Horvath v Commonwealth Bank of Australia [1998] VSCA 51

Horvath v Commonwealth Bank of Australia [1998] VSCA 51 - VSCA 1998 case summary — Zoe

[26]

I should not doubt (with respect for the memory of Martin, J.) that the result in Percy v. Youngman was correct. It has received support in an essay by F.P. Hennessy, "Mortgages of Land by Infants", (1950) 24 A.L.J. 278, at 281 and in Baalman, Commentary on the Torrens System in New South Wales (1951), 155. Having regard, however, to the development of the law in the intervening period, the result might now be differently explained or justified. A contract to sell an estate or interest in Torrens title land, made by the registered proprietor who is a minor, will have immediate effect; and, fraud aside, registration of a transfer of the estate or interest sold will confer on the transferee, as against the minor, an indefeasible title unless the minor can resist the effect of registration by reference to some claim at law or in equity which binds the transferee. To say, merely, that the contract which justifies the transferee's registration, or on which the registration depends, has been avoided after the registration, or is voidable at common law, will not achieve a defeasance of the title which registration confers. So much is made clear by the decisions of Street, J. in Mayer v. Coe [1968] 2 N.S.W.R. 747, at 754 and Ratcliffe v. Walters [1969] 2 N.S.W.L.R. 146 at 151-3, which were approved by Barwick, C.J. in Breskvar v. Wall, supra, at 387, with whom Windeyer, J. (at 399) and Owen, J. (at 400) specifically agreed. Defeasance can only be justified (again leaving fraud aside) if the minor can point to a right in personam - that is to say, a right by which a legal or equitable remedy can properly be imposed upon and bind the transferee in favour of the minor by way of negating the claim of the transferee in the capacity of registered proprietor. Percy v. Youngman, however, did not deal with a contract by a minor to secure repayment of money lent or to be lent; and neither that case nor Coras v. Webb was concerned with a statutory provision which renders such a contract void, as opposed to a common law right to avoid a contract.

[27]

Although the arguments before O'Bryan, J. may have assumed otherwise, the expressions "personal equity" and "right in personam" in the present context are not in my opinion usefully indicative of anything other than a "claim in personam" of which the Judicial Committee spoke in Frazer v. Walker. Moreover it should now be acknowledged that such a claim in personam encompasses only known legal or equitable causes of action: Garafano v. Reliance Finance Corporation Ltd. (1992) N.S.W. Conv. R. 55-640, per Meagher, J.A., with whom Priestley, J.A. agreed; Grgic v. Australia & New Zealand Banking Group Ltd. (1994) 33 N.S.W.L.R. 202, at 223-3, per Powell, J.A.; Macquarie Bank Ltd. v. Sixty-Fourth Throne Pty. Ltd., supra; and cf. Pyramid Building Society (In Liq.) v. Scorpion Hotels Pty. Ltd. [1998] 1 V.R. 188, where the correctness of that view was assumed. Of course, equity always acts on the person; and it should scarcely be necessary to say that a claim in personam, whether legal or equitable, refers to a claim which avails against a specific person only because of the circumstances. Consistently with this notion, the Torrens system of title by registration "... does not interfere with the ordinary operation of contractual or other personal relations, or the effect of instruments at law or in equity": Groongal Pastoral Co. Ltd. (In Liq.) v. Falkiner [1924] HCA 54; (1924) 35 C.L.R. 157, at 163. The system is regarded, as Isaacs, J. explained in an oft-quoted dictum, "... as giving greater certainty to titles of registered proprietors, but not in any way destroying the fundamental doctrines by which Courts of Equity have enforced, as against registered proprietors, conscientious obligations entered into by them.": Barry v. Heider [1914] HCA 79; (1914) 19 C.L.R. 197, at 213. It does not seem to me to be possible to argue, a priori, that a privilege or benefit given to a minor by a statutory provision such as s.49(a) of the Supreme Court Act 1986 confers a right or claim in personam that will meet any and every claim of a registered proprietor under Torrens title legislation. In this I respectfully agree with Professor D.J. Harland who, in The Law of Minors in Relation to Contracts and Property (1974), at 114, wrote that -

[29]

I should be prepared to hold that, if ss.41, 42 and 43 of the Transfer of Land Act 1874 apply to confer on the respondent as against the appellant an interest in the land by registration of the mortgage, s.49(a) of the Supreme Court Act does not alone confer on the appellant a claim in personam which could defeat that interest. There is, however, an anterior question: whether registration under the Transfer of Land Act of a mortgage such as that which was executed by the appellant, a minor, is capable of effecting in favour of the mortgagee an interest in the subject land as against the minor. The question is not whether a prima facie indefeasible interest of the mortgagee can be met by a grant of relief to the minor by a court acting in personam but whether, by registration of the mortgage, the mortgagee derives an interest as against the minor at all. This question does not appear to have been considered below and we received no argument about it on the hearing of the appeal. The proper answer is to be determined by considering whether the relevant provisions of the Transfer of Land Act and the Supreme Court Act can stand together. I was at first attracted to the view that there was inconsistency between the two sets of provisions and that s.49, being a later enactment, should prevail. I am, however, persuaded by the reasons of the other members of the Court, which I have had the advantage of studying in draft, that the provisions should not be treated as inconsistent with each other. I respectfully adopt their reasons and need not add to them in that respect. The judgment for possession and the order for sale as against the appellant were accordingly justified by virtue of the registered mortgage. That is sufficient to defeat the appeal, although it appears that the relief granted by the learned judge to the respondent was not founded on the mortgage. The declaratory order made below that the mortgage "is void as against" the appellant, while now in strictness incongruous and inappropriate, will remain, there being no cross-appeal.

[30]

By its amended statement of claim the respondent sought alternative relief against the appellant that did not rely on the mortgage, namely a declaration that it was entitled to a subrogated right to a vendor's lien over the subject land. Because O'Bryan, J. had decided that the respondent had obtained an indefeasible interest by virtue of registration of the mortgage, and that the appellant was not entitled to rectification of the Register, it was not strictly appropriate that he should have dealt with the respondent's alternative claim for relief. Being an equitable claim, it was a true alternative which could not stand together with the right to rely on the mortgage. He did deal with it, however, and acceded to it. The basis for the alternative claim was that, because the advance of $40,000 made by the respondent to the Horvaths had been used by them to purchase the land, the respondent was subrogated to the lien that the vendor would have had if the purchase price had remained unpaid to the extent of the advance. O'Bryan, J. applied the decision in Nottingham Permanent Benefit Building Society v. Thurstan [1903] A.C. 6 which he held to be relevantly indistinguishable from the present case. In Thurstan the House of Lords upheld a decision of the Court of Appeal to the effect that a mortgage given to a building society by an infant in order to secure a loan made to the infant to purchase real property was void by reason of s.1 of the Infants Relief Act; but that, the loan having been applied to pay the purchase price for the property owed by the infant purchaser to the vendor, the building society was entitled by subrogation to such a lien as the vendor would have had as against the purchaser. The principle has been widely recognised. Lord Diplock in Orakpo v. Manson Investments Ltd. [1978] A.C. 95, at 106, treated the Court of Appeal in Thurstan's Case as having regarded it "as a classic case of subrogation to the unpaid vendor's lien"; and see Halsbury's Laws of England, 4th ed., vol. 28, paras.508, 556, 558 and 570; Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 3rd ed., 263-5; Sykes & Walker, The Law of Securities, 5th ed., 199-202; Mitchell, The Law of Subrogation (1994) 158-160; Voumard, The Sale of Land, 5th ed., para.4060; Fisher & Lightwood's Law of Mortgage, (Australian ed., 1995) para. 2.13. If the mortgage had not derived validity from its registration there would in my opinion be no reason not to apply here the principle that the House of Lords approved in Thurstan. A similar question had been extensively considered earlier by the Supreme Court of the United States, which reached the same conclusion as the House of Lords, in MacGreal v. Taylor [1897] USSC 152; (1896) 167 U.S. 688, a decision that was evidently not cited in Thurstan. Interestingly, both MacGreal and Thurstan were considered by Philp, J. in Coras v. Webb. Thurstan was not properly applicable there because the money lent had not been applied to the purchase of the subject land. MacGreal was a case (like Coras v. Webb and unlike Thurstan and the present case) in which a mortgage was avoided pursuant to an infant's common law right to do so. Philp, J. discerned from MacGreal, however, a principle that "... the common-law voidance did not exclude equity from giving effect to the avoidance by decreeing a modified restitutio which fully protected the infant's privilege". His Honour would apparently have been prepared to apply the principle that he discerned from MacGreal in order to require the plaintiff, by way of doing equity, to account to the mortgagee for the money lent in return for an equitable decree of rectification of the Register, had the plaintiff pursued a claim for it. We are not called on here to consider whether, by the adoption or adaptation of any comparable principle, the appellant might be required to account to the respondent, in order to obtain the rectification of the Register that he sought, for the advances of $220,000 that were not applied to the purchase price of the subject land. The respondent's claim based on subrogation to a lien was confined by its pleading to the unrepaid portion of the advance of $40,000 that was applied to the purchase price of the land, and interest thereon. It was agreed at the trial that the respondent's entitlement on that footing was $39,165 and interest from 21 May 1993 (when the Horvaths ceased to pay interest) to the date of judgment. O'Bryan, J. allowed interest at a rate of 13.2%, which worked out at $14,813, producing a total entitlement of $53,978.

[34]

The facts and issues are set out in the judgments of the other members of the Court. Their detailed analysis has relieved of the necessity of going through many of the issues and authorities. The first principal issue is whether before registration both the appellant's agreement to borrow and repay money and the related mortgage were made void by reason of the relief provision. The competing views are by no means simple, as the other judgments demonstrate. It is not inconceivable that a conclusion might have been reached by the courts over the years that avoidance of a loan contract would not in itself have any bearing on the validity or otherwise of a related mortgage: (that is, without having regard to any consequences which might flow from registration under the Act.) However, since at least 1902 it would appear that it has been accepted that the obligations under a mortgage are so closely bound up with a related agreement to borrow that, if the latter contract falls because the obligation is avoided by reason of a relief provision, or probably any other statutory provision avoiding a contract, then the related mortgage must likewise fall and cannot be enforced. This is what was held in Nottingham Permanent Benefit Building Society v. Thurstan [1903] A.C. 6, albeit that in that case and in subsequent cases it was held that the lender might succeed to and enforce the vendor's lien which the vendor otherwise would have had against the purchaser. I agree with what Tadgell, J.A. has said about this case. The principle was recognised, although distinguished, by the House of Lords in Orakpo v. Manson Investments Ltd. [1978] A.C. 95 and in Victoria in Evandale Estates Pty. Ltd. v. Keck [1963] VicRp 88; [1963] V.R. 647. A similar conclusion, based in part on English authority, was reached by the Supreme Court of the United States at about the same time in MacGreal v. Taylor [1897] USSC 152; (1896) 167 U.S. 688: reference was made to this case in Coras v. Webb [1942] St.R.Qd. 66 at 72-73.

[47]

Of course, the rule that later statutory provisions repealed earlier inconsistent statutory provisions requires for practical purposes that one must find an earlier and a later statute, and a relevant inconsistency, to which the rule might apply. If Parliament wishes to repeal a section it has only to do that or to say that it intends that consequence. There are cases of explicit inconsistency of which South-Eastern Drainage Board (S.A.) v. Savings Bank of South Australia [1939] HCA 40; (1939) 62 C.L.R. 603 may fairly be said to be an example. This cannot be said to be such a case. The other cases, where the issue arises, are those where it is asserted that there is an implied or implicit repeal by the passing of later inconsistent statutory provisions. There the alleged inconsistency and its consequences must be considered. That is what is here in issue. If the relief provision could be said to have been passed earlier than the Transfer of Land Act provisions, then little could be said in support of any contention that it should prevail. Here there is theoretically a problem raised by the practice of the Victorian Parliament, at least until 1958, of passing regular consolidating statutes. It is possible, as occurred here, that each relevant statutory provision has been passed a number of times. It would seem the preferred view that it is the most recent version of each provision with which one is concerned, notwithstanding that it may have been passed in identical terms many years earlier, but it is unnecessary here to examine the question: cf. Bennett v. Minister for Public Works (N.S.W.) [1908] HCA 50; (1908) 7 C.L.R. 372 at 378; Maybury v. Plowman [1913] HCA 43; (1913) 16 C.L.R. 468: cf. O'Connor: "Public Rights and Overriding Statutes as Exceptions to Indefeasibility of Title" (1994) 19 Melb. Univ. Law Review 649 at 658-659. Whether one looks to the first Torrens statute in Victoria in 1862 and the first Infants Relief Act of this State in 1909 or whether one looks to the present provisions in the 1958 Transfer of Land Act and in the 1986 Supreme Court Act, in each case the relief provision is contained in a later statute.

[50]

The answer to the question posed, as I would understand it, flows from a correct characterisation of the two statutes as consistent or inconsistent one with the other. There is a strong presumption that Parliament does not intend to contradict itself but rather intends both relevant acts to operate within their given spheres: Butler v. Attorney-General (Victoria) at 276 and 290. No earlier statutory provision is to be treated as repealed or derogated from by a later enactment unless an intention to do so must necessarily be implied, and ordinarily there must be a very strong basis supporting any such implication, for the Parliament is generally presumed to intend both provisions to operate without there being any such implicit repeal or derogation: cf. Saraswati v. The Queen [1991] HCA 21; (1991) 172 C.L.R. 1 at 17. Here, although there can be no doubt that, if not registered, the mortgage would have been unenforceable by the respondent because it was void by reason of the relief provision, that provision says nothing as to the effect of registration or the operation of any of the indefeasibility provisions of the Transfer of Land Act. It is directed to the enforceability of certain contracts. The respondent bank has conceded that it cannot enforce the loan agreement against the appellant. Nevertheless the better view seems to be that the word "void" was never intended to mean that the contract in question was totally ineffective: cf. Pearce v. Brain [1929] 2 K.B. 310 and Woolf v. Associated Finance Pty. Ltd. [1956] VicLawRp 10; [1956] V.L.R. 51 and see Greig and Davis, Law of Contract pp.779-780. Whether or not a different construction of the word "void" may have had other consequences (and the forgery cases suggest otherwise), the fact is in this case that the mortgage was registered in the conventional way under the Act. Whatever may have been the position before such registration, the legislature must be treated, subject to the presently irrelevant exceptions as to fraud and the like, as having given an immediately indefeasible title in the land to the respondent bank as mortgagee unless the relief provision should prevail as being relevantly inconsistent.

[55]

It is that critical characteristic which demonstrates why there is no relevant inconsistency in the present case. The only inconsistency which would be relevant would arise from a provision which directly or by implication denied the consequence of indefeasibility to registration either generally or in a specified circumstance. The fact that another statute declares a class of contract "void" is ordinarily of no significance once the instrument is registered. Before registration, as in the present case both contract and instrument (here the mortgage) may be taken to be void, as the relief provision requires. But, except in the case of fraud, or of any of the other relevant exceptions, that does not preserve the instrument (here the mortgage) from the consequences of registration. The relief provision says nothing as to that and one may envisage many transactions where that section operates in accordance with its terms. Before registration the appellant could have set aside both contract of loan and mortgage and restrained the respondent from registering the latter. In terms of the law of contract to which the relief provision (and the related provisions in the Supreme Court Act) were directed, both contract of loan and mortgage were void in the relevant sense and, if nothing more had occurred, the latter could not have been enforced against the appellant. Once registered, however, the mortgage took on the characteristics and had the effect of a duly executed mortgage, not because of its original contractual effects, but because as a matter of policy the Act created an immediately indefeasible interest in the land by way of mortgage in favour of the respondent. Of course registration has a number of consequential effects in that it makes the mortgage easier, or at least more certain, of enforcement but, for the purposes of the present appeal, the object of the relevant provisions of the Act is directed to certainty of title and they relate solely to the question of indefeasibility. About this latter question the relief provision had nothing to say. In those circumstances there was no relevant inconsistency for the relief provision never purported and was never intended to deny indefeasibility to a mortgage or other document once it becomes registered in the manner prescribed by the Act.

[75]

It appears well enough accepted that at common law an infant had the capacity to take, hold and dispose of real property before arriving at full age, subject to the relevant transaction's being voidable; that is, subject to the infant's having the power - or the privilege as it is sometimes called - of avoiding the transaction upon his or her reaching full age: see, for example, Kemp, Principles of Real Property in N.S.W. (1903) pp.77-78, Strahan, Law of Property (5th ed., 1908) p.373, Millard, Law of Real Property in N.S.W. (6th ed., 1948) pp.195-6, Moss, Sale of Land & Costs in N.S.W. (4th ed., 1967) pp.197-199, Williams, Title to Land (4th ed., 1975) pp.248, 250, Robinson, Transfer of Land in Victoria (1979) p.142 and, in Canada, Falconbridge, Law of Mortgages of Land (1942) p.23; see also North Western Rly Co. v. McMichael [1850] EngR 78; (1850) 5 Exch. 114, 155 E.R. 49, Edwards v. Carter [1893] A.C. 360 (an infant acquiring land) Duncan v. Dixon at 214 and Percy v. Youngman [1941] VicLawRp 61; [1941] V.L.R. 275 (an infant disposing of land) and in Queensland (where there is no equivalent to the Infants Relief Act) Coras v. Webb and Hoare [1942] St.R.Qd. 66. Indeed, land vested in an infant is "settled land" within the settled land statutes and one of the purposes of that legislation was to enable dealings with such land that were not voidable, but final and binding: Settled Land Act s.8, Dart on Vendors and Purchasers (6th ed., 1888) p.4, Hood & Challis' Conveyancing, Settled Land and Trustee Acts (7th ed., 1909) pp.329-333. Wolstenholme's Conveyancing and Settled Land Acts (10th ed., 1913) pp.108-9, Voumard, Sale of Land (1939) p.188. None of this appears to be directly affected by s.1 of the Infants Relief Act 1874 , or indeed by s.2, and if it be correct to distinguish between the "conveyancing part" and the "contractual part" of the mortgage under consideration on this appeal, is it not open then to conclude that, while the appellant could not be regarded (in face of the statute) as liable on the covenant to repay the money lent by the bank, that in itself affords no reason why the appellant must be taken to have lacked the capacity to create in the mortgagee a valid interest in the land by way of charge, albeit that the creation of that interest remained voidable at his instance upon the appellant's reaching adulthood? If an infant can alienate an interest in land though the transaction be voidable, why should an infant not have the capacity to charge his interest in land with the repayment of money, though that too be voidable in the sense described?

[86]

Thus, unlike Thurstan, the appellant's mortgaging of his interest cannot be said to serve no point once his own liability on the personal covenant is recognised as void by statute; for there are still persons liable on the personal covenants - the appellant's parents and co-owners. And, unlike Foulkes, it cannot be so readily concluded that the appellant's joining in that mortgage with his co-owners was necessarily to his prejudice. Both cases are therefore distinguishable and neither, in my opinion requires that the mortgage here be taken to be void by reason of the statute. If, as I have suggested, it is possible by distinguishing between the contractual aspect and the conveyancing aspect of the mortgage to treat the mortgage as not altogether void as against the appellant, then the mortgage would take effect as a charge over the appellant's interest in the land to secure the repayment by his parents of the money lent by the bank. The trial Judge rejected this result on the ground that it made the appellant liable on a contract of guarantee which s.49 made void. But with respect, is that so? The appellant in no wise became liable himself on the contract for the repayment of the moneys borrowed; he was not liable either primarily or secondarily, nor could he be because of s.49. In In re Application by Midland Bank Ltd. [1941] Ch. 350 a mortgage had been given to cover the borrowing of a third party and the mortgagor was recognised as having no personal liability for the mortgage debt, and in Re Conley [1938] 2 All E.R. 127 the Court of Appeal held a contract to be immaterial to the existence of a guarantee by deposit of documents. Can it not be concluded that the appellant created in the bank a mortgagee's interest in his share in the land, he being free to do so independently of s.49 - whether or not the giving of that mortgage amounted to a guarantee (even a contract of guarantee) of his parents' liability to make repayment? Just so long as he was not himself liable in contract to repay the money lent, at least arguably s.49 had nothing to say.

[110]

It is perhaps a nice question whether registration under the Transfer of Land Act 1958 serves in a case like the present to expose the appellant to liability on the personal covenants in the mortgage, but it is a question which was not argued. Section 46 of that Act does not apply; that operates only when land already subject to a mortgage is transferred to another. But s.75 implies personal covenants to pay and the like, unless (according to s.112) that implication is excluded "by express declaration in the instrument". I should have thought that such implication was sufficiently denied by the presence of express covenants to like effect in the mortgage instrument. By reason of s.49 of the Supreme Court Act the appellant is not liable on those express covenants, unless s.42 of the Transfer of Land Act operates to make him liable. Whether s.42 can be given that effect is a problem. Whilst s.42 is concerned only to confer a good title to an interest in land (and correspondingly to free the registered proprietor from claims in respect of the land), the title to a mortgagee's interest might be rather hollow if (as was the case in Thurstan) there is no underlying obligation on anyone to make repayment, in respect of which the mortgage can operate as security. On the other hand, it can be argued that the infant's contract to make repayment does not, in itself, create any interest in land: contrast Travinto Nominees Pty. Ltd. v. Vlattas [1973] HCA 14; (1973) 129 C.L.R. 1 at 16-18 and Mercantile Credits Ltd. v. Shell Co. of Aust. Ltd. [1976] HCA 9; (1976) 136 C.L.R. 326 at 338-9. Here, the appellant's parents remained obligated to make repayment and the bank makes no claim to force personal liability on the appellant in the face of s.49; so the problem of the infant mortgagor who is the sole borrower need not be pursued. Indeed, it would be undesirable to pursue it when the argument before us was necessarily limited, not only because of the position taken up by the bank in respect of the appellant's personal liability, but also because the appellant himself was not represented by counsel.

[111]

Thus far, I conclude that registration of the mortgage under the Transfer of Land Act was sufficient, by virtue of s.42, to confer upon the bank a good title to a mortgagee's interest in the appellant's share in the land of which he was a co-owner, to secure performance by his parents of their continuing obligation to make repayment according to the mortgage covenants. What then might be argued on behalf of the appellant against this result? First, can it be successfully contended that s.42 of the Transfer of Land Act is displaced - impliedly repealed pro tanto - by s.49 of the Supreme Court Act so that in a case where both might otherwise apply the latter prevails? In this State the provisions of the Transfer of Land Act derive from the Real Property Act 1890 of 1862 (Act No.140) and its amendment by Acts No.180 and No.223 which led in turn to the consolidating and amending Transfer of Land Statute of 1866 (see A'Beckett, The Transfer of Land Statute (2nd ed., 1883) pp.11-12, Guest, Transfer of Land Act (1895) p.viii, Wiseman, The Transfer of Land Acts (1925) p.vii) and that legislation, at least in original form, preceded the Infants Relief Act 1909 . (If it matters the same order may be seen in the modern equivalents enacted respectively in 1958 and 1986). Can it be said that the later Act prevails, according to the ordinary canon of construction leges posteriores priores contrarias abrogant (as to which see Pearce and Geddes, Statutory Interpretation in Australia (4th ed., 1996) para.7.9)? In some cases that might be a relevant consideration, but there are particular difficulties in its application on this occasion. Such conflict as might be said to exist between the two statutory provisions - s.42 on the one hand and s.49 on the other - derives much from the notion of immediate indefeasibility; without that the "conflict" is less apparent, if it exists at all. The doctrine of immediate indefeasibility was recognised, or at all events became established, only in comparatively recent times and the answer to the question which of the two statutes was adventitiously passed first and which second many years ago would then seem irrelevant.

[127]

Next, there is an argument that might be put on behalf of the appellant which derives from the enactment of s.28A and s.28B of the Property Law Act. These two sections were introduced by the Property Law (Loans to Minors) Act 1961 . The first conferred power on an infant (if not under 18 years of age) to execute "as if he were of full age" a first mortgage of land by way of security for any moneys borrowed by him from "any bank or life assurance society" for the purpose of purchasing or erecting a dwelling house for his own occupation. Obviously the need for this provision ceased when the age of majority was lowered from 21 to 18 years of age and so s.28A was repealed by the Age of Majority Act 1977 (Act No.9075). Section 28B remains still. It purported to validate contracts for the repayment of money lent, or to be lent, to an infant (of whatever age) by certain bodies including building societies, co-operatives, life assurance societies and banks. Such contracts were to be "as valid and binding on an infant for all purposes as if the infant were of full age at the time he entered into the contract" notwithstanding anything to the contrary in s.69 of the Supreme Court Act 1958 (now s.49 of the 1986 Act) "or in any rule of common law or equity". Moreover by s.28B(2), the infant was denied the right "on any ground relating to his infancy or former infancy" to avoid any obligation under the contract or an instrument executed by the infant to secure the repayment of the money lent. Such an instrument was declared by s.28B(3) to be "as valid and effectual for all purposes as if the infant were of full age and capacity at the time he executed the instrument". By s.28B(4), it mattered not that the contract was entered into by the infant with others, or that the moneys were lent to the infant and others, or that the instrument was executed by the infant with others. Thus, it was made plain that infancy was no defence in respect of those contracts and those instruments mentioned in s.28B.

[129]

I say that for a number of reasons. First, it cannot be surprising, if only in the light of Thurstan, that Parliament saw the need to enact ss.28A and 28B if infancy was to be denied as a defence to persons borrowing for certain specified purposes or from certain specified bodies. It does not follow that s.69 of the 1958 Act, must therefore have been taken to have the operation which the appellant would now accord to its successor, s.49 of the 1986 Act in the particular instance under appeal. Secondly, though Parliament was obviously concerned to deny effect to s.69 of the 1958 Act in relation to the contracts and instruments mentioned in ss.28A and 28B, those two sections might well have been intended to do no more than put the validity of such transactions beyond doubt. After all, the authorities on the operation of the Infants Relief Act 1874 and its successors were not easy to reconcile and those who would lend to infants were plainly at risk, to a greater or lesser degree depending upon the precise transaction, but in my opinion neither s.28A nor s.28B can be used to define the extent of that risk. Thirdly, and most importantly for present purposes, neither section adverts to the effect of registration under the Transfer of Land Act. Sections 28A and 28B may just as well be understood as directed to contracts and unregistered instruments; there is nothing in them to indicate acceptance of the view that registration under the Transfer of Land Act is insufficient to accord validity to what otherwise is void. And finally in a case like the present, if registration of the mortgage, although sufficient to accord validity to that aspect of the instrument which would charge the land, remains insufficient (which I need not decide) to expose the infant to personal liability on the covenants because of s.49, ss.28A and 28B would serve the very useful purpose of imposing that personal liability on the infant. In short, in my opinion there are a number of reasons for the enactment of s.28A and 28B which do not depend upon the view that registration of an instrument under the Transfer of Land Act was of no effect if that instrument was otherwise void for infancy, and so it cannot be concluded that that must have been the view of Parliament at the time.

[130]

Finally, although I have not so far mentioned it when contrasting the operation of s.49 of the Supreme Court Act and s.42 of the Transfer of Land Act, there is, I think, very good reason for not concluding that s. 49 overrides s.42 so completely as the argument for the appellant must suggest; for if s.49 does override s.42 in a case where both can operate, it must also override s.43 which protects the title of one dealing with the registered proprietor, and the consequences would then be considerable. Whether by the discredited notion of deferred indefeasibility or by the now preferred doctrine of immediate indefeasibility, it is generally accepted that under the provisions of the Transfer of Land Act a subsequent transferee, subject only to fraud, takes a clear and indefeasible title; nor was the contrary suggested here. Yet how could it be so if s.49 overrides ss.42 and 43 of the Transfer of Land Act? On the present hypothesis, s.49 of the Supreme Court Act strikes down not only the infant's contract for repayment, but the whole mortgage transaction (at least so far as it purports to bind the appellant); it is void absolutely, without the need for any act on the part of the infant. If s.49 overrides s.42 and with it s.43, the invalidating effect of s.49 must endure notwithstanding the subsequent registration of the mortgage by the party with whom the infant (the appellant) has purported to deal and in consequence that party (the bank) obtains absolutely nothing by means of the registration. How then could the bank transfer title to another; how could a transferee from the bank justify title? As one cannot nowadays allow that the transferee from the bank gains title when the bank does not merely because the bank dealt directly with the infant (for that would seem to resort to the discredited doctrine of deferred indefeasibility), it seems necessary if the subsequent transferee is to have title to recognise that that result flows in favour of the bank also. It cannot be concluded, then, that s.49 prevails over either s.42 or s.43.

[143]

One final comment. Having given this matter much consideration, it seems to me that, whatever solution is adopted, it cannot be wholly satisfying. The foregoing leads to the enforcement of the mortgage as an interest in land, while the appellant remains free of liability on the personal covenants to make repayment. Of course the bank did not argue otherwise, yet while the appellant remains free of that liability the bank's position as registered mortgagee is not perhaps as indicated on the register; for while money may be owing under the mortgage one only of the mortgagors remains free of any obligation to make repayment, despite express covenants to the contrary: contrast Phillips where for the time being no-one was liable to make repayment. Moreover, the stand of the bank was made possible in this instance because the appellant was only one of three mortgagors and the mortgage could therefore constitute security over his interest in the land, if not for his liability under the personal covenants then for his parents'. That leaves open what might be the position had the appellant been the sole borrower and the sole owner of the land and so the sole mortgagor (as was so in Thurstan). In such a case it would seem to be unsatisfactory, particularly for a subsequent transferee from the bank, that s.49 should be taken to "override" altogether the provisions of the Transfer of Land Act, if that means not only that the infant mortgagor is freed of all personal liability to make repayment, but also that the bank, and subsequent transferees, are left with a title to nothing despite the register (which, in view of his immunity, an infant mortgagor might not feel impelled to correct). At the other end of the spectrum, if s.49 has no effect at all once the mortgage is registered and an infant mortgagor becomes thereby liable to make repayment by force of s.42 (and without any right, even for a reasonable time after registration, to dispute personal liability), it might be possible to argue that, although the one statute deals with contracts and the other with title to land, the sort of conflict envisaged by Gibbs, J. in Travinto has emerged: contrast Breskvar.

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Legislation Cited (56)