A registered mortgage is a "land instrument" as defined in s 4(1).
11 Subsections 7(3) and 19(1), which appear intended to preserve the indefeasibility of registered title, escaped notice until the argument in this Court. Subsequent to the hearing, the appellant applied for leave to amend to seek an order that the bank execute and register a discharge of its mortgage.
12 The trial judge found that the contract between the appellant and the bank, that is to say, the registered mortgage which the appellant gave the bank, was not "unjust in the circumstances relating to the [mortgage] at the time it was made." That conclusion has been challenged by the appellant.
13 The bank had not previously dealt with the appellant or the company or the others who gave it security, and did not request a mortgage from the appellant. Her son and his associates had arranged for mortgages from her and the late Mrs Marks prior to approaching the bank for a loan to the company on the basis of the securities which they offered. An experienced commercial solicitor who acted for the company and its directors also provided assistance to the appellant, and either advised her or was available to do so. The appellant's husband, who had more business experience than she did, perused projected figures for the business based on its previous results and told her that the business would return a profit. Either the solicitor or her husband advised the appellant that the business was a good proposition. Thereafter, she did not question the proposal to borrow or how the loan would be repaid. There was no finding, or basis for a finding, by the judge that the appellant was influenced in her decision to give the mortgage to the bank by a belief that the bank considered that the business which the company purchased was viable.
14 Although the business continued for a number of years and ultimately failed only because of poor management and increased competition, the appellant contended - with the benefit of hindsight - that it was never viable, and that the bank should have known that that was so. Attention was drawn to financial information which the bank might or might not have had which it was argued, unpersuasively, indicated that the company would have difficulty repaying the bank, the significant risk of failure said to be associated with an indoor cricket centre, the initial borrowing of working capital as well as the full purchase price, the lack of business experience of the directors (young men in their mid-to late 20s) and the subsequent borrowings from the bank by the company. However, the experienced commercial solicitor who acted for the appellant and her son and his associates and an accountant whom they engaged after the company had acquired the business were sanguine about its prospects. The business went through a period of expansion and the appellant consented to the company's additional borrowings from the bank, some of which were for additional or replacement equipment, and urged the bank to support the continuation of the business. The trial judge was entitled to find, as he did, that the business was viable when purchased, and to decline, as he did, to find that the decision to purchase it was imprudent.
15 Further, contrary to the appellant's submission, the bank did not form or act on an opinion that the business and its assets were valueless or an adverse opinion of the prospects of the business when it made the initial loan. Nor was the information which was available to it such that it ought to have done so, either because of the information available or because it did not have sufficient information to form favourable opinions about the assets and prospects of the business. Because of the mortgages which it was offered, the bank's position was well secured, and it paid little, if any, attention to the value of the assets of the business or its prospects.
16 The trial judge also found, and the appellant accepted, that it was not the bank's function to advise the appellant on the commercial merits of the transactions entered into by her or the company, and that she was well aware of the purpose of the mortgage and that there was a risk that she would lose her house if the business failed. His Honour also found, without challenge, that there was little communication between the appellants and the bank and that the communications which occurred were substantially confined to the execution of the mortgage and later documents.
17 The appellant nonetheless argued that the circumstances were such that the bank should have known that the appellant's mortgage was unwise and should have warned her that the risk that she would lose her home was "real". At its highest, this submission seemed to involve the proposition that the bank knew or ought to have known that there was a likelihood that the appellant would lose her home. That obviously cannot be sustained. In a more moderate version, the proposition was that the bank knew or ought to have known the risk that the appellant would lose her home was significant. The trial judge did not find that that was so or that the appellant's decision to support her son's career by giving the bank the mortgage to secure the company's borrowings was imprudent. On the contrary, his Honour formed conclusions which were open to him which are inconsistent with such findings.
18 Attention was drawn by the appellant to a number of additional factors which were said to make her mortgage unjust in the circumstances in which it was entered into, including the importance to her of her home, the absence of any financial benefit to her (or any benefit to her other than her son's business interests) and the conflict between her interests and those of her son and his associates and the company without her receiving independent legal advice.
19 In her evidence, the appellant also claimed some uncertainty about the legal effect of the mortgage and other documents which she subsequently signed, but the trial judge was disinclined to accept her evidence on those matters or her evidence that she was not paying attention when, on the occasion when she and the late Mrs Marks signed their mortgages, a bank officer informed them that they were putting their houses up as security for the money which the bank was going to lend and that if the loans went into default the bank could sell their homes. His Honour was of the opinion that, in any event, the appellant was well aware that that was so.
20 The appellant cannot succeed in this Court merely because it might have been preferable for the bank to form an opinion on the extent of the risk which she ran and explain its perception to her, with reference perhaps to such possibilities as bad management, interest rates or increased competition, or to caution her to obtain independent advice. She must persuade the Court that the trial judge either made a discernible error or that the only conclusion reasonably open to his Honour was that the mortgage was unjust in the circumstances relating to it at the time when it was made. Such an error was not demonstrated. On the contrary, I consider that the trial judge's conclusion that the mortgage was not unjust was correct.
21 Even if the appellant's mortgage to the bank had been "unjust in the circumstances relating to the [mortgage] at the time it was made," the Court's power to declare the mortgage void or order the bank to discharge the mortgage is dependent upon a conclusion that it is "just to do so … for the purpose of avoiding as far as practicable an unjust consequence or result …". The bank's only remaining interest in the mortgage relates to costs in proceedings between the appellant and the bank. The appellant did not seek any limited relief related to the bank's interest in the mortgage, and a conclusion that it is just to declare the mortgage void or order the bank to discharge the mortgage would be warranted only if it is just to deny Mr Stone and the executor of the late Mrs Marks rights to contribution from the appellant and subrogation to the right to the bank under its mortgage over the appellant's property at Balgowlah in support of those entitlements to contribution. The appellant made no attempt to advance such a case in her grounds of appeal or her written or oral arguments in this Court.
22 I cannot identify any basis for the relief claimed by the appellant. In my opinion, the appeal should be dismissed with costs.