LAA as arising only on the culmination of the specified steps which, once completed, crystallise the right of the Mortgagee to take action. She says that her rights have not yet crystallised, because the process established by the clause has not yet reached completion; ie, the Mortgagor is, and remains, in default of the Mortgage, but the Mortgagee has yet to issue a demand for payment.

Clause14.2 prevents the Mortgagee from issuing a notice under the TLA before each of the preceding steps are satisfied, but the question is whether the satisfaction of those steps are necessary before time can begin to run under the LAA (should it apply).
Section 8 of the LAA relevantly provides that:[26]
Action to recover land
No action shall be brought by any person to recover any land after the expiration of fifteen years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person[.]
[26]Emphasis added.
Section 8 of the LAA speaks explicitly of ‘action’ as defined by the Act. The word ‘action’ is defined by s 3 of the LAA inclusively as ‘any proceeding in a court of law or in VCAT’. Ms McDonald contends that because an action cannot be commenced before the requirements of cl 14.2 are satisfied, the right of action has not accrued.
The argument understates the effect of the Mortgagor’s default. It is the default of the Mortgagor which gives rise to the cause of action under the Mortgage, not the completion of the procedural requirements which must be satisfied under the Mortgage before proceedings can be commenced. The significance of the Mortgagor’s default is underscored by cl 14.2 itself, which is enlivened only by reason of the default. Clause 14.2 defers the commencement of proceedings by requiring that the Mortgagee make a formal demand for the payment of monies and suffer a short period before steps to commence proceedings can be taken. That said, the cause of action with which s 8 of the LAA is concerned is the recovery of the land arising from the Mortgagor’s default.
In her written submissions, Ms McDonald says that ‘under s 8 [of the LAA], time commences to run from the date upon which the right to take action to recover the land accrued to the First Defendant’. Rather, s 8 is concerned with when the ‘right of action’ — ie, the right to recover the land — accrued to the Mortgagee. It is the default of the Mortgagor which founds the cause of action to seek recovery of the land.
Accordingly, if contrary to my principal finding, the Mortgagor is entitled to the benefit of the LAA, the fact that the Mortgagee has not yet made a formal demand of the kind prescribed by cl 14.2 would not prevent time running for the purposes of s 8 of that Act from 10 June 2006.
This conclusion does not affect my view that cl 16 is to be properly construed as excluding the operation of the LAA. It was not the objective purpose of the Mortgage that the money lent by Ms Ellery would, through inaction on her part, become a gift to her brother’s girlfriend. The sole commercial reason for requiring security in the form of a mortgage was to avoid that result. Clause 14.2 does no more that set out pre-litigation steps to be taken before any action is commenced to recover the land. This construction of cl 14.2 sits comfortably with my view that cl 16 prevents the Mortgagor from claiming the benefit of the LAA.

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SCHEDULE OF PARTIES

S ECI 2023 05140
BETWEEN:
SAMANTHA JANE WARD	Plaintiff
- v -
MARGARET LUCY MCDONALD, in her capacity as Executor of the deceased estate of TRACEY SUSAN ELLERY	First Defendant
REGISTRAR OF TITLES	Second Defendant

[2025] VSC 186

16 April 2025