Carr v Finance Corporation of Australia Ltd

High Court of Australia|1980-04-24|Before: Brennan JJ, Wilson JJ, Reynolds J, Glass JJ, Mason J

High Court of Australia Mason, Murphy, Aickin, Wilson and Brennan JJ. Carr v Finance Corporation of Australia Ltd [No 2] [1982] HCA 43

The respondent instituted proceedings in the Supreme Court of New South Wales to recover moneys due for principal and interest payable under three mortgages and an indenture of mortgage given by the appellants to the respondent over various lands in Sydney. In its statement of claim the respondent asserts that the appellants defaulted in the payment of instalments of principal and interest due under the mortgages and that in exercise of its power of sale, derived from the mortgage instruments and s. 58 of the Real Property Act 1900 N.S.W., as amended ("the Act"), it sold three of the properties while the appellants themselves sold the fourth (the subject of the indenture of mortgage) and accounted for the proceeds. The amount claimed was calculated, inter alia, by allowing for the proceeds of sale of all four properties. On 24 April 1980 the respondent obtained judgment in default of a defence.

The second matter of defence raised by the appellants was that the properties were sold at so gross an undervalue as to indicate that the respondent was in breach of its duty as a mortgagee. In this regard, the Master recognized, as indeed was conceded, that there was an arguable issue as to a breach of duty but concluded that it should be the subject of other proceedings by way of a cross-claim.

The appellants appealed to a judge of the Supreme Court from the Master's refusal to set aside the default judgment. The judge referred certain questions of law to the Court of Appeal. The Court (Reynolds J.A., with whom Hutley and Glass JJ.A. agreed) answered those questions adversely to the appellants and dismissed the appeal.

The matter then came before this Court in December 1980 on the hearing of an objection to the competency of an appeal as of right and, in the event of that objection being upheld, of an application for special leave to appeal. The Court allowed the objection to competency, but granted special leave to appeal limited to exclude consideration of any issues of fact not raised in the Supreme Court [1] .

In the course of the hearing of the application for special leave to appeal, a new issue of fact emerged bearing on the possible application of s. 57 (5) of the Act. The respondent argued that in any event that sub-section could have no application for the reason that the moneys had become due under the mortgages because the time for payment fixed thereunder had arrived, and not because of any default referred to in sub-s. (2) (a) of s. 57. However, in written submissions lodged without leave after the conclusion of the hearing, the appellants submitted that if the matter went to trial they would tender evidence to show that the term of the mortgages had been extended (see Gibbs C.J. [2] ). The latter proposition may derive some support from the fact that, as Mason J. observed [3] , it appears from the statement of claim that the respondent is suing on the covenants to pay principal and interest by instalments before the expiry dates of the mortgages and relying upon breach of those covenants in order to make the principal due and payable at earlier dates and claiming interest on the principal from those dates. In the present argument, Mr. Sheller Q.C., counsel for the respondent, concedes that his Honour's observation reflects a reasonable construction of the statement of claim. It is plain from the reasons both of the Chief Justice and Mason J. that special leave was granted for two reasons: first, to enable the correctness of the Court of Appeal's decision in Morrisey v. Bright to be examined; secondly, to clarify the operation of s. 57 (5). In consequence, the formal grant of leave was limited to exclude consideration of any issues of fact not raised in the Supreme Court.

(1981) 147 C.L.R., at p. 250. 2. (1981) 147 C.L.R., at p. 257.

The grounds of appeal reflect the terms of the grant of special leave. They are as follows:

The Court of Appeal was in error in holding that the provisions of sections 57 and 58 of the Real Property Act 1900 as amended by Act No. 96 of 1976 did not operate so as to render the respondent's power of sale ineffective.

The Court of Appeal should have allowed the appellants to set aside default judgment on the ground that there was an arguable or triable issue in the appellant's defence that none of the moneys allegedly owing by the appellants to the respondent were due and payable because the provisions of s. 57 (5) of Act No. 96 of 1976 rendered any covenant under which the whole of the principal or other money secured by the mortgage became payable of no force or effect due to failure by the respondent to comply with the provisions of that section.

The appellants seek from this Court an order that the default judgment entered against the appellants be set aside and the appellants be let in to defend.

This brief account of the history of the case makes it clear that the issues which now fall for determination are to be considered on the basis, contrary to the alternative basis which might be supposed from the expiry dates contained in the mortgages themselves, that the respondent's case rests on the covenant by the appellants that upon default in the due payment of interest the principal sum shall immediately become due and they will thereafter pay the same on demand. That covenant is expressed in identical terms in the seventh clause of each of the three mortgages. A similar covenant appears in the indenture of mortgage, but we are not concerned in this appeal with any question arising in respect of that instrument. It is convenient to set out in full the relevant clause from the mortgages. It reads as follows:

Seventhly - That upon default being made in payment at the respective times and in the manner herein mentioned of the principal slum or any part thereof or of the interest thereon or any part thereof or upon default being made in the observance or performance of any of the covenants herein contained or implied by the Real Property Act, 1900, or the Conveyancing Act, 1919 the Mortgagee shall (notwithstanding any omission, neglect or waiver of the right to exercise all or any of such powers on any former occasion) be at liberty to exercise all or any of the powers of a Mortgagee under the said Acts immediately upon or at any time after default as hereinbefore mentioned without the necessity of giving the Mortgagor any notice whatsoever required by the said Acts or otherwise. And that if at any time default shall be made in the due payment of the interest on any of the days when the same respectively shall become payable of if the power of sale given of the Mortgagee under either of the said Acts shall become exercisable then the principal sum shall immediately become due and the Mortgagboor will thereafter pay the same on demand.

It is common ground that, default within the meaning of the seventh clause in each of the mortgages having occurred prior to 1 July 1978, the position on 30 June 1978 was that there was vested in the mortgagee in each case a power of sale which could then have been exercised without any impediment at all. The power was derived from s. 58 of the Act. Although in terms the exercise of the power pursuant to that section was conditioned by both prior notice and a further lapse of time subsequent to the service of the notice, s. 58A (1) at that time provided as follows:

Any notice or lapse of time prescribed by sections fifty-seven or fifty-eight may, by agreement expressed in the mortgage or encumbrance, be dispensed with, and in such case section fifty-eight shall operate as if no notice or lapse of time were thereby required. As we have seen, there was such a dispensation in the seventh clause of each mortgage.

It is also common ground that as at 30 June 1978, consequent on the defaults to which we have referred, and having regard to the seventh clause, the principal sum in each case had immediately become due and was payable by the mortgagor on demand.

As we have noted, the Real Property (Amendment) Act 1976 ("the amending Act") came into force on 1 July 1978. It made important changes to ss. 57, 58 and 58A. The old s. 57 was omitted in its entirety, and a new section inserted, reading as follows:

(1) A mortgage or charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.

(2) A registered mortgagee or chargee may, subject to this Act, exercise the powers conferred by section 58 if -

(a) default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or charge or in the payment, in accordance with the terms of the mortgage or charge, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that principal, interest, annuity, rent-charge or other money;

(ii) the default does not relate to that payment and notice or lapse of time has not been dispensed with under section 58A,

a written notice that complies with subsection (3) has been served on the mortgagor or charger in the manner authorised by section 170 of the Conveyancing Act, 1919; and

(c) where such a notice is so served, the requirements of the notice are not complied with within the time notified pursuant to subsection (3) (d).

(3) A notice referred to in subsection (2) complies with this subsection if -

(a) it specifies that it is a notice pursuant to section 57 (2) (b) of the Real Property Act, 1900;

(b) it requires the mortgagor or charger on whom it is served -

(i) to observe, except in relation to any time expressed in the covenant, agreement or condition for its observance, the covenant, agreement or condition in respect of the observance of which he made default; or

(ii) as the case may be, to pay the principal, interest, annuity, rent-charge or other money in respect of the payment of which he made default;

(c) if the costs and expenses of preparing and serving the notice are to be demanded, it requires payment of a reasonable amount for those costs and expenses and specifies the amount; and

(d) it notifies the mortgagor or charger that, unless the requirements of the notice are complied with within one month after service of the notice (or, where some other period exceeding one month is limited by the mortgage or charge for remedying the default referred to in the notice, within that other period after service of the notice), it is proposed to exercise a power of sale in respect of the land mortgaged or charged.

(4) Where a notice is served under subsection (2) (b) and the requirements of the notice are complied with within the time applicable to the notice under subsection (3) (d), the default to which the notice relates shall be deemed not to have occurred.

(5) Without prejudice to any other manner in which it may be deprived of force or effect, a covenant, agreement or condition whereby upon a default referred to in subsection (2) (a) -

(a) the whole of the principal or other money of which the payment is secured by a mortgage or charge becomes payable; or

(b) a part of that principal or other money (not being a part to which that default relates) becomes payable,

has no force or effect until the powers conferred by section 58 become exercisable by reason of that default.

Sections 58 and 58A in their amended form, so far as relevant, read as follows:

(1) Where a mortgagee or chargee is authorised by section 57 (2) to exercise the powers conferred by this section, the mortgagee or chargee may sell the land mortgaged or charged

(1) Any notice or lapse of time prescribed by section 57 (not being notice or lapse of time relating to default in the payment, in accordance with the terms of the mortgage or charge, of any principal, interest, annuity, rent-charge or other money) may, by agreement expressed in the mortgage or charge, be dispensed with, and in such case section 58 shall operate as if no notice or lapse of time were thereby required.

(2) This section applies to mortgages and charges made before or after the commencement of the Real Property (Amendment) Act, 1976, and, to the extent to which an agreement dispensing with notice or lapse of time expressed in such a mortgage or charge is not authorised by subsection (1), the agreement has no force or effect.

The appellants' case may be put very simply. It is that the rights which admittedly had vested in the respondent prior to the coming into force of the changes effected to ss. 57 and 58 by the amending Act could thereafter be exercised only in accordance with the new provisions. They concede that the amending Act contains no express provision to that effect, but seek to rely on well established principles of construction in order to extract the necessary legislative intent from the enactment. For its part, the respondent relies on those same rules of construction to demonstrate that the amending Act has no application to its exercise of the rights in question.

In Maxwell v. Murphy [4] Dixon C.J. stated the general common law principle governing the retrospective application of statutes in terms which have been quoted in many later cases. He said:

The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events. But, given rights and liabilities fixed by reference to past facts, matters or events, the law appointing or regulating the manner in which they are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of such a presumption. Changes made in practice and procedure are applied to proceedings to enforce rights and liabilities, or for that matter to vindicate an immunity or privilege, notwithstanding that before the change in the law was made the accrual or establishment of the rights, liabilities, immunity or privilege was complete and rested on events or transactions that were otherwise past and closed. As the Chief Justice proceeded then to recognize, the distinction is clear enough in principle, but difficulties have always attended its application. 1. (1957) 96 C.L.R. 261, at p. 267.

The key to the problem is to identify clearly the relevant effect of the amending Act. It is convenient to commence with the change effected to s. 58A. Before 1 July 1978, by virtue of that section the parties were authorized by agreement expressed in the mortgage to dispense with the statutory requirements of notice or lapse of time following default of the mortgagor. After that date the parties were prohibited from contracting out of the requirements of notice or lapse of time in the case of default in the payment, in accordance with the terms of the mortgage, of any principal, interest or other money. By sub-s. (2) the section was made applicable to mortgages made before or after the commencement of the amending Act, and any such contracting out was made of no force or effect.

The second change was to vary the conditions which must be satisfied before a registered mortgagee could exercise the power of sale contained in s. 58. The effect of sub-ss. (2) and (3) of s. 57 is that following default in the payment of money the mortgagee must serve on the mortgagor a written notice which specifies that it is a notice pursuant to s. 57 (2) (b) of the Act and requires the mortgagor to make the payment in respect of which he is in default within one month after service of the notice or within such longer period if any which may be contained in the mortgage. It is only if the notice is not complied with within the specified time that the mortgagee may exercise the power to sell.

The third change is provided by s. 57 (5). A covenant, agreement or condition whereby upon default the whole or part of the principal (not being a part to which the default relates) becomes payable has no force or effect until the power to sell conferred by s. 58 has become exercisable by reason of that default. The effect of the amendment is that the mortgagor cannot become liable to pay the total moneys secured by the mortgage unless and until sub-s. (2) of s. 57 has been complied with, and the mortgagor has failed to comply with the notice served in accordance with that provision.

Finally, the new statutory scheme is completed by sub-s. (4) of s. 57, which provides that where the notice prescribed by sub-s. (2) is served and complied with, the default to which the notice relates shall be deemed not to have occurred.

Mr. Bennett, counsel for the appellants, argues that these changes do not impair the vested rights of the respondent. They regulate the manner in which those rights may be enforced or their enjoyment secured. He insists that the effect of the amendments is merely to require the mortgagee to give a month's notice before exercising his power of sale. If it were correct so to characterize the effect of the amending Act there would be much force in the appellants' submission. It would be a procedural statute the application of which to the rights in question would leave those rights in substance unimpaired. The question is whether it can be so described.

In our opinion, the amending Act deals with matters of substantive right. Its effect is much greater than merely inserting a temporal impediment to the exercise of a power of sale. Assuming its application, rights which were immediately exercisable prior to the coming into operation of the amendments were no longer capable of such exercise, and might never be capable of exercise. Those rights are not adequately described by reference solely to the power of sale, as the argument for the appellants tended to so describe them. As we have noted, the mortgagor covenanted under the mortgage instruments in the event of default to pay on demand the whole of the principal and interest the subject of the security, not limited to the payment to which the default related. The new sub-s. (5) of s. 57 interfered directly with this covenant, rendering it of no force or effect until, s. 57 (2) having been complied with, the power of sale conferred by s. 58 became exercisable. In form and in substance the effect of s. 57 (5) was to defeat the rights which it is conceded had vested prior to the amending Act, subject to their resurrection in the event of non-compliance with the notice which the new s. 57 (2) required to be given. The rights, both to sell and to demand payment of the whole of the moneys payable under the mortgage, were now contingent upon the failure of the mortgagor to comply with the notice. By paying within the time prescribed the amount which was the subject of the default, the fact of the default having occurred was denuded of all significance and effect. It was to be deemed not to have occurred (s. 57 (4)).

The appellants seek to find support, by analogy, in the decision of the Court of Appeal in West v. Gwynne [5] . Bearing in mind that every case turns on the provisions of the particular statute to which it relates, it may be doubted whether there is any utility in comparing different cases. In any event, we do not think there is any assistance to be gained from that decision. The question was whether s. 3 of the Conveyancing Act 1892 U.K. was of general application, or whether its operation was confined to leases made after the commencement of the Act. The section enacted that in all leases containing a covenant against assigning or underletting without licence or consent, such covenant shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine shall be payable for or in respect of such licence or consent. The Court of Appeal upheld the primary judge's conclusion that the provision was of general application. There was clearly no vested right in the landlord, in the absence of authority in the lease, to charge a fee as the condition of his consent to the assignment. Here there was a default, upon which by operation of the express provisions of the mortgage agreement, backed by s. 58A as it formerly stood, specific rights accrued to the mortgagee.

Nor do we think that the appellants can derive any comfort from the limitation cases: Maxwell v. Murphy [6] ; Chang Jeeng v. Nuffield (Australia) Pty. Ltd. [7] ; Yrttiaho v. Public Curator (Q.) [8] . The decisions in these cases are clear illustrations of the operation of the rule. If the time allowed for instituting an action has already expired when an amending Act extends the time, that amendment will not operate to revive the extinguished cause of action or render it capable of enforcement. Conversely, if the time within which an action may be taken, or a step taken in proceedings, is abridged, the amending law will not apply so as to place a party out of time. On the other hand, so long as there is yet time for the action to be instituted or the step taken, an abridgment of time will apply; it is then no more than a procedural statute affecting the future conduct of the proceedings. It seems to us that this line of cases reflects the care of the common law for vested rights and its concern to avoid injustice.

(1957) 96 C.L.R. 261. 2. (1959) 101 C.L.R. 629. 3. (1971) 125 C.L.R. 228.

The appellants rely on the provisions of s. 58A (2) as an express declaration of the intention of the legislature that the amending Act should apply to the present case. That provision, as we have noted, has the effect of preventing parties to a mortgage, whether made before or after the commencement of the amending Act, from contracting out of the provisions of s. 57 as to notice or lapse of time in the case of default in the payment of money. It is argued that the three sections - 57, 58 and 58A - form a code, and that the intention expressed in s. 58A (2) has application to the whole scheme. However, the argument runs into difficulty at several points. First, in form the section stands quite independently of the other sections. Secondly, it deals only with one particular aspect of "the scheme", if it may be so called. It deals with the conditions under which a power of sale will come into existence; it has nothing to say to the exercise of a power of sale which has already accrued. The operation of s. 58A may be demonstrated by a hypothetical case. Suppose that a default in the payment of money occurred after 1 July 1978 under a mortgage, in terms similar to those in the present case, made before that date. The power to sell, consequent on that default, could not come into existence until the conditions precedent prescribed by s. 57 (2) were satisfied notwith-standing that by agreement of the parties those conditions as to notice and lapse of time should not apply. Thirdly, the express mention may well attract the operation of the maxim expressio unius est exclusio alterius.

The appellants submit that Morrisey v. Bright [9] was wrongly decided. The central question in the case was identical to the present question, namely, whether the amending Act operated to impair a power of sale which had accrued to a mortgagee by reason of default by his mortgagor before the Act commenced. The majority of the members of the Court of Appeal (Reynolds and Hutley JJ.A.) answered the question in the negative. Mahoney J.A., although concurring for other reasons in the decision of the Court, was of a different opinion. There was a prior question in the case as to whether the power of sale was an accrued right, but that issue is conceded here. Hutley J.A., with whom Reynolds J.A. agreed, observed that the new scheme was not directed to the carrying out of the sale subsequent to the exercise of the power, but to the deferment of the power itself. He rejected the notion that the amended sections were merely procedural in their effect. It will be plain from what we have already said that we agree generally with the conclusion of the majority in Morrisey v. Bright, although in our opinion it is an understatement to say merely that the amending Act effects a deferment of the power of sale. It does not merely defer the power. It renders the very existence of the power subject to a contingency, namely, the compliance or non-compliance by the mortgagor with the notice within the prescribed time. Mahoney J.A. agreed that the power to sell which had come into existence prior to the commencement of the amending Act was an "accrued right" for the purposes of this branch of the law, and he rejected any reliance by the mortgagor on the intent as to retrospectivity evidenced by s. 58A (2). His Honour differed from the majority in that he discerned in the form of ss. 57 and 58 as amended a legislative intent to impose on existing powers of sale the restraints prescribed by s. 57. With all respect, we think it does rather less than justice to the effect of the amending Act to describe it merely as imposing the requirement of a notice as a condition precedent to the exercise of a power of sale. On the other hand, if its full import be appreciated then the common law presumption against affecting vested rights will operate unless a contrary legislative intention appears, in Sir Owen Dixon's words, "with reasonable certainty": Maxwell v. Murphy [10] . In our opinion, no such certainty appears here.

[1978] 2 N.S.W.L.R. 1. 2. (1957) 96 C.L.R., at p. 267.

In our opinion, the concession by the appellant that, for the purposes of construing the effect of the amendments, the mortgagee's power of sale was an accrued right was rightly made. By reason of the default of the mortgagor there had vested in the mortgagee a statutory power to effect a sale of the property notwithstanding that it was not the registered proprietor. The common law presumption against imputing to the legislature an intention to interfere retrospectively with rights which have already accrued does not call for a narrow conception of a right. If it were otherwise, the essential justice of the rule would be eroded.

The decision of the Court of Appeal in Heston and Isleworth Urban District Council v. Grout [11] provides a close analogy. In that case notices had been given to frontagers in a private street requiring them to sewer and make up. In the event of the notices not being complied with the local authority was empowered to execute the works themselves and recover the expense from the frontagers. The frontagers defaulted and the local authority resolved to do the work. However, before the work was done the statute which authorized the recovery of the cost of the work from the frontagers ceased to have any application in that district. The power to execute the works and thereby give rise to a liability in the frontagers was held to be a right which survived the repeal. See, also, Director of Public Works v. Ho Po Sang [12] .

[1897] 2 Ch. 306. 2. [1961] A.C. 901, at pp. 922-924.

Brief reference was made in the course of argument to the question whether the amending Act should be classified as a repealing Act or an amending Act. The distinction is discussed at some length by Windeyer J. and by Gibbs J. in Mathieson v. Burton [13] , a discussion which reflects some difference of opinion on the part of their Honours. However, like Gibbs J. in that case [14] , we are of the opinion that if there is any distinction it is of no materiality in the present case. If the amending Act be regarded as a repealing Act so as to enable the respondent to rely on the provisions of s. 8 of the Interpretation Act 1897 N.S.W., as amended, the result would be the same.

(1971) 124 C.L.R. 1. 2. (1971) 124 C.L.R., at p. 22.

The appellants also submit that the delayed operation of the amending legislation after enactment encourages a finding in favour of the intended retrospectivity of its provisions: cf. Gibbs J. in Yrttiaho [15] . We have taken the point into consideration but in the absence of other and stronger indications of such an intent, we are unable to place reliance upon it.

In our opinion, therefore, the appellants have failed to make good their grounds of appeal. In conclusion, we would say this. The critical event in the history of the case was the occurrence of default in payments of interest by the appellants. That default occurred before the amending Act came into operation. It vested in the respondent not only an immediate power to sell the properties the subject of security, but an immediate power to call up the principal which but for the default would not then have been payable. It is upon the appellants' covenant to pay that principal and outstanding interest on demand that the respondent has now sued and obtained judgment. It remains open to the appellants in other proceedings to challenge the propriety of the conduct of the respondent in relation to the sale of the properties the subject of the mortgages.

The appellants, the registered proprietors of an estate in fee simple in certain land under the Real Property Act 1900 N.S.W. ("the Act"), mortgaged all their estate and interest in that land to the respondent to secure, inter alia, the repayment of a principal sum lent by the mortgagee to the mortgagor and the payment of interest thereon. By clause seventhly of three memoranda of mortgage respectively given in respect of several parcels of mortgaged land, it was provided that, upon default in the due payment of principal or interest or in the due observance of any of the covenants contained in the memorandum or implied therein by the Act or the Conveyancing Act, 1919 N.S.W., the mortgagee should "be at liberty to exercise all or any of the powers of a Mortgagee under the said Acts immediately upon or at any time after default as hereinbefore mentioned without the necessity of giving the Mortgagor any notice whatsoever required by the said Acts or otherwise."

Among the powers conferred on a mortgagee by the Act is the power of sale (s. 58). Prior to 1 July 1978, s. 58 authorized a mortgagee to sell after a default in the payment of the principal sum, interest, annuity, or rent charge or any part thereof secured by the mortgage or in the observance of any covenant expressed or implied in any registered mortgage, where the mortgagee had given to the mortgagor a notice of default as prescribed by s. 57 and after default had continued during the time after the service of the notice prescribed by s. 58. However any notice or lapse of time prescribed by s. 57 or s. 58 might be dispensed with by agreement expressed in the mortgage (s. 58A). Notice and lapse of time were dispensed with by the agreement expressed in clause seventhly. It was common ground that, prior to 1 July 1978, the mortgagee had become authorized by s. 58 to sell the mortgaged land in exercise of the power contained in s. 58.

Clause seventhly of each memoranda of mortgage provided further that " if the power of sale given to the Mortgagee under either of the said Acts shall become exercisable then the principal sum shall immediately become due and the Mortgagor will thereafter pay the same on demand." Prior to 1 July 1978, the power of sale had become exercisable and accordingly the whole of the principal sum had become due and was payable on demand.

On 1 July 1978, the amendments to the Act effected by Schedule 8 to the Real Property (Amendment) Act 1976 N.S.W. came into force. Thereafter a mortgagee's power of sale arose only where the mortgagee was "authorized by s. 57 (2) to exercise the powers" conferred by s. 58. By the amending Act, s. 57 was omitted and a new s. 57 was inserted in its stead. Sub-section (2) of the new section provided:

A registered mortgagee or encumbrancee may, subject to this Act, exercise the powers conferred by section 58 if -

(a) default has been made in the observance of any covenant expressed or implied in the mortgage or encumbrance or in the payment on the due date of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or encumbrance or of any part of that principal, interest, annuity, rent-charge or other money;

(ii) the default does not relate to that payment and notice or lapse of time has not been dispensed with under section 58A,

the mortgagee or encumbrancee serves on the mortgagor or encumbrancer, in the manner authorised by section 170 of the Conveyancing Act, 1919, a written notice that complies with subsection (3); and

(c) where such a notice is so served, the requirements of the notice are not complied with within the time notified pursuant to subsection (3) (d).

Section 58A also was amended on 1 July 1978 to exclude dispensation by agreement with a notice or lapse of time prescribed by s. 57 "relating to default in the payment, in accordance with the terms of the mortgage of any principal, interest, annuity, rent-charge or other money". Thereafter where the default related to a payment of the specified kind, the service of notice of default complying with s. 57 (3) became a condition of the exercise of the power of sale conferred by s. 58 whether or not the mortgage expressed an agreement to dispense with such a notice. Moreover, by s. 57 (5) an acceleration clause of the kind found at the end of clause seventhly was deprived of force or effect until the powers conferred by s. 58 became exercisable. Sub-section (5) of s. 57 provided - Without prejudice to any other manner in which it may be deprived of force or effect, a covenant, agreement or condition whereby upon a default referred to in subsection (2) (a) -

(a) the whole of the principal or other money of which the payment is secured by a mortgage or encumbrance becomes payable; or

(b) a part of that principal or other money (not being a part to which that default relates) becomes payable,

has no force or effect until the powers conferred by section 58 become exercisable by reason of that default.

If the respective rights and obligations of the mortgagee and mortgagors are to be determined as though they are and were governed exclusively by the amended ss. 57, 58 and 58A, the absence of a notice of default which complies with s. 57 carries the consequences that the principal sum is not payable and a power of sale may not be exercised. Two questions therefore arise, related but distinct. First, did the mortgagee's power of sale which it was authorized to exercise prior to 1 July 1978 survive the amendments to ss. 57, 58 and 58A which came into force on that day, unaffected by them? And second, did the principal sum which had become due and payable on demand under clause seventhly continue to be due and payable on demand when the amendments came into force?

Before turning to these two questions a further provision, unaltered by the amending Act, should be noted. By s. 58 (3) the purchase money arising from the sale of mortgaged land in exercise of the power of sale conferred by that section is to be applied, first, in the payment of the expenses of sale; secondly, in payment of moneys then due and owing to the mortgagee; and thirdly, in payment of subsequent mortgages or charges (if any); and the surplus (if any) is to be paid to the mortgagor.

It was submitted by the respondent mortgagee that its power of sale which had become exercisable prior to 1 July 1978 was preserved, unaffected by the amendments, as an accrued right. The appellant mortgagors conceded in argument that the power of sale which had become exercisable was an accrued right. Nevertheless the mortgagors submitted that the amendments prescribed requirements which were procedural impediments to the exercise of the power of sale and that the amendments affected merely the exercise of the power, leaving the power intact. Both mortgagors and mortgagee relied upon the well-known passage in the judgment of Dixon C.J. in Maxwell v. Murphy [16] , where his Honour distinguished between the application of a statute which changes the law to past facts or events so as to affect rights or liabilities already defined by reference to those past facts or events and the application of a law changing the manner in which those rights or liabilities are to be enforced or their enjoyment secured by judicial remedy.

The amendments with which we are here concerned created a new set of conditions governing the exercise of a mortgagee's power of sale. The new conditions are not merely procedural; indeed, it would not be accurate to speak of them as conditions governing the exercise of a power of sale if the power is conceived to exist independently of or antecedently to the fulfilment of the conditions. Where the exercise of a power of sale is governed by conditions of the kind prescribed by ss. 57 and 58, the power does not exist unless the conditions are fulfilled. If a mortgagee who might have exercised a power of sale prior to 1 July 1978 should now be required to fulfil the conditions prescribed by the amendments in order to exercise the power of sale, his authority to exercise that power would be conferred by the new s. 57 (2), and the fact that he had a power of sale prior to 1 July 1978 would be irrelevant. The mortgagors' argument that the new conditions governing the exercise of the power of sale are merely procedural fails. However, despite the concession that the mortgagee's power of sale was an accrued right, I am unable to adopt that view.

A power of sale under s. 58 (1) is not a cause of action; it confers no right to property or to the enjoyment of property nor any right to the payment of money or to the observance or performance of an obligation. It is distinct from the right to apply the net proceeds of sale to the payment of moneys due to the mortgagee under s. 58 (3). It gives to a sale by the mortgagee of land under the Act the legal effect of a sale though the mortgagee is not the owner of the property sold; but it affects no change in the legal position of either mortgagor or mortgagee with respect to the mortgaged property unless the mortgagee sells. When the mortgagee sells in pursuance of statutory authority, he is clothed with the mortgagor's capacity to sell. By s. 58 (1) the mortgagee is authorized "to make and execute all such instruments as shall be necessary for effecting the sale thereof", and the sub-section requires that the validity of the "sales, contracts, matters, and things hereby authorized" be recognized "as if the mortgagor had made, done, or executed the same".

Section 58 (1) operates upon the act of a mortgagee who sells the mortgaged land, and the interlocking provisions of ss. 57, 58 and 58A define the conditions to be fulfilled before a mortgagee's sale takes effect as if the sale had been made by the mortgagor. Section 58 (1) creates no rights and works no change in legal relationships except by its operation upon a sale by a mortgagee at a particular time and in particular circumstances. To say that a mortgagee has a power of sale at a particular time or in particular circumstances means no more than that a sale by a mortgagee at that time or in those circumstances takes effect as if the sale had been made by the mortgagor. Although it is convenient to speak of a power of sale, the legal effect of the power waits upon its exercise. A statute which defines and confers a power of sale therefore speaks to the occasions of its exercise. Such a statute is not concerned to recognize the validity of a future exercise of the power by reference to conditions which earlier governed its exercise but which govern it no longer. Nor can a future exercise of such a power be clothed with legal effect except by a statute which is then in force. In general, when the conditions defined by statute to govern the exercise of a power are amended, the effectiveness of an exercise of the power after the amendment is to be determined by reference to the conditions newly prescribed, and not by reference to conditions which would have governed the exercise of the power had it been exercised before the amendment came into force. The extent of a power conferred on public authorities (Reynolds v. Attorney-General (Nova Scotia [17] ) and of the jurisdiction conferred upon a court (British Broken Hill Proprietary Co. Ltd. v. Simmons [18] ) is determined by reference to the power or jurisdiction conferred upon the repository at the time of its exercise, and that rule is no less applicable to a power conferred by statute upon a mortgagee.

[1896] A.C. 240, at p. 243. 2. (1921) 30 C.L.R. 102, at pp. 111-112.

A power of sale is thus a different species of legal entitlement from the legal rights with which Dixon C.J. was concerned in Maxwell v. Murphy [19] . I do not overlook the dictum of Windeyer J. in Mathieson v. Burton [20] , that classification of a "right" as a power "does not put it outside the family of rights", but his Honour was there concerned to classify a statutory entitlement to continue in possession of premises - an entitlement which, if classified correctly as a power, is a power of a very different kind from the power of sale conferred by s. 58 of the Act. In my view, a statutory power of sale cannot be an accrued right; it is an entitlement by the exercise of which a right may be enforced without resort to litigation. A mortgagee, having a right to be paid the moneys which are due and owing to him, is entitled to enforce that right by selling the mortgaged land and applying so much of the net proceeds of sale as are needed to discharge his debt.

(1957) 96 C.L.R. 261. 2. (1971) 124 C.L.R. 1, at p. 13.

It follows that, in my view, Morrisey v. Bright [21] was wrongly decided in the respect material to this case. If it were correct to characterize a power of sale which arose before the amending Act as an accrued right - a view which commended itself to the majority of the Court of Appeal in that case - I would agree that the amending Act had no operation upon it. Though neither party in this Court accepted another analysis of the power, I am not able to construe the complex of provisions which define and confer a power of sale as giving rise to an accrued right in the sense in which that term is used either in s. 8 (b) of the Interpretation Act 1897 N.S.W. or to identify those rights which, having been defined by reference to past facts and events, are presumed at common law to be unaffected by an amending statute. I would hold that the validity of the exercise of a mortgagee's power of sale on and after 1 July 1978 falls to be determined by reference to the amendments which came into force on 1 July 1978 whether or not the mortgagee might have exercised the power validly prior to that date. It is unnecessary to consider the effect of the amendments upon a sale which was not then completed by conveyance, but I should not wish to be taken as casting doubt upon the validity of contracts entered into prior to that date by a mortgagee then entitled to exercise a power of sale.

The mortgagee's right to demand and to be paid the whole of the principal sum is founded upon the acceleration clause earlier recited. That right arises from the terms of the covenant, not - as in the case of the power of sale - from the statute. The event specified by the covenant upon the occurrence of which the principal sum should become due and thereafter be payable on demand was the becoming exercisable of the power of sale "given to the mortgagee under either of the said Acts". The time when the principal sum should become so due and payable was the first occurrence of the specified event. Prior to 1 July 1978 the Real Property Act had given a power of sale to the mortgagee and the specified event had occurred. The principal sum had therefore become due and payable on demand prior to 1 July 1978.

The amending Act did not purport to affect the mortgagee's right to the payment of principal or to modify any curial procedure for the enforcement of that right. Section 57 (5) denied force or effect to acceleration clauses within its ambit until the powers conferred by s. 58 should become exercisable but the mortgagee did not need to rely upon the acceleration clause after s. 57 (5) came into force. The clause had already done its work and the right to payment on demand of the principal was a right already existing, defined by reference to the events which had already occurred. It was an accrued right in either of the senses earlier mentioned. Had the mortgagee sued for the principal sum after the power of sale first became exercisable, his action would not have been defeated by s. 57 (5). The mortgagee's right to payment of principal clearly attracts the operation of the rule of construction stated by Wright J. in In re Athlumney; Ex parte Wilson [22] :

Perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. 1. [1898] 2 Q.B. 547, at pp. 551-552.

This conclusion warrants dismissal of the appeal. The argument as to the power of sale was raised in these proceedings as a step towards denying that the mortgagor was liable on the personal covenant. In fact the liability on the personal covenant is unaffected by legislative changes made after the principal sum first became due and payable on demand, and the effect of the amendments upon the mortgagee's entitlement to exercise the power of sale after 1 July 1978 is irrelevant to the mortgagee's entitlement to recover judgment for the amount which, prior to that date, had become due and payable on demand. The order which I would make, therefore, is to dismiss the appeal with costs.

[The Honourable Mr. Justice Aickin died before judgment was delivered in this case.]

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