Contracts - Construction and interpretation of deed - Whether equitable mortgage was discharged immediately or conditionally by terms of deed

Evidence - Cross-appeal of trial Judge's refusal of leave to adduce further evidence to prove forgery of deed - No substantive difference between forged deed and previously signed deed

Practice and procedure - Appeal from Master's decision granting summary judgment - Turns on own facts

Transfer of Land Act 1893

Blair v Curran [1939] HCA 23; (1939) 62 CLR 464

Egri v DRG Australia Ltd (1988) 19 NSWLR 600

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589

Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

Unioil International Pty Ltd v Deloitte Touche Tomatsu [No 2] (1997) 18 WAR 190

Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

1 JUDGMENT OF THE COURT: These reasons for decision cover two related appeals. The first, FUL 190 of 1997, is an appeal against a decision of Heenan J in CIV 1724 of 1997 in which his Honour made declarations that:

(a) the first respondent ("Evenwood") held an equitable mortgage over shares held by the third respondents in certain lands; and

(b) the moneys owing to Evenwood under the equitable mortgage be paid to Evenwood out of a fund that had been established by court order following the sale of the lands.

2 There is a cross-appeal by the first-named third respondent ("Marton") against the finding that he had signed the document from which the equitable mortgage was said to have arisen and was bound by it.

3 The second matter, FUL 98 of 1998, is an appeal against a decision of Master Bredmeyer in CIV 2058 of 1996 granting summary judgment in an action brought by Evenwood against Marton for debt arising from a personal guarantee.

4 This litigation has had a tortuous history. It will be necessary to make some reference to the course that the litigation has taken. Before doing so we will spend a short time on the factual background.

5 In 1993 Marton, the second-named third respondent ("McGrath") and a Mr Henry ("Henry") entered into a contract to acquire about 300 hectares of land near Mount Barker from Vasse Felix Pty Ltd for $720,000. We will refer to this parcel as "the Forest Hills land". On 28 February 1994 they were registered as the proprietors of the land as tenants in common in equal shares. The Forest Hills land was acquired, in part, with funds contributed by McGrath, Marton and Henry and with funds advanced by National Australia Bank and a private investor named Gimblett, who took first and second registered mortgages respectively. Henry was found to have misappropriated the moneys he put into the venture from Hafia Pty Ltd, a company with which he was associated. The liquidator of Hafia Pty Ltd took action in this Court and, as a result, the one undivided share that Henry held in the property was transferred to the company. In January 1996 the liquidator sold that one-third interest to Forest Hills Rural Investments Pty Ltd ("FHRI"). A Mr Lyons ("Lyons") is the governing mind (to use the phrase employed by counsel for the appellant) of both FHRI and the appellant ("Hillboi").

6 In the latter part of 1995 McGrath and Marton sought a loan of $300,000 from Evenwood to enable them to purchase other properties, including some land that we will call "the Crystal Brook land". This loan arrangement was documented in a deed dated 4 September 1995 ("the September deed"). The deed shows Farm Forestry Finance Pty Ltd ("FFF") as the borrower and McGrath and Marton as guarantors. McGrath and Marton gave a joint and several guarantee for the repayment by FFF of the principal and interest of the loan and the performance by FFF of all other terms and conditions of the deed. These are referred to as "the Secured Obligations". Clause 6.6 is critical. It provides:

"[McGrath and Marton] jointly and severally covenant and agree with [Evenwood] that for the purpose of securing the performance of the Secured Obligations [McGrath and Marton] will grant a third registered mortgage on terms determined by [Evenwood] over [the Forest Hills land] upon McGrath and Marton becoming the sole registered proprietors of [the Forest Hills land] and further on all encumbrances over [the Forest Hills land] (excluding [the National Australia Bank and Gimblett mortgages]) being removed from [the Forest Hills land]."

7 The proper characterisation of the interest created by the undertaking of that obligation is at the heart of this appeal. Evenwood had an equitable mortgage and lodged a caveat over the title to protect its interests under the arrangement.

8 By February 1996 McGrath and Marton had fallen out. In that month there were further transactions concerning the Forest Hills land. McGrath sought an advance of $280,000 from Hillboi. Lyons required him to provide security for this advance by way of mortgage over the Forest Hills land. This meant that the arrangements between McGrath, Marton and Evenwood had to be changed. On 20 February 1996 a deed was executed by which Evenwood agreed not to enforce the obligation in the September deed for McGrath and Marton to grant to it a mortgage over the Forest Hills land. Instead, Evenwood would take security over the Crystal Brook land. The only parties to the deed are Evenwood, as lender, and McGrath as guarantor. There are two clauses that are critical:

"3 [Evenwood] agrees that it will not take any steps to enforce clause 6.6 of [the September Deed] on the basis of the undertaking provided by [McGrath] in clause 5 and that clause 6.6 will be of no further effect."

5 [McGrath] agrees with [Evenwood] that for the purpose of securing the performance of the Secured Obligations under [the September deed] [FFF] will grant a mortgage over [the Crystal Brook land] on terms determined by [Evenwood], simultaneously with [FFF] or his nominee becoming registered proprietor of [the Crystal Brook land]. If [the Crystal Brook land] is acquired by [FFF's] nominee then [FFF] must ensure that the nominee fully co-operates in completing the mortgage and is itself bound by the obligations of [FFF] hereunder."

9 It is not clear whether the loan of $280,000 was to McGrath personally or for a purpose connected to the activities of FFF. On one view of it the terminology used in cl 5 suggests that the borrower is McGrath. This is the approach taken by counsel for the appellant in the appeal. We find this difficult to reconcile with the express wording of the February deed, particularly the definition of "the Borrower" in cl 2.2. Perhaps nothing turns on it because there is no suggestion that McGrath or FFF or any nominee of them or either of them ever granted the mortgage over the Crystal Brook land contemplated by cl 5.

10 The proper construction of the February deed, and its effect on the interests in the Forest Hills land that Evenwood had acquired by virtue of the September deed, is also at the heart of this appeal.

11 On 23 February 1996 Hillboi advanced the $280,000 to McGrath who, essentially in support of, or as security for, the loan granted to Hillboi an option to acquire his interest in the Forest Hills land if there should be a default under the terms of the loan contract.

12 A little while later, Hillboi took an assignment of the Gimblett mortgage. The next step was an assignment of the rights of Hillboi in the arrangement with McGrath to FHRI. McGrath defaulted under the loan arrangement and on 18 October 1996 FHRI exercised the option to purchase his one-third interest in the Forest Hills land. By reason of the exercise of the option, FHRI received a registrable transfer of the interest but it could not effect registration because of the existence of a number of caveats over the property.

13 In one of the myriad of actions arising from this unfortunate venture, Anderson J ordered that the Forest Hills land be sold in lieu of partition. FHRI was the successful bidder at the resulting auction. It, therefore, became the sole registered proprietor. The registered mortgages to National Australia Bank and FHRI (as assignee from Gimblett) were paid out. One third of the net proceeds of sale was paid to FHRI in satisfaction of the interest which it had acquired following the transfer of the interest initially held by Henry. Anderson J ordered that the balance of the net proceeds be held in an interest-bearing account known as "the Evenwood Fund". This fund was to stand in lieu of any security interest in the Forest Hills land which Evenwood might be found to have had. There is about $760,000 standing in the Evenwood Fund. This appeal concerns the competing claims to the fund.

14 Evenwood commenced proceedings by originating summons in CIV 1724 of 1997. Evenwood asserted that it had an equitable mortgage or an equitable charge over the shares of McGrath and Marton in the Forest Hills land subject only to the mortgages in favour of National Australia Bank and Gimblett (or FHRI after the assignment). Hillboi, which was a defendant, asserted a charge that was, initially, subsequent to the Evenwood charge but which achieved priority over the Evenwood charge by virtue of the February deed.

15 Marton and McGrath were also named as defendants. After the conclusion of the argument and just before judgment was handed down, Marton applied to Heenan J to reopen his case and to argue that the Evenwood mortgage (in so far as it affected him) was a forgery. One copy of the mortgage had been tendered in evidence. However, there is another copy of the mortgage, substantially similar but not in identical terms, which had been signed by Marton and which he acknowledged to be authentic. Heenan J refused leave to adduce further evidence and found that Evenwood had a good security granted to it by McGrath and Marton jointly for the loan made to FFF which they had guaranteed and for which they were each personally liable.

16 In CIV 2058 of 1996 Evenwood had commenced actions for debt against Marton and McGrath separately on the personal covenants in the Evenwood mortgage. McGrath did not dispute the claim. Evenwood applied for summary judgment against Marton. The defendant did not raise the forgery issue. Master Bredmeyer granted summary judgment in favour of Evenwood. That order was the subject of an appeal to the Full Court. The appeal first came before the Full Court on 6 November 1997 but it was adjourned partly completed. Marton did not raise the forgery issue. He attempted to raise it before Heenan J in the circumstances that we have already mentioned. The forgery issue was raised substantively on an application by Marton on 27 February 1998 (which was after Heenan J had handed down his decision) to re-open his case on appeal. Apparently, the Full Court was not told that an issue about the document had been raised before Heenan J or that he had declined the application to adduce further evidence. On the issue being raised by Marton, the Full Court set aside the summary judgment and remitted the matter for further consideration by a Master. When the matter came on for further consideration the forgery issue was the major defence raised by Marton. Master Bredmeyer rejected Marton's assertions about the two documents, effectively coming to the same decision as Heenan J had done. Summary judgment was entered once again. However, that decision, too, is under appeal in FUL 98 of 1998. Similar considerations arise in the appeal in FUL 98 of 1998 and the cross-appeal in FUL 190 of 1997.

17 This background is relevant to both appeals. We will deal first with FUL 190 of 1997 and then move to FUL 98 of 1998.

18 His Honour identified the primary question as being "whether cl 6.6 created an equitable mortgage or whether it created merely a personal covenant". That is correct so far as it goes. The appellant did not challenge the finding that Evenwood was the holder of an equitable mortgage. But the subsequent, and perhaps more important, question is the effect of the several transactions on priorities as between the holders of competing interests.

19 In relation to the February 1996 arrangements the trial Judge made these comments:

"No thought seems to have been given at the time as to how, or even whether Marton's interest in the Forest Hill property would be affected. He was not a party to the February deed and did not know about it until much later.

Clearly the purpose of the February deed was to enable [Hillboi] to take security over McGrath's interest in the Forest Hill property in priority to any claim by [Evenwood]. But that purpose is not expressed in the document. Clauses 3 and 5, when read together, show that it was not an agreement that the security of [Hillboi] would take priority to the security of [Evenwood]. Rather it was an agreement that [Evenwood] would accept one security in exchange for another.

The undertaking by [Evenwood] expressed at the beginning of cl 3, not to take any steps to enforce cl 6.6 of the September deed is clear enough. But the later words 'that cl 6.6 will be of no further effect' are difficult to understand. If cl 6.6 were to be 'of no further effect' upon the execution of the February deed, the undertaking at the beginning of cl 3 would be superfluous: [Evenwood] would not have been able to enforce cl 6.6. In my opinion cl 3 must be interpreted as an agreement by [Evenwood] that as from the time of execution of the February deed it would not take any steps to enforce the equitable mortgage granted by the September deed and that, on the performance by McGrath of his undertaking to grant a mortgage over the Crystal Brook property, [Evenwood's] mortgage over the Forest Hills property would be of no further effect."

20 There are some extraordinary aspects to this entire transaction. The February deed has the virtue of brevity but it is drafted in a most unsatisfactory fashion. We have already alluded to the tension brought about by the definition of "Borrower". It is also most surprising that neither FFF nor Marton were made parties. Quite how the obligations of FFF could have been enforced against it when it was not a party is difficult to fathom. In failing to make Marton a party, those who were parties ran a grave risk of defeating the security to which Marton could have had recourse if he were called on to pay under the guarantee. According to conventional principles of the law relating to sureties, this might have had the effect of discharging Marton from his obligations. However, cl 6.3 of the September deed is cast in very broad terms and the issue of discharge might not have arisen. There is no need for this Court to look further at the matter. It may be inferred that the real reason why Marton was not included in the February deed is that, by then, he and McGrath had fallen out.

21 Be that as it may, the task of the trial Judge was to interpret the February deed according to its tenor. The task now confronting this Court is whether his Honour erred in arriving at the conclusion that he did.

22 To appreciate the competing claims and positions of the various parties, it is useful to examine the Evenwood Fund and the effect on the parties of various potential outcomes.

23 As this is for sake of illustration only, we will use rounded figures. They approximate the position as at the date of the hearing of the appeal. The Fund stood at $760,000. The amount due to Evenwood under the loan arrangements (including accrued interest) was $440,000. The McGrath debt to Hillboi was $340,000.

24 If the Evenwood mortgage continues to exist and has priority over the Hillboi interest, the distribution of the Fund would be:

25 Hillboi does not purport to say it has a claim against Marton. This would leave McGrath, who is apparently without assets, solely liable to Hillboi for the deficit.

26 If the Hillboi interest has priority over the Evenwood mortgage or if that mortgage has been discharged the distribution of the Fund would be:

27 Under this scenario, Hillboi would be satisfied in full. Marton and McGrath would be liable on their personal guarantees to Evenwood for the unsecured deficit. In Marton's case that, of course, is subject to the argument whether he is bound by the September deed. In any event, it would be to Marton's advantage if the Evenwood mortgage were to have priority because it would then be unlikely for there to be a deficit that he would have to fund. His position would be advanced even further if his cross-appeal were to succeed. In that case both Evenwood and Hillboi could have resort only to McGrath's interest in the Fund.

28 FHRI applied to be joined as a party to the originating summons and as an appellant in this appeal. The application arises in this way. In commenting on assignment by Hillboi to FHRI of the option to acquire the McGrath interests and the exercise by FHRI of the option his Honour said:

"As I understand the evidence, by reason of the transfer to [FHRI] of McGrath's one-third share in the property the loan to him of $280,000 was discharged."

29 Counsel for the appellant (who also appeared for FHRI) submitted that while this finding was not essential to the reasons, it may not be correct. However, as will appear later, the issue is of some importance in the disposition of the appeal. Gurfinkel v Bentley Pty Ltd [1966] HCA 75; (1966) 116 CLR 98 is authority for the proposition that a conveyance or contract of sale absolute in its terms, which is, in reality, a security for the advance of money, will be treated in equity as a mortgage. The borrower (vendor) will be treated as having an equity of redemption that will last right up until the point of foreclosure. Here, the evidence suggested that the option to purchase granted by McGrath was protective of the loan made to him by Hillboi and, accordingly, it could well be treated as a mortgage in respect of which the court could intervene at any time prior to registration of the transfer. It follows that FHRI, being the transferee at the end of the chain of loan, contract of sale, option, assignment, default, exercise of option and recipient of an executed transfer is affected by considerations relating to the priorities of the respective interests. It has a legitimate interest in the determination of these questions and was a party that ought to be before the Court.

30 Counsel for Marton opposed the joinder. It was, he submitted, no mere passive joinder for the sake of completeness but was designed to advance the legal position of FHRI. The factual circumstances on which it was based were not, he said, canvassed before Heenan J. They could have been, especially as Lyons was the guiding mind behind both companies. As they were not, considerations such as those in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 arose. Counsel also submitted that the interests of Marton would be adversely affected by the joinder because they might have an impact on his right to seek contribution from McGrath, should that be pursued.

31 We find the arguments raised by the appellant in favour of joinder compelling. No action has been taken to impugn the interest that McGrath held in the Forest Hills land or his dealings with FHRI in relation to it. In the absence of such steps it must be taken that FHRI has a claim to an interest under those arrangements and thus a legitimate interest to protect. It is clear that the "chain" of which counsel spoke was addressed in evidence and in findings made by the trial Judge. The categorisation of the arrangement as essentially one of security was not addressed in that form but that is essentially a question of law. The factual basis was always there. In relation to contribution proceedings, we are not aware that at any time during this saga has such a prospect been aired. Nor has the basis of the feared impact of the FHRI involvement on rights of contribution been developed.

32 For these reasons, we would grant leave for FHRI to be joined as a co-defendant in the substantive proceedings and as a co-appellant in this appeal. The joinder having been made, counsel made it clear that FHRI took no different a stance from that advanced on behalf of Hillboi on any issue.

33 There are two grounds of appeal. First, the appellant contends that the trial judge erred in failing to find that Evenwood's equitable mortgage was not discharged by the terms of cl 3 of the February deed. Secondly, the trial judge erred in finding that by cl 3 of the February deed Evenwood agreed its equitable mortgage would cease to have effect only on the grant by Marton and McGrath of a mortgage over the Crystal Brook land.

34 At the hearing the appellant applied for leave to amend its notice of appeal by adding a third ground. The contention made in the additional ground is that even if Evenwood's equitable mortgage was not discharged by cl 3, it had nevertheless lost priority to Hillboi's interest in the land by reason of Evenwood's conduct in executing and allowing distribution of the February deed.

35 Once again, the characterisation of the circumstances in terms of priorities was not addressed before the trial Judge. While it is not phrased in this way, the further ground smacks of an estoppel argument. It alleges conduct of Evenwood which ought to lead to a conclusion that priority had been deferred. As counsel for Evenwood pointed out, there was no significant examination of the circumstances surrounding the events of February 1996. However, we note that Evenwood's notice of contention (to which we are about to turn) seeks to characterise the February deed as a "priority agreement". In our view the issue of priorities is not irrelevant to the questions raised in the appeal, particularly ground 2. If the Evenwood mortgage was not discharged by the February deed then the construction issue raised by ground 2 is one of priorities. As will appear later, we think the appeal can be disposed of on the construction issue. Accordingly, it will not be necessary formally to consider the issues raised by the proposed additional ground of appeal.

36 Evenwood has filed a notice of contention in which it seeks to support the trial Judge's conclusion on an alternative ground. Evenwood says that the February deed was a priority agreement whereby Hillboi's equitable mortgage dated 23 February 1996 was afforded priority over that of Evenwood but that Hillboi's mortgage was discharged by set-off on the exercise of the option in October 1996. It follows, according to the argument, that on discharge of the moneys owed under Hillboi's mortgage the subject matter of the priority agreement ceased to exist.

37 Then there is the cross-appeal filed by Marton. He attacks the trial Judge's refusal to allow him to adduce evidence that he did not sign or agree to the September deed. This is essentially the forgery argument to which we have already referred. Marton complains that had the additional evidence been before the trial Judge, he would have found that Marton had not executed the document. Accordingly, he could not, by the September deed, have given an undertaking to Evenwood to grant a mortgage. It follows that the trial Judge erred in finding that he (Marton) had given to Evenwood an equitable mortgage over his share in the Forest Hills land.

38 The general principles governing interpretation of contracts were summarised by Gibbs J in Australian Broadcasting Commission v Australasian Performing Rights Association [1973] HCA 36; (1973) 129 CLR 99 where his Honour said, at 109 - 10:

"It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust ... Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503 at 514, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437."

39 The paramount canon of construction is that the search is for the intention of the parties as embodied in the words which they have used. The court will not re-write the contract for the parties. In other words, the court stays within the four corners of the document except to the limited extent to which resort can be had to extrinsic evidence. In that respect, extrinsic evidence is largely that of the surrounding circumstances in which the contract came into being. The time-honoured dictum of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 352, is apposite:

"The true rule is that evidence of surrounding circumstances is admissible in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although ... if the facts are notorious knowledge of them will be presumed."

40 As Mason J pointed out, at 353, interpretation of a contract proceeds on the presumed, rather than the actual, intention of the parties. Evidence of the actual subjective intention of the parties is not admissible as an aid to construction if for no other reason than that their respective intentions are taken to have been superseded by and merged in the written document.

41 Some of the more recent English authorities might be interpreted as taking rather a more liberal view of the extent to which regard can be had to extrinsic evidence. We mention by way of examples Charter Reinsurance Co Ltd v Fagan [1997] AC 313, Mannai Ltd v Eagle Star Assurance Co Ltd [1997] UKHL 19; [1997] AC 749 and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 2 WLR 896. However, no argument to that effect was advanced before the Court. In any event, as will appear shortly, we are not sure that the evidence of surrounding circumstances is particularly helpful one way or the other.

42 There are only two parts of the factual matrix or surrounding circumstances that, we think, are pertinent to the construction issue. The first is the desire of Hillboi to take security that would rank third behind the National Australia Bank and Gimblett mortgages. At first glance this may seem like the subjective intention of Hillboi but we do not think it is. Apart from the fact of the $280,000 loan itself, it is the genesis of the February transactions. Evidence that the trial Judge accepted was that Lyons told McGrath of his desire to take a third ranking security. The evidence of Foster (a director of Evenwood) was that at a meeting with McGrath and a Mr Gaunt (the solicitor for Hillboi), Gaunt told him that the execution of the February deed "would free up McGrath to chase external finance". Although details of the proposed McGrath-Hillboi arrangements may not have been mentioned, the purpose of the deed must have been known to Evenwood, through Foster. There is no other explanation for Evenwood entering into the February deed than that it was aware of McGrath's need to be able to provide security and that it was prepared to accommodate them. Of course, that is not an end to the matter. It remains necessary to decide the terms on which Evenwood was prepared to afford McGrath this accommodation, which terms must be found in the language of the February deed.

43 The second factor is the relative positions of the two competing parties prior to the implementation of the February transactions. Counsel for Hillboi submitted that it was only necessary to look at the circumstances as they existed immediately prior to the transactions to get a pointer to the true construction of the document. Evenwood held priority over any interest that Hillboi might obtain by virtue of its proposed loan arrangements with McGrath. Evenwood was first in time and it had a caveat against the title to prevent a subsequent interest holder becoming registered without giving it an opportunity to intervene. Thus, its position was secure and it could retain its temporal priority unless it made a concession. From Hillboi's point of view it could not achieve its desired priority without an agreement from Evenwood to that effect. This, counsel submitted, implies a concession by Evenwood to afford priority in favour of Hillboi because otherwise there would be no need for the document.

44 The trial Judge construed the words in cl 3 "will be of no further effect" as coming into operation prospectively or conditionally and that unless and until the undertaking in cl 5 was fulfilled, cl 6.6 of the September deed continued to apply. Put in a slightly different way, the subsequent mortgage that was the subject of the prospective promise in cl 5 conditioned the operation of cl 3. If this is correct, the concluding words of cl 3 should be understood as if it read: "cl 6.6 will be of no further effect once the mortgage under cl 5 has been granted".

45 The neat question raised by this appeal is whether his Honour was correct in deciding that cl 3 would take effect prospectively or conditionally or whether, as the appellants contend, it was of immediate or instant application.

46 We accept the appellant's contentions. The trial Judge seems to have approached it on the basis that it came in two separate parts. The first part was the undertaking not to enforce cl 6.6 and the second was the stipulation that cl 6.6 would be of no further effect. That his Honour seems to have approached it in this way appears from the comment that if cl 6.6 was to be of no further effect upon the execution of the February deed the opening words of cl 3 would be superfluous. But we are not sure that this result follows. We think it is necessary to read the whole of cl 3 together. In our view there is only one aspect to it, namely the deferment of Evenwood's priority to enable McGrath to accommodate the security requirements of the new lender. This is implicit in the words "cl 6.6 will be of no further effect". There is no warrant for giving any separate or different meaning to the opening words. The two parts flow neatly as a whole and there is no tension between them.

47 If, as the trial Judge found, the purpose of the February deed was to enable Hillboi to take security over McGrath's interest in priority to the claim of Evenwood, it would not have been achieved by deferring the operation of cl 3. Evenwood had no need to take any action in order to preserve the status quo. It already had priority. There would be no point in the February deed unless the common intention of the parties was to achieve a particular result. By entering into the February deed in the way it did, Evenwood was taking the risk that the substitute security might not be forthcoming. This may seem a little surprising in a commercial sense but it appears to follow from the language of the deed. What, we think, is the proper construction of the February deed is this. It documents an arrangement whereby McGrath offered Evenwood a substitute security as regards his guarantee and, in return, Evenwood agreed that its pre-existing security was of no further effect.

48 There are competing incongruities in the commercial aspects of this transaction. On the one hand, why would Evenwood give up its pre-existing security until the substitute security was in place? On the other hand, why would Hillboi advance the money before it was assured of the priority it was demanding? In the end we think regard to these factors may not be helpful. Regard must be had to the plain meaning of the words used. We think they should be construed as having immediate effect. It follows that ground 2 of the grounds of appeal has been made out.

49 This conclusion makes it unnecessary to consider whether there is any additional or further consideration brought into play by the proposed additional ground 3 of the grounds of appeal.

50 In ground 1 of the notice of contention Evenwood asserts that, on its proper construction, the February deed is a priority agreement between Hillboi and Evenwood. That cannot be correct as Hillboi was not a party to the deed. Counsel for Evenwood acknowledged this and advanced the argument on the basis that this was the ultimate effect of the document as a matter of fact. The gravamen of the argument is that when, on 18 October 1996, FHRI exercised the option following McGrath's default the moneys owing under the equitable mortgage were discharged by set-off. There was, therefore, nothing owing to FHRI (or Hillboi) in respect of which it could assert a claim against the Evenwood Fund.

51 The rights which Hillboi obtained by virtue of the 23 February 1996 arrangements all depend on the existence of prior encumbrances. So far as Hillboi was concerned, the prior encumbrances were the National Australia Bank and Gimblett mortgages. This much appears from the transfer of land document which listed only those two securities as prior encumbrances. We have already concluded that the effect of the February deed was to discharge the Evenwood mortgage to the advantage of the Hillboi rights. Those rights were assigned to FHRI which, in turn, became entitled to be the registered proprietor of the McGrath interests by reason of the exercise of the option. It must follow that FHRI would be entitled to be registered as the proprietor of that interest in priority to any residual interest of Evenwood. Ultimately the land was sold and is now represented by the moneys in the Evenwood fund. It seems to us that FHRI as an assignee of Hillboi can assert a legitimate claim to have its interest satisfied from the fund in priority to the claim of Evenwood.

52 The transfer document that was executed following the exercise of the option shows the consideration as $296,338, which appears to be the principal sum of $280,000 plus some accrued interest. There was other evidence to suggest that this may not have covered all of the moneys owed by McGrath to FHRI. Evenwood now argues that by taking the transfer, the purchase price was set off against the debt, thus discharging the debt. We think the answer to this argument lies in the proposition that the arrangements between Hillboi, FHRI and McGrath remained executory. We have already touched on this point in discussing Gurfinkel in the context of the application by FHRI to be joined as a party. The set-off may well have taken effect on registration of the transfer. Had registration occurred the interests of FHRI as transferee would have taken priority over any Evenwood interest as a consequence of registration under the Transfer of Land Act 1893. But that did not happen because of the existence of caveats, including that lodged by Evenwood. Any attempt by FHRI to have the caveat removed so as to permit it to register the transfer would have raised exactly the same issues: which of them had priority? It seems to us, therefore, that the claim under the equitable mortgage has survived following the exercise of the option and the same priority arguments apply to the Evenwood Fund.

53 It follows that we do not think the arguments raised in the notice of contention have been made out.

54 The background from which the cross-appeal arises must be borne in mind. We have already set it out.

55 It must also be borne in mind that the cross-appeal is against the trial Judge's decision refusing leave for Marton to adduce further evidence. What must be looked at is whether the trial Judge erred in coming to that conclusion and that the error is such that this Court should now intervene. It is necessary to look closely at what occurred in the proceedings before the trial Judge.

56 The substantive proceedings were heard on 1 and 2 December 1997. The trial Judge reserved his decision. The parties were advised that the decision would be handed down on 16 December 1997. On the morning of 16 December 1997, Marton's solicitor came to court armed with an affidavit sworn by Marton on 8 December 1997 and made an oral application "to tender this affidavit as evidence in the proceedings, notwithstanding the fact that evidence has been terminated in the proceedings".

57 In the affidavit, Marton says that on 2 December 1997 he went to the offices of the Administrator of FFF and examined some documents. He saw what seemed to be an original copy of the September deed. Later that evening, he compared the original with the copy of what purported to be the same document and which had been used in evidence both in these proceedings and in the application by Evenwood against him on the guarantees. He says there are differences between the two versions. In par 10 of the affidavit he says:

"Most importantly, I saw immediately that the signatures, which were purportedly mine, were not my signatures at all, but appeared to be a poor tracing or a poor attempt to copy my signature.

I believe that my signature must have been fraudulently forged onto this copy of the document."

58 The trial Judge commented that he found the affidavit confusing and asked what relevant material it contained. The solicitor said it tended to show Marton was not a party to the September deed but conceded that this was the first time the issue had been raised. Certain exchanges occurred between the trial Judge and Marton's solicitor which, despite their length, we believe we should set out:

"HEENAN J: What your client says that he inspected was not necessarily the original of the deed, was it?

GORDON, MR: Yes, he says that it bore an original of his signature. The document he inspected in the office of Messrs Charters bore an original of his signature.

HEENAN J: Mr Gordon, the matter of identity of the document is a problem. This matter has proceeded so far on the basis that there was no dispute as to your client's execution of the deed and so there is no evidence before the court as to how many copies were signed. I am not even sure that an original was produced to the court. ... I don't know what documents they are and I don't know that your client's affidavit is capable of showing that the document alleged to have been signed by the parties was one of those that he has inspected.

GORDON, MR: All we seek to do, your Honour, is say that the document that is in evidence dated 4 September 1995 on which the plaintiff relies to assert its rights was not signed by my client.

HEENAN J: Well, I know, you told me that earlier, and my difficulty that I have tried to express to you is that I don't see at the moment that the contents of your client's affidavit support that, and the difficulty is identification.

GORDON, MR: Your Honour, we would say that - my client says he signed one deed and he gives evidence of that. ... It is an inference from the evidence he gives that the deed that he executed is that presently in the possession of Charters and Co. He says he signed one deed. He has seen one with an original signature on it, therefore he assumes quite reasonably that that is the deed he executed.

HEENAN J: You see, your client says that he executed a copy of the deed. Now, as Mr Metaxas has pointed out, it would seem that the contents of the deed that your client executed are virtually the same as the contents of the deed upon which the parties have relied. Do you agree that that's so?

HEENAN J: So what does it matter, Mr Gordon, that your client says that the copy that he signed was witnessed by someone other than a person who witnessed the copy upon which the parties rely?

GORDON, MR: It may not ultimately matter, your Honour, but it is for the plaintiff to prove its case and that second deed is not yet in evidence, nor has it been read or relied upon by any party. As things stand, in our submission, if your Honour were to find that the deed of 4 September 1995, on the evidence of Mr Marton, was not signed by him, then your Honour could not make the orders that the plaintiff seeks.

HEENAN J: Mr Gordon, your client says a deed of 4 September 1995 was signed by him and as I understand it the contents of that deed are, for all practical purposes, the same as the contents upon which the parties rely.

GORDON, MR: The terms are similar, there's no doubt, but it is true that no party, and, I must confess, even for our party, has turned a mind to the question of whether or not the effect of the words, which are different in the new deed - - -

HEENAN J: Mr Metaxas has identified the differences and they don't really seem to change the meaning as far as I can tell.

GORDON, MR: Your Honour, in our submission we don't get there yet. We don't get to a comparison of the deeds.

HEENAN J: Well, I'm asking you to get there now, because I don't wish to engage in an exercise that proves to be fruitless in the end. ... At the moment I don't see any point in agreeing that the affidavit should be tendered in evidence, Mr Gordon. Is there anything more you wish to say about that aspect of the matter?

HEENAN J: My difficulty is this: how is it going to help the court to determine the issues presently before it to allow your affidavit to be accepted and for the case to be reopened? If the case is reopened what is the point if your client admits having executed a document, the contents of which are, for all practical purposes, the same as the document as to which I have already heard argument and reached a tentative conclusion?

GORDON, MR: Your Honour it goes as to helping the court. The matters in issue in this have been largely as between [Evenwood and McGrath and Hillboi]. This matter goes only to the issues joined between [Evenwood and Marton], of which there has been, until now, little controversy."

59 We should add that later in the proceedings that morning counsel for Evenwood produced an original signed copy of the September deed. It was inspected by Marton and the trial Judge was told: "My instructions remain the same, that the signatures are not that of [Marton]". The document there referred to was produced by Foster. The inference is that it was the original, a copy of which had been adduced in evidence by Evenwood. It does not detract from the proposition that there was a version of the September deed which bore what Marton conceded to be his signature.

60 The trial Judge refused the application. In the course of delivering reasons for that refusal his Honour said:

"Now, the Court has been asked, on Mr Marton's behalf, to accept into evidence an affidavit which he has sworn on 8 December tending to show that his signature in the deed of September 1995 was a forgery. Mr Marton has asserted that the signature was not his and it follows from that that his assertion is tantamount to an allegation of forgery on the part of someone.

If the affidavit were accepted in evidence it would necessarily follow that further argument would be required. Possibly the taking of evidence viva voce also would be required. Of course, if the document has been forged and the court has been misled that is a very serious matter indeed, but even if the contents of the affidavit were accepted into evidence, in my view they fall far short of providing even a prima facie basis for a conclusion that the signature in question was forged.

In essence, for at least two reasons, I have decided that the affidavit should not be admitted into evidence, but should remain on the court file. Those reasons are first, in my opinion, the contents of the affidavit itself fall [sic] far short of a prima facie case that the signature on the document in question was forged and, secondly, it is far too late for the allegation to be raised.

In these proceedings and in other proceedings, I have been told from the bar table, Mr Marton has impliedly accepted that the signature was his. Of all people he should have known whether or not that was so. I have said that there were two reasons.

I recall, of course, that there is a third and that is that, as I understand it, it is not contested by Mr Marton or on his behalf that the substance of the document which has been accepted by the court is any different from the substance of the document which Mr Marton acknowledges that he has signed. For those reasons the application is refused."

61 Counsel for Marton submitted that the trial Judge was wrong in relying on the lateness of the application as a reason for refusing it. He also submitted that the conclusion that the contents of the affidavit fell short of establishing a prima facie case that the signature was forged was wrong. That might have some merit but again we do not think it is determinative.

62 Earlier in these reasons we set out rather lengthy exchanges from the transcript of the proceedings on 16 December 1997. We think it was important to do so because a clear understanding of the way the application for leave to adduce further evidence was advanced is necessary for the proper disposition of this appeal. In our view it emerges clearly from the exchanges between the trial Judge and the solicitor on 16 December 1997 that the most important consideration was the probative value of the material included in the affidavit and its likely impact on the outcome of the proceedings. Whatever else might be said, Marton was obliged to seek the indulgence of the court effectively to re-open his case and to adduce further evidence. This called for the exercise of a discretion. The discretion is at large but the overriding factor is the interests of justice. The trial Judge must balance the interests of the parties by considering the prejudice that might be caused and whether, by adjournments, costs orders and the like, prejudice that might otherwise flow can be avoided. The judicial officer must also bear in mind the case flow management principles and the interests of the public in the proper, efficient and timely administration of justice. It seems to us that at all stages of that balancing process the probative value of the material sought to be adduced and its likely effect on the outcome of the case is a relevant consideration. In our view his Honour was entitled to take it into account. Similarly, the lateness of the application and its effect on the course of the proceedings was a relevant, though not necessarily determinative, consideration.

63 There was a clear concession made to his Honour that Marton had signed at least one version of the September deed. It was not suggested that he was not bound by that version of the deed. We will assume (although we agree with the comment made by the trial Judge that the affidavit is a little confusing) that this is the version that is part of Annexure "AM2" to the affidavit sworn 8 December 1997. The trial Judge had before him written submissions which detailed the variances from one version to the other. Marton had himself listed them in par 12 of his affidavit. The trial Judge, in the course of argument, made the comment that the contents of the deed which Marton conceded he had signed were "virtually the same as the contents of the deed on which the parties have relied". When asked whether he agreed with that comment Marton's solicitor said: "Yes, your Honour". A little later he said that "it may not ultimately matter". In other words, the purpose of the affidavit was to raise the issue of forgery but no attempt was made to convince the trial Judge that (assuming the proper version was Annexure "AM2") any different result would or even might flow in the substantive proceedings if that version were in evidence.

64 We have compared the version which, apparently, was in evidence (Appeal Book 18 to 27) with that contained in Annexure "AM2" (Cross-Appeal Book 30 - 39). Bearing in mind the issues on which the parties were joined, it seems to us that the only differences that could conceivably bear on the questions raised in the substantive proceedings were those in par 6.1 and par 6.6 of the deed. Having considered those two provisions we are forced inevitably to the same conclusion as that arrived at by his Honour, namely that there are no differences of substance.

65 We have not been persuaded that the trial Judge approached the application to adduce further evidence in a wrong manner or that, for any other reason, his discretion miscarried. We think that on the materials before him and in the light of the concessions that had been made, his Honour was correct to refuse the application.

66 We would allow the appeal and dismiss the cross-appeal. So far as we can see neither before the trial Judge nor in the notice of appeal did Hillboi seek alternative declarations in its favour. Counsel should be heard in that respect.

67 We now turn to consider FUL 98 of 1998. Much of what we have already said is relevant to the second matter but there are some specific issues that need to be considered.

68 This is an action for debt. The statement of claim pleads the September deed and the loan to FFF under it. There is then a plea that under the September deed Marton and McGrath jointly and severally guaranteed repayment by FFF of the moneys owing under the deed. Neither FFF nor the guarantors had paid any of the moneys due to Evenwood. It therefore claimed the amount due, namely $301,261 and interest under the guarantees.

69 In his reasons for decision, the Master sets out the evidence of the circumstances in which the September deeds (both versions) were signed and the moneys advanced to FFF. He then recites Marton's account of how he came to be aware of the existence of the two versions in December 1997 and his denial that the signature on the version that was in evidence in the first summary judgment application (and, we would add, the proceedings in CIV 1724 of 1997) was his signature. This version of the September deed is referred to in Master Bredmeyer's reasons as "the second deed".

70 The Master concluded, although without unbridled enthusiasm, Marton's evidence raised "a triable issue of fact as to whether he had signed the second deed or not". He then went on to consider whether he should give leave to defend and, if so, on what terms.

71 The Master had referred to the specific differences between the two versions of the September deed in a way which accords with our own assessment of the documents. He noted that cl 6.6 was of no significance in this action because Evenwood was not suing under that clause. The Master's conclusion appears clearly in this passage from the reasons:

"I bear in mind the defendant's submissions on the caution which must be taken before summary judgment can be entered against a defendant which I accept as an accurate and useful statement of the relevant principles. On the totality of the evidence which is now before me I consider that the defendant has not raised any issue of law or fact that needs to be tried, nor has he raised any other reason why there should be a trial of this action. On the totality of the evidence, which is much greater than before me previously, it is clear that the $300,000 was advanced on 5 September on the security of the first deed. Foster is wrong in saying that the money was advanced on the security of second deed. The defendant admits signing the first deed. It is good as against him, although the other parties - ie Evenwood and McGrath - novated it. McGrath's obligations as guarantor are now more accurately expressed in the second deed. For him the second deed may well replace the first deed. Marton signed the first deed. He claims certain representations were made to him prior to signing, that he did not have an opportunity to read the deed, and did not know that, in signing it in two places, he was giving a personal guarantee, etc. I ruled against those arguments in my first judgment and was upheld by the Full Court."

72 The notice of appeal contains several different grounds upon which the challenge to the summary judgment is advanced. However, the fundamental problem that Marton faces in this appeal is explaining away the effect of a deed which he acknowledges he has executed and which in all material respects, creates the same liability as does the impugned deed. We will deal with that issue first.

73 There is no doubt, on the evidence, that the first deed was executed by each of Evenwood, FFF, McGrath and Marton. The affidavit material suggests that the second deed came into being because Foster, on behalf of Evenwood and notwithstanding the execution of the document by Evenwood, required some changes to the terms. We will assume for the purposes of this appeal that Marton did not sign the second deed but that McGrath and Evenwood did.

74 Counsel for Marton argued that in these circumstances there had been a rejection by Evenwood of the first deed and, as Marton had never signed the second deed, it did not bind him and he was not liable on it. There was, therefore, no document on which Evenwood could rely which bound Marton to answer for a default of FFF in its obligations to Evenwood. It took quite some time at the hearing of the appeal to tease out the exact nature of the defence that Marton was saying would arise from these factual circumstances. In the end, it was summarised by his counsel in these terms. As soon as he became aware that the second deed was a forgery (December 1997), Marton rejected it. He did so clearly in his affidavit sworn 8 December 1997 in CIV 1724 of 1997. The forged deed was the one on which Evenwood had sued. The forged deed contained a proposal, in effect, to abandon the terms of the first deed and enter into a new deed. The preparation and execution by Evenwood of the forged deed was a repudiation of the first deed. Marton elected to accept the repudiation. All of this raised, at very least, a triable issue.

75 The problems are compounded by the fact that, in the course of the appeal, Evenwood applied for leave to amend the statement of claim. The proposed amendment pleaded a demand under the guarantee. This was to remedy a deficiency that Master Bredmeyer had pointed out at first instance. But there was a more substantive amendment. Paragraph 10 of the minute is in these terms:

"Further or in the alternative to paragraphs 2 to 9 hereof the plaintiff pleads that under a deed made in or about September 1995 ("the second deed") between the plaintiff, the defendants and [FFF] the plaintiff agreed to advance to [FFF] a principal sum of $300,000."

76 The balance of the proposed amended pleading then effectively repeats the pleas made in respect of the deed originally relied on. If the amendment were to be allowed, Evenwood would maintain its reliance on the second deed (par 2 to par 9) but assert a further or alternative claim based on the first deed (par 10 to par 16).

77 The application to amend was opposed. In the context of the summary judgment application, the opposition was based on two grounds. First, that in relation to the claim based on the first deed there was no affidavit complying with O 14 r (2). Secondly, it did not alter the fact that the affidavit evidence raised a triable issue whether the first deed had been rejected by Evenwood in the sense outlined above. During the course of the hearing the Court granted leave to amend the statement of claim (see transcript 119). However, we wish to say something about the two issues raised by counsel for Marton in opposition to the amendment.

78 We will deal with the second of those issues first. The factual position is that first deed was signed on 4 and 5 September 1995 and bears the former date. The money was advanced on 5 September 1995, after the signing of the first deed. In September and October 1995 there was correspondence between the solicitors relating to the changes or altered terms. Eventually the second deed was signed (by whoever did sign it) and it is dated 4 September 1995. If it be the case that the second deed was not signed by Marton then, as between Marton and Evenwood, it has not come into effect. In those circumstances, where the money had already been advanced, a finding that the lender had abandoned the first deed in the absence of a binding substitute security would be far-reaching indeed. Evenwood obviously relied on the guarantees provided for in the deed in making the advance to FFF. There is no evidence of reliance (in any sense that would be relevant to a claim of abandonment or repudiation) by Marton.

79 There are some very interesting questions raised by the exact characterisation of the position as between Evenwood, FFF and McGrath under the second deed, again assuming that Marton did not sign it. It has been put in terms of novation. Quite what is the effect of execution by some only of the parties to a document in circumstances where the rights and obligations under it are said to have been novated, is not entirely clear. However, we do not think it is necessary to answer that question in this appeal because we are concerned only with the position as between Evenwood and Marton.

80 In our view Marton has not overcome the evidentiary and factual problems created by the fact that there is a deed (namely, the first deed) on which he is, at least prima facie, liable as a guarantor. If the amendment set out in the proposed minute were to be made it seems to us, on the materials presently before the Court, that there would be no arguable defence overall to Evenwood's claim. Even if the second deed does not create an actionable liability (because Marton did not sign it and is not bound by it) the first deed does. This is why we joined in the order permitting the amendment. Subject to resolution of the issue arising under O 14 r 2 and subject also to disposition of the other grounds of appeal (to which we will come shortly) we think the summary judgment order should be allowed to stand.

81 We respectfully adopt the interpretation of O 14 r 2 arrived at by Ipp J in Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536 at 550, where his Honour said, at 550:

"While the ordinary practice undoubtedly is that a failure to comply with O 14 r 2(1) will result in an application for summary judgment being dismissed, there is ample and longstanding authority to the effect that that consequence is not inevitable. It all depends on the circumstances."

82 It would serve no useful purpose to try and list "the circumstances" in which the court would be inclined to depart from the "ordinary practice". Each case must depend very much on its own facts. We would, however, echo the sentiments expressed by Rowland J in Lill, at 539, namely that the court must recognise the grave consequences that may flow to a party against whom summary judgment is sought and that the parties (especially the applicant) must avoid "a casual approach" to the application.

83 In this case the situation in which this Court finds itself cannot be divorced from the history of the litigation. It has taken up an enormous amount of court time. The parties have had many opportunities to put their respective cases. The interests of the public in the efficient administration of justice, as well as the interests of the parties as between themselves, is a legitimate concern that can be taken into account in deciding how best to proceed. Each time the parties have come before the court (whether at first instance or an appeal) the ground has shifted somewhat. We think, though, that as a result of the several hearings devoted to these appeals the battle lines are now clear. This means that the Court can assess the relative merits of the arguments put forward (albeit without the full range of factual and evidentiary material) with some degree of confidence. Taking everything into account, we incline to the view that the absence of an affidavit which complies with O 14 r 2(1) (so far as concerns the amended statement of claim) ought not deprive Evenwood of the ability to hold the summary judgment that it has obtained.

84 In the first ground of appeal Marton contends that the Master answered the wrong question. It is said that he determined how there came to be two deeds in existence rather than whether that question raised a triable issue. We do not think this is correct. It is true that the Master said, at 3: "The Full Court has asked me to determine as to why two deeds are in existence and as to whether one affects the other. Pidgeon J, with whom Ipp J agreed, said at 12 that summary judgment can only be obtained in respect of a deed [Marton] signed". But Pidgeon J also said, at 12: "Nothing in these reasons is intended to preclude the Master from dealing in any way he sees fit with the new issues that have arisen". That is a reference to Marton v Evenwood Pty Ltd, unreported; FCt SCt of WA; Library No 980135; 27 March 1998. We think the answer to this ground of appeal lies in the comment, at 9 of the Master's reasons, that Marton's evidence raised a triable issue of fact as to whether he signed the second deed or not. He went on to say that he considered the evidence to be "shadowy". However, we are not persuaded that he applied the wrong test.

85 Grounds 2 to 7 are all concerned with the forgery issue and, in view of the conclusions we have already expressed on that matter, there is no need to address them specifically.

86 In ground 8 Marton complains that the Master erred in failing to find that, on the materials before him, there was no triable issue relating to agency, misrepresentation and misleading and deceptive conduct. There is no doubt what the Full Court in FUL 50 of 1997 decided. In so far as the Master had rejected potential defences based on representations said to have been made to Marton and on misleading and deceptive conduct, the Court upheld the decision: Marton per Pidgeon J at 1 - 10. The Court seems to have regarded the agency question as a "new issue" along with forgery. Counsel for Evenwood submitted that the affidavits relied on by Marton at the hearing before Master Bredmeyer in June 1998 contain no new material on any of the agency, misrepresentation or misleading conduct issues.

87 As we understand it, the misrepresentation argument arises in the circumstances set out in Marton's affidavit sworn 21 November 1996. It is that McGrath handled the negotiations for the purchase of the Crystal Brook land. He told Marton that the funds to acquire the land were "as good as in place", the proposed loan (from Evenwood) was a "good deal" and that they would not be risking their shares in the Forest Hills land if that were not so. In his April 1997 decision Master Bredmeyer held there was no triable issue on these points because, even assuming they were misrepresentations, there was no evidence that Evenwood or its solicitors were aware of the statements. We think we are correct in saying that the agency argument was not raised before Master Bredmeyer in April 1997. It was advanced before the Full Court in FUL 50 of 1997. It is to the effect that in his dealings with Marton concerning the loan McGrath acted as Evenwood's agent or at the direction of Evenwood. If that claim could be established Evenwood might be liable for the misrepresentations made by its agent.

88 This ground of appeal was not specifically addressed by counsel for Marton either in written or oral submissions. This makes it difficult for the Court to assess its worth. If the Appeal Book is a complete record, the evidentiary materials that were before the Master in June 1998 but had not been available when the first decision was made in April 1997 are contained in the following affidavits:

Sally McGrath, sworn 17 March 1998 (FUL 190 of 1997)

Lynn Jeffrey, sworn 31 March 1998 (CIV 2058 of 1996)

89 It can be seen that Marton did not present any new material specifically for use in CIV 2058 of 1996. In fact, the only affidavit prepared specifically for the second summary judgment application was that of Jeffrey. It was part of Evenwood's case. Of course, that does not mean that Marton could not rely on them but it is a little curious. We have perused those affidavits. We can see nothing that would advance the case previously made about McGrath misrepresenting the situation to Marton or that, if he did, Evenwood was aware of it. Nor can we see anything that would raise a triable issue that in his dealings with Marton, McGrath was acting as agent for, or at the direction of, Evenwood. Accordingly, the fact that the Master saw no triable issue on those matters is hardly surprising.

90 We have already indicated that we do not believe the novation question is material to the disposition of the matters in issue between Marton and Evenwood. Accordingly, ground 9 has no substance.

91 Marton sought leave to amend the notice of appeal by adding two further grounds. They relate to a further decision that the Master handed down on 14 July 1998. This judgment is consequential on the earlier decision. It relates to the payment of stamp duty on the September deed and the costs of the application for summary judgment. In our view, neither of the new grounds has merit.

92 Ad valorem stamp duty in the sum of $1,261.50 was assessed and paid on the second deed. On 12 June 1998 the first deed was presented to the Commissioner and was stamped with nominal duty on the basis that it was a copy of a deed which bore full duty. The obvious inference is that this was done so that the first deed could be adduced in evidence in the action. Strictly speaking, the imposition of nominal duty on the basis that the first deed is a copy of the second deed is not correct. However, the fact is that FFF was obliged to pay $1,261.50 to the consolidated revenue. It did not do so. Evenwood had no alternative but to pay the duty and it did so. It would be different if the claim had been directed to a refund from the Commissioner of the stamp duty that had been paid. But that is not the claim. The Master decided that the payment of the duty was "a legitimate cost incurred in prosecuting the action". In our view, and notwithstanding the fact there has been no finding that Marton signed the version of the deed that bears ad valorem duty, we think the decision is defensible.

93 The second of the proposed new grounds challenges the costs order that the Master made. We wish only to make the trite statement that a costs order is a discretionary one. This is a situation where the Master had the benefit of hearing the argument and assessing the evidentiary materials on two separate occasions. He has made a reasoned and considered decision on costs. Nothing has been advanced to convince us that his discretion miscarried.

94 We would therefore refuse Marton's application for leave to amend the notice of appeal. Evenwood filed a notice of contention in which it suggested that the Master's decision could be upheld by reference to the evidence of a handwriting expert that it had engaged. In the light of our other conclusions it is unnecessary to deal with the notice.