WILLIAMS v Peter Marston Pty Ltd and Anor No. Scgrg-99-558 Judgment No. S344

[1999] SASC 344

WILLIAMS  V  PETER MARSTON PTY LTD AND ANOR

[1999] SASC 344

1. JUDGE BURLEY.    The plaintiff has applied for an order extending the time for the removal of a caveat.  She is the registered proprietor of two parcels of land over which a mortgage is registered in favour of the defendants.  In her detailed affidavits supporting her application, she says that the execution of the mortgage was obtained by the fraud or undue influence exercised by Mr Malcolm Pettingill.  On this interlocutory application it was not contended that the defendants were participants in the fraud or undue influence, nor is it contended that they were privy to or had notice, actual or constructive, of the alleged behaviour of Mr Pettingill.

2. Both parties referred to the decision of Cox J in Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198 and contended that, in general, the approach taken by his Honour in that case was applicable to this application. However, reference was also made to the decision of the Full Court in Nexus Mortgage Securities v Mawson KLM Holdings Pty Ltd and Anor (1997) 193 LSJS 474. In that case Doyle CJ, with whom Matheson and Bleby JJ agreed, said that, although it was appropriate to take the approach suggested by Cox J in Whallin v BailbartInvestments Pty Ltd, the exercise of the discretion was based on statute, namely the provisions of Section 191VII of the Real Property Act 1886 (as amended) (the Act). It remains to be seen whether there is any difference between the exercise of the statutory discretion under Section 191VII of the Act and the exercise of the equitable discretion on an application for an interlocutory injunction. In any event, the parties were content to direct their submissions to the requirements for the grant of an interlocutory injunction as expounded in Castlemaine Tooheys Ltd and Ors v The State of South Australia (1986) 161 CLR 148.

3. The serious question to be tried centred upon the proviso to Section 69I of the Act which is as follows:-

   “69... The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications:--

   I....... In the case of fraud, in which case any person defrauded shall have all rights and remedies that he would have had if the land were not under the provisions of this Act:  Provided that nothing included in this subsection shall affect the title of a registered proprietor who has taken bona fide for valuable consideration, or any person bona fide claiming through or under him:”

4. On the affidavit material filed by the plaintiff, I think it is open to me to conclude that the plaintiff has made out an arguable case that her signature to the mortgage may have been procured by the fraud of Mr Pettingill.

5. For the purposes of this application, the plaintiff, in relation to the proviso, did not contend that the defendants, the registered proprietors of the interest as mortgagee, had acted other than in a bona fide manner.  To the extent that that concept of good faith includes the question of whether or not the defendants had notice, either actual or constructive, of the actions of Mr Pettingill, it has not been contended that the defendants had such notice.  However, it was contended that the defendants had not taken their interest for valuable consideration.

6. Before dealing with the plaintiff’s argument based on Section 69I of the Act, it is necessary first to mention that the plaintiff has also alleged that Mr Pettingill exercised undue influence in respect of the plaintiff in relation to the execution of the mortgage and various other documents.  To the extent that she relies upon undue influence, she must be taken to accept that it is her signature which appears on the relevant documents.  The plaintiff has said in her affidavit evidence that she has no recollection of signing most if not all of the documents and that she is unsure as to whether or not some or all of them are her signature.  However, as forgery has not been alleged by the plaintiff at this stage, her uncertain attitude in relation to the signatures appearing on the relevant documents probably makes no difference.  For the purposes of fraud and undue influence, it must be assumed that they are her signatures because she says that if she did sign documents then it was as a result of either the fraud or undue influence of Mr Pettingill.

7. As to undue influence, Mr Cudmore, counsel for the plaintiff, correctly acknowledged that equitable fraud was not a species of fraud recognised by Section 69I of the Act.  Consequently, he could not rely upon its provisions in relation to the allegations of undue influence.  He said, again correctly in my view, that he had to rely upon the general law.  He also said that his client could not, at this stage, link the defendants with the alleged conduct of Mr Pettingill.  That being so, it seems to me that the plaintiff cannot rely upon alleged undue influence to support her case that there is a serious question to be tried.  This is so because there is simply no evidence that the defendants made any unfair use of their position: cf The Commercial Bank of Australia Ltd v Amadio and Anor (1983) 151 CLR 447; (1983) 57 ALJR 358 per Gibbs CJ at 362 ALJR. In addition, unlike the conclusion reached in Amadio, there is no suggestion that the position of the plaintiff vis-à-vis Mr Pettingill was known to the defendants.  It was contended by Mr Cudmore that the onus was on the defendants to establish that they were unaware of the alleged actions of Mr Pettingill and that they had failed to discharge that onus.  It is unnecessary for me to decide whether there was such an onus upon the defendants, but even if there was, they have discharged that onus by the affidavit material adduced by them on this application.

8. For the above reasons I do not consider that the plaintiff has demonstrated a serious question to be tried in relation to the alleged undue influence exercised by Mr Pettingill.

9. I return to the plaintiff’s contention that the defendants took their interest as mortgagees without valuable consideration.  The plaintiff asserted in her affidavits that she had never received the monies advanced by the defendants pursuant to the mortgage the subject of these proceedings.  There is a simple answer to that contention: it is clear that nearly all of the monies advanced by the defendants were used to discharge a prior mortgage on the title to the land.  The plaintiff therefore had the benefit of the discharge of the prior mortgage.  She may not have seen any of the monies advanced by the defendants, but she undoubtedly received the benefit of having the prior mortgage discharged.  That, in my view, precludes a finding that valuable consideration, as referred to in Section 69I of the Act, was not present.

10. The plaintiff has been unable to demonstrate that a serious question to be tried has arisen relating to whether or not the defendants are registered proprietors who have taken bona fide for valuable consideration.  Thus, she has been unable to show that the proviso to Section 69I of the Act, arguably, does not apply.

11. In light of the above reasoning, I have come to the conclusion that the plaintiff has failed to make out a case that a serious question to be tried has arisen in the circumstances pertaining to this application.  The application for an extension of time for removal of the caveat must be refused.