[Edited edition of reasons for judgment given orally]

Conveyancing - Torrens system - Indefeasibility of title - Conclusive evidence - Registered mortgage - Mortgage altered after registration - Rule in Pigot's Case.

Money - Payment - Time for payment - Payment on demand - Demand not specifying amount or date required.

Land Titles Act 1980 (Tas), s40(1).

Pigot's Case [1572] EngR 180; (1614) 11 Co Rep 26 b; [1572] EngR 180; 77 ER 1177; Donnelly v National Australia Bank (unreported, Supreme Court of Western Australia, Full Court, 19 May 1992; Australia and New Zealand Banking Group Ltd v Cooper (1993) 9 WAR 112, distinguished.

Bunbury Foods Pty Ltd v National Bank of Australasia Pty Ltd [1984] HCA 10; (1984) 153 CLR 491, applied.

Judgment Number: [2000] TASSC 73

THOMAS PETER BARON v RICHARD AUSTIN UPTON (No 2)

1 This is an appeal from an order of the Master made on 22 March 2000. The appeal was commenced pursuant to the provisions of the Rules of the Supreme Court, O62. The order of the Master was an order for possession of certain mortgaged premises. The appellant was the respondent to the application before the Master and is the mortgagor. The respondent to the appeal was the original applicant, and is the mortgagee.

2 At the time the mortgage was given, the mortgagor borrowed $100,000 from the mortgagee and executed a mortgage for that amount in favour of the mortgagee, who was a solicitor. The mortgagee registered that mortgage under the provisions of the Land Titles Act 1980 ("the Act"). The mortgage originally showed the principal sum secured thereby as $100,000, but it is significant that cl 11(e) of the mortgage was an "all moneys" clause. Clause 11(e) provided that the mortgage secured moneys described as follows:

"Also all other monies whatsoever which the Mortgagee shall lend pay or advance or become in any way whatsoever liable to pay to advance to for or on the credit or for the accommodation or otherwise on the account of the Mortgagor or to for or on account of any other person upon the order or request or under the authority of the Mortgagor."

3 After the registration of the mortgage, the mortgagor borrowed a further $30,000 from the mortgagee. No variation of mortgage was executed or registered pursuant to the Act, s88, but that was unnecessary because of the "all moneys" clause in the mortgage. The mortgage itself was altered by somebody who deleted the principal sum shown as " ONE HUNDRED THOUSAND DOLLARS ($100,000.00)" and substituted, in handwriting, "ONE HUNDRED & THIRTY THOUSAND DOLLARS ($130,000.00)". That alteration was dated "16/10/98" and apparently initialled. 16 October 1998 was the date of the further advance of $30,000. I infer that the alteration to the mortgage document was made either by the mortgagee, or by one of his staff. As I have said, he was a solicitor. I infer that he would have been holding the mortgage and I infer that somebody made that alteration in order to evidence the fact that the mortgage was then to secure $130,000.

4 It has been submitted on behalf of the mortgagor that the alteration of the mortgage document invalidated the mortgage. That submission was made before the Master and rejected, and it has been repeated before me. Counsel for the mortgagor relies on the rule in Pigot's Case [1572] EngR 180; (1614) 11 Co Rep 26 b; [1572] EngR 180; 77 ER 1177. That case contained the following statement (at ER 1178):

"When any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it by interlineation, addition, erasing, or by drawing of a pen through a line, or through the midst of any material word, ... the deed thereby becomes void ...

... if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed is void."

Clearly, if that rule applies the mortgage became void at the time of the alteration.

5 In my view, the rule did not apply because of the indefeasibility provisions of the Act. The Act, s40 begins:

"40 - (1) For the purposes of this section 'indefeasible', in relation to the title of a registered proprietor of land, means subject only to such estates and interests as are recorded on the folio of the Register or registered dealing evidencing title to the land.

(2) Subject to subsections (3) and (4), the title of a registered proprietor of land is indefeasible."

In my view, the reference in s40(1) to a registered dealing evidencing title to the land indicates that Parliament intended that the indefeasibility provisions of this Act were to apply, not only to the title of a registered proprietor of a physical piece of land, but also to the proprietors of registered interests in the land, and that in that sense, they were to be treated as registered proprietors of those interests. Otherwise, the reference in s40(1) to a registered proprietor in conjunction with the reference to a registered dealing would not make any sense. I interpret those subsections as applying to mortgagees as registered proprietors of estates or interests recorded on registered dealings, namely their mortgages.

6 There is nothing in s40(3) and (4) that applies to the facts of this case. None of the exceptions to indefeasibility listed in those subsections is applicable and, accordingly, my conclusion is that the title of the mortgagee in this case, as the registered proprietor of his mortgage, is indefeasible. I am fortified in that conclusion by the decision of Zeeman J in Co-Operative Property Developments of Australia Ltd v Denver Glen Pty Ltd A94/1992 in which his Honour held that the title of a mortgagee to a mortgage under the Act was indefeasible, and that the indefeasibility provisions in the Act applied. It follows that there is no place for the operation of the rule in Pigot's Case (supra) on the facts of this case and that the alteration of the mortgage document did not render that mortgage void.

7 It has also been submitted on behalf of the mortgagor that the demand for the payment of the mortgage debt made on 10 February 1999 was defective. First of all, a complaint is made that no date for payment was specified in that demand. However, in my view, it is not essential to the validity of such a demand that it specify a date by which payment was required. The High Court in Bunbury Foods Pty Ltd v National Bank of Australasia Pty Ltd [1984] HCA 10; (1984) 153 CLR 491 had to consider the validity of a demand made for the payment of moneys owing pursuant to a debenture. The demand did not specify the amount owing, nor did it specify a date for payment. In a joint judgment, Mason, Murphy, Wilson, Brennan and Dawson JJ said, at 502:

"However, it is now a well established principle of law that a debtor required to pay a debt payable on demand must be allowed a reasonable time to meet the demand. Even in a case where a deed provided that the debt was payable 'immediately upon demand thereof in writing' it was held that the provision must be given a reasonable construction so that the debtor had a reasonable time to get the money from some convenient place (Toms v Wilson [1863] EngR 991; (1862) 4 B & S 442, at pp 453-455 [1863] EngR 991; (122 ER 524, at p 529)). This does not mean that the notice calling up the debt is invalid unless it requires payment 'within a reasonable time'. It means no more than that the debtor must be allowed a reasonable opportunity to pay before it can be said that he has failed to comply with the demand."

On the basis of those comments, I conclude that the failure to specify a date by which payment was required was not fatal to the validity of the notice. The mortgage provided that the sum secured was payable on demand. The demand was made on 10 February 1999. The proceedings that were instituted by originating application commenced on 16 June 1999. The interval between those two dates was so long that, by the time the originating application was issued, the mortgagor had had a reasonable time to comply with the demand. He had not complied with the demand.

8 It is also complained that the demand of 10 February 1999 did not specify the amount that the mortgagor was required to pay. A similar situation existed in Bunbury Foods (supra) in which their Honours said, at 503 - 504:

"Upon the making of a demand the debtor has a reasonable time to obtain the money. True it is, that in the absence of a specific statement of the debt, he may lack precise knowledge of the amount which he must pay in order to avoid enforcement or realization of the security. On the other hand, to require the creditor in all cases to specify the amount of the debt may operate to impose an onerous burden upon him. Some accounts may be so complex and so constantly changing that it is difficult at any given time to ascertain or to assert the precise amount that is due and payable. Indeed, the ascertainment of the amount may in some instances require the resolution over time of complex issues of fact and law. Yet, in order to preserve the value to the creditor of his security, he may need to call up the debt as a matter of urgency.

It is of some materiality to note that it is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt. Even a notice given to the mortgagor by the mortgagee as a condition precedent of a power of sale is not rendered invalid because it demands payment of more than is due (Humphery v Roberts (1866) 5 SCR (NSW) 376, at pp 385, 387; Campbell v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375, at 385; Clyde Properties Ltd v Tasker [1970] NZLR 754, at pp 757-758; MIR Bros Projects Pty Ltd v 1924 Pty Ltd (1980) 2 NSWLR 907, at p 926). It may be thought that this provides sufficient reason for insisting that the creditor should specify the amount of the debt in his notice demanding payment for the validity of the notice will not be imperilled by an error in the statement of the amount. However, there is little point in requiring that the notice should state the amount if the correctness of the amount is not essential to the validity of the notice. In this situation insistence on the requirement may result in creditors taking insufficient care in stating the amount of the debt, thereby contributing to confusion on the part of debtors.

The foregoing examination supports the view that the interests of the parties will be more adequately protected by the principle that the debtor must be allowed a reasonable opportunity to comply with the demand before the creditor can enforce or realize the security than by the adoption of the suggested proposition that the notice of demand must specify the amount of the debt. In determining whether the debtor has had such an opportunity it will be relevant to take account of the debtor's knowledge, lack of knowledge and means of knowledge of the amount due and of the information which the creditor has provided in that respect, including the response which he has made to any inquiry by the debtor.

There is perhaps a stronger case for saying that, when a third party, for example, a guarantor, is called upon to pay the debt of another, the creditor should specify the amount. But in the circumstances of this case it is unnecessary to explore the problem further."

9 Counsel for the mortgagor relied on two Western Australian cases. The first in time was Donnelly v National Australia Bank (unreported, Supreme Court of Western Australia, Full Court, 19 May 1992). That case concerned a demand that had been sent to guarantors. It was an appeal from a decision of a master who had dealt with an application for summary judgment. The majority of the Full Court, Rowland and Ipp JJ, decided that there was a triable issue as to whether the demand, which did not specify the amount required to be paid, was therefore invalid. In my view, the majority in the Full Court in that case went no further than to conclude that there was an open question, just as the High Court had indicated there might be in the final paragraph I have quoted above from Bunbury Foods (supra). The second case which counsel for the mortgagor relied on was a decision of Master Bredmeyer of the Supreme Court of Western Australia, in Australia and New Zealand Banking Group Ltd v Cooper (1993) 9 WAR 112. That was also a summary judgment application. As I read what the learned master said at 113, it seems that he might not have understood that all that was decided in Donnelly (supra) was that there was a triable issue:

"I also considered that the notice of demand given in this case did not adequately particularise the amounts owing and did not comply with the decision of the Full Court in Donnelly v National Bank."

I cannot see how it could be said that any notice of demand did not comply with a decision that only determined that there was a triable issue.

10 In any event, I distinguish those two Western Australian cases on the basis that they related to notices of demand given to guarantors, whereas I take Bunbury Foods (supra) as establishing a general proposition that the amount owing is not required to be specified on a notice of demand addressed to a principal debtor, at least in the absence of any contractual or legislative requirement to the contrary. Even if I am wrong as to that, in my view the course of dealing between the mortgagor and the mortgagee up to the time that the mortgage in question was executed indicates transactions of such simplicity that it is not necessary to imply a term requiring that any demand specify the amount owing in order to give the mortgage contract between the parties business efficacy. I refer to the tests for the implication of a term referred to by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337. For those reasons, it is my view that the demand of 10 February 1999 was not invalidated by the failure to specify the amount required to be paid.

11 To the extent that the mortgagor's counsel's submissions were directed to the subsequent notice to sell, it is my view that the comments I have made in relation to the validity of the notice of demand are equally applicable.

12 There was evidence suggesting that, after the demand of 10 February 1999, the mortgagor received a reminder notice in relation to a quarterly payment of interest, and that he may have been confused or even interpreted that reminder as indicating some backing down on the part of the mortgagee, or the solicitor managing the practice of the mortgagee, in relation to the demand for payment of the mortgage debt. In my view, any such thoughts on the part of the mortgagor cannot have had the effect of altering his legal position. The reminder notice did not, in my view, amount to a suggestion that payment of the principal sum would not be required. It could not reasonably have been interpreted as suggesting any such thing. Therefore, no question of waiver can arise. It is conceded that there is no evidence that the mortgagor acted to his detriment in any way as a result of receiving that reminder notice. Therefore no question of estoppel can arise. There is no other basis upon which the reminder notice could have had any effect on the mortgagor's rights.

13 The evidence before me is that there was a principal sum of $130,000 outstanding. It is really immaterial what the position was as to interest. A demand for payment of the mortgage debt was validly made. The mortgagor did not comply with that demand within a reasonable time. Therefore, the requirements of the Act, s146(1) are satisfied. It is common ground that the mortgagor remains in default. It must follow that there is no reason why this Court should not order possession of the premises to be given up to the mortgagee. In my view, the Master was right to order accordingly. For these reasons, the appeal from his decision is dismissed.

14 I accept Mr Abbott's submission in relation to the Master's jurisdiction that what the Master was dealing with was not an originating application or an originating summons, but a summons to show cause under the Act, s146, which is a separate creature from the sort of process that was contemplated in the Supreme Court Civil Procedure Act 1932, s197(1)(f)(vi).

15 I order that the appellant pay the taxed costs of the respondent to the appeal of and incidental to the appeal, and I certify for counsel.