McLeod v McLeod

Aspects of the relationship between the plaintiff and the defendant

1. The plaintiff is now aged nearly 67 years and the defendant is 41. In 2002 the defendant was 24 years old and resided with the plaintiff, then 50, in the family home at Whalan. The defendant's father (the plaintiff's husband) had moved out of the family home in the early 1980s. There is one other child of the marriage, Belinda McLeod, who is approximately 18 months older than the defendant. Belinda had ceased to reside in the family home some years prior to 2002.
2. The plaintiff and Belinda McLeod both gave evidence that from the 1990s and continuing to the present time the defendant has always been socially reticent and has avoided contact with people outside his family and immediate circle. This has included avoidance of minor everyday business dealings such as purchasing goods and instructing tradesmen. From about 1997 he was employed by Hoyts Cinemas. By early 2003 he was a manager at Mount Druitt, with oversight of other Hoyts Cinemas in western Sydney.
3. The plaintiff gave evidence that when the defendant lived in the family home he frequently asked her to go out to buy things on his behalf, to make enquiries about purchases or other transactions on his behalf, to deal with his accountant for the preparation of his tax returns and to undertake many other small dealings. She said that his requests of this nature were insistent and that she generally complied for the sake of peace. I accept the evidence of both the plaintiff and Belinda McLeod regarding the defendant's avoidance of social and business interactions. The defendant disputed this in his affidavit but his counsel appeared to accept it and relied upon it, as giving credibility to the defendant's evidence concerning his claimed ignorance of significant aspects of his financial and property affairs, referred to further below.
4. The plaintiff's evidence is that the defendant not only asked her to arrange transactions for him and to pick up purchased goods on his behalf but also to pay for services and goods. She said that he was insistent about this and that she often paid for things "for peace" rather than argue. When she received her credit card account each month she highlighted items that had been incurred on the defendant's behalf and told him what the total was. On these occasions she said, "You spent [the amount] dollars this month". The plaintiff deposed that the defendant responded to the effect of: Don't worry you'll get your money back. I'll give you my tax check and that'll pay for everything that I owe you.
5. The plaintiff said the defendant also asserted from time to time that he would repay her from the next annual bonus he expected to receive from his employer. No repayment was made out of any tax refund or bonus. The plaintiff said this pattern of behaviour commenced in 1994 when the defendant got his first job and that it continued through to August 2014 but that the defendant's demands for the plaintiff to pay for things were much less prior to 2002, when she received a substantial inheritance. In that year the plaintiff's godmother died, leaving most of her estate to the plaintiff. On 1 December 2002 the plaintiff received from the executors a cheque for $596,190. Thereafter, the plaintiff said, "everything just snowballed" in terms of the defendant asking her to pay.
6. With respect to the period up to May 2004, in the defendant's principal affidavit he disputes that he asked the plaintiff to pay for things on his behalf but nevertheless acknowledges that she did so. He has deposed that he made payments to the plaintiff to reimburse her. The defendant claims that at times he gave the plaintiff cash to cover expenditures that she booked to her credit card, to enable her to accrue points. The defendant is also deposed that the plaintiff reimbursed herself by direct access to one of his bank accounts. These assertions are not quantified as to how much he paid the plaintiff or how much she took from his account. In cross-examination he asserted that his annual bonuses were deposited to his account and that the plaintiff thereby had recourse to them. His oral evidence differed from his affidavit in that, when cross-examined, he asserted that in giving his mother access through his bank account to tax refunds and bonuses "that was just me trying to be nice to her being a good son". He claimed that in so far as she obtained any money in that way it was a gift from him rather than a repayment.
7. For reasons given below I prefer the evidence of the plaintiff to that of the defendant where the two of them are in conflict. I have found, as recounted in more detail later in these reasons, that in May 2004 the plaintiff asserted that the defendant owed her more than $200,000 for expenses she had covered on his behalf. I accept that she asserted that debt and find her evidence strongly corroborated by the circumstance that a loan agreement and mortgage were signed by the defendant on 25 May 2004. On my assessment of the plaintiff's integrity I am unable to accept that she would have sought execution of the documents if, as the defendant asserts, she had been repaid for outlays on his behalf from month to month over the previous year and a half.

The defendant's purchase of the land

1. In January 2003 the defendant informed the plaintiff that he wished to build his own home. The defendant's gross annual salary at that time was $52,764 and over preceding years he had consistently received discretionary annual bonuses of up to a few thousand dollars.
2. In about late January 2003 the plaintiff made a general enquiry of Westpac Bank about the possibility of the defendant obtaining a loan to buy vacant land and to build a house on it. The plaintiff attended a Westpac office in Penrith. She is uncertain whether the defendant accompanied her for the purpose of this initial enquiry. The plaintiff was informed that the bank required information about the defendant's assets, liabilities, employment and income and that its policy was to lend up to 80% of the value of the property against which the loan would be made. The bank officer recommended the firm of Reimer Winter Williamson, solicitors, to act for the defendant on the borrowing transaction.
3. By late January 2003 the defendant had informed the vendor's agent that he would purchase the land and that he wished to retain Reimer Winter Williamson to act on the conveyance. The agent sent a sales advice note to the solicitors. Documents subpoenaed from the firm show that they received this note on about 29 January 2003 and from that date commenced to act. Owing to the lapse of time the only documents able to be produced under the subpoena are as printed from electronic storage. They are in Word format (or similar) and do not bear signatures or facsimiles of signatures. Nevertheless, having regard to the content and sequence of the documents, I am satisfied that they can be relied upon to establish the events they record and the dates of those events.
4. On 31 January 2003 the solicitors received the contract for sale of land and wrote to the defendant requesting him to make an appointment to sign. He did so on 10 February 2003, together with the plaintiff. The purchase price was $155,000. This was written on the document by hand, a few centimetres from the line upon which the plaintiff's signature was required. Neither the executed counterpart nor any copy of it is in evidence but I infer that it must have been signed and witnessed otherwise the sale would not have proceeded to completion as it did.
5. I find that that defendant must have been aware of the price he agreed to pay for the land, both from direct communication with the vendor's agent and from seeing the price on the counterpart when he signed it. Incredibly, the defendant asserted in cross-examination that he left the whole transaction of purchasing the land in the hands of the plaintiff to such a degree that he never knew the price. I reject this. The defendant was educated to Year 12 at high school and by the date of these events in early 2003 had worked in a responsible managerial position with Hoyts Cinemas for six years. He is not unintelligent. In giving oral evidence he did not display any deficiency of comprehension. It is inconceivable that a young man with his characteristics would have signed the contract for his first purchase of a block of land, upon which he intended to build a home, without knowing what price he was agreeing to pay. I find the assertion so implausible that it can only be regarded as an intentional lie, under oath. This has a significant bearing upon the defendant's credit as a witness, generally.
6. On 10 February 2003 the plaintiff paid to the solicitors, from her own funds, $500 they required on account of disbursements for preliminary enquiries relating to the land purchase. The plaintiff did not depose to any specific conversation between herself and the defendant regarding the making of this payment for his benefit. On 19 February 2003 the plaintiff paid to the solicitors, from her own funds, $15,500 for the deposit. She has deposed, and I accept, that prior to this payment the defendant on several occasions pressed her to make it. She resisted, saying, "You're supposed to be doing this on your own". The defendant insisted and said, "You've got enough money, you won't even feel it".
7. I find the defendant's evidence with respect to the deposit inherently contradictory and unconvincing. He deposed that purchasing the land, rather than renting a property, "was her idea" and that the plaintiff "managed everything in relation to the purchase of the property and the construction of the home on it, including arranging the loan from Westpac". Throughout his affidavit he has attempted to distance himself, implausibly, from the transactions for the purchase, the borrowing and the construction of the house. On the other hand he has deposed that during discussions with a Westpac loan officer the plaintiff offered to provide a guarantee for his borrowing and then offered to pay the deposit "out of the inheritance from Auntie Betty". The defendant asserts that in this conversation he resisted these offers because he was insistent that the property be in his own name. This appears to me quite inconsistent with the defendant's assertion elsewhere that he was indifferent to the entire transaction and remained ignorant of its fundamental particulars.
8. The solicitors' records include a certificate given by Mr A Brischetto, solicitor, stating, amongst other things, that: I have explained to Jamie Campbell McLeod the effect of the contract for the purchase of [the] property. The certificate is expressed to have been given "in accordance with s 66W of the Conveyancing Act 1919 [(NSW)]" with reference to a contract for the sale of the land at Warrimoo "in order that there is no cooling off period in relation to that contract".
9. A letter dated 20 February 2003 was sent by Reimer Winter Williamson to the vendor's solicitors enclosing the counterpart of the contract for sale executed by the defendant and a copy of the s 66W certificate "duly completed and signed". This evidence confirms, as I would infer in any event, that a solicitor in the firm explained to the defendant the effect of the contract before he signed it. Such explanation must have at the least included pointing out to him the price of $155,000. This supports my conclusion that the defendant's evidence about not having known the purchase price and having left the matter of its acquisition entirely to his mother cannot be accepted.
10. The defendant, in cross-examination, denied any recollection of having had the contract explained to him by a solicitor. He asserted, again implausibly, that he thought he had signed the contract for purchase of the land at the Westpac office and that he did not know a solicitor was required in relation to the transaction. He asserted that the plaintiff must have engaged the solicitor to act on the purchase and that he did not know that had occurred until these proceedings were commenced. I am unable to accept any of that evidence.
11. Counterparts of the contract were exchanged on 21 February 2003. By letter of 24 February 2003 addressed to the defendant, the solicitors requested that he put them in funds to pay the stamp duty on the contract of $3,919. I accept the plaintiff's evidence that the defendant nagged the plaintiff to pay this over several conversations, as he had done in relation to the deposit. The plaintiff paid it on 27 February 2003.

The defendant's borrowing from Westpac Bank

1. During January 2003 the plaintiff and defendant together had discussions with a representative of Jandson Pty Ltd about the price for which that company could build a home on the land. Jandson Pty Ltd offered various standard home designs, one of which the defendant selected. For this there was a basic price but the company quoted significant additional construction charges because the land slopes steeply. The defendant also wanted optional extras. On 31 January 2003 Jandson Pty Ltd submitted to the defendant a written quote for $237,965.
2. The plaintiff's evidence is that after her preliminary meeting with a Westpac lending officer (referred to at [18] above) she attended upon Westpac again, this time accompanied by the defendant. She took to this meeting documents and information about the purchase price of the land and the quotation for construction of a house on it. The sum of those two figures was $391,945. Business records subpoenaed from Westpac contain loan officers' entries from late January and early February 2003 adopting this as the projected improved value of the property. The records show that 80%, calculated by the bank as $313,556, could be advanced. With loan fees and incidentals there would be approximately $80,000 to be found by the defendant. A bank officer's diary entry records his understanding that "[the] client has $100K to put towards this purchase and costs".
3. On 22 February 2003 the defendant signed a seven-page finance application disclosing his financial position, including net monthly income of $3,286. On the same day he signed his acceptance of a nine page loan offer document. It was a term of the loan that he could initially draw down, for completion of the land purchase, only $75,591. The balance of $237,965, being construction costs, could be drawn down progressively.
4. The defendant asserts that during this meeting the bank officer said, "You are a little bit short to get the loan". After the plaintiff had offered to pay the deposit on the purchase of the land out of the inheritance she had received, the defendant claims that he left the meeting to have a cigarette and when he returned the plaintiff said, "It's all sorted". He gave evidence that on the bank documents he only ever saw the monthly repayment figure, which he was satisfied he could meet, and that he never learned of the total amount he would be borrowing from the Bank.
5. I find this last point quite implausible and I do not accept the defendant's evidence about it, for much the same reason as I have rejected his evidence that he did not know the price of the land he was buying. Taking into account his level of education, his relatively responsible position in employment and his presentation in the witness box, it is not credible that as a young man entering into his first home loan at the age of 24 years, for a sum of $313,556, he would sign all documents and complete the transaction without ever finding out the amount of debt he was taking on, for which his land and the house he was having built on it would be security. In order to avoid finding out this simple, central piece of information he would have had to go out of his way to shut his eyes. No reason was given as to why he should have done that. It would have been irrational. I do not attribute to him such foolish behaviour. The defendant has shown himself entirely unreliable in his account of the dealings with Westpac Bank. I am unable to place any weight on his version of events as recounted in the preceding paragraph.
6. In addition to the deposit paid by the plaintiff and the amount to be advanced from Westpac Bank, a sum of $67,400 was required in order to complete. Reimer Winter Williamson requested the $67,400 from the defendant. The plaintiff paid it on his behalf. The defendants' solicitors' fees were $983. The plaintiff paid these also. In her affidavits the plaintiff did not depose to any conversation with the defendant specifically concerning the payment of the $67,400. However, in cross-examination she was asked about Westpac diary entries that referred to the shortfall between the amount the defendant would need and the amount the bank would lend. The loans officer had recorded his understanding that this was to be made up from $100,000 that was independently available to the defendant.
7. The defendant's counsel asked the plaintiff whether she accepted that she would be "giving Jamie" the shortfall. She gave these answers: A Yes, on the understanding that he was paying me back. Q Do you say that you told him that at this time? A Oh yes, he knew he had to pay me back, yeah. Q If he had to pay you back, then it would have been a personal loan, wouldn't it? A Well I didn't think we did that between mother and son. It was just an understanding he always said that I could get his tax returns and his bonuses would help pay, pay me back for what was getting spent. Q When you say his tax returns, do you mean his tax refunds? A Yeah, the refunds, yeah. … Q The reason [there was no reference in the Westpac records to a loan of the shortfall from the plaintiff] and the reason you didn't tell the bank was because at that point in time it wasn't to be a personal loan was it? A It was - well, money I was lending him. But I didn't class it as a personal loan. … Q But if he didn't pay you back, then you weren't going to sue him were you for the $100,000? A No, not your son, no.
8. It became clear from other answers given by the plaintiff that her concept of a "personal loan" was something that would be recorded in legal documents. She said she never intended that the loan would be documented: "It was just between him and I". In submissions the defendant has attached significance to the plaintiff's disavowal of an intention to sue her son. I do not consider that that makes any difference to the objective effect of the defendant's statements that he would pay the plaintiff back, which give the character of a loan to the payments that were covered by such words. The plaintiff's subjective intention not to sue would not alter this. That intention could change at a later time, in different circumstances, as has occurred.
9. The land purchase settled on 4 November 2003, utilising the first drawdown on the Westpac loan and $67,400 from the plaintiff. The defendant deposed: I understood that my loan from Westpac was meant to cover the entirety of the purchase price for the property. If it did not, the first I learnt that was when I read [the plaintiff's] affidavit.
10. I reject that evidence. Having regard to the Westpac lending officers' diary entries, the content of the loan application and the terms of the loan agreement, both of which the defendant signed, it is not believable that he failed to appreciate that he was being loaned only 80% of the cost of the land plus the price of the building work. I do not find it credible that the defendant would have failed to ascertain the purchase price of the land and the quoted price for the works, to add those sums together and compare the total with the amount being advanced by Westpac. There is also no reason why the plaintiff would have refrained from informing the defendant that she was providing the shortfall of $67,400. I am satisfied that she did.

The defendant's construction contract with Jandson Pty Ltd

1. On 13 February 2003 the plaintiff paid $3,000 to Jandson Pty Ltd for preliminary work in relation to construction of a house on the land. Shortly after completion of the land purchase the builder commenced works in earnest. The defendant drew down on his loan facility with Westpac Bank to meet the builder's progress payments. Extra charges were incurred because the defendant requested variations to the contract and because the local Council's requirements were more onerous than had been expected. I accept the plaintiff's evidence that whenever additional funds had to be found for the builder, the defendant asked her to make payments. On these occasions he said words to the effect: You've got the money, just pay for it. or You'll get your money back. The money's there in the house so there's nothing to worry about.
2. As well as incurring variation charges payable to the builder, the defendant requested his mother to purchase on his behalf numerous fitting-out items that were not included in the builder's price. The plaintiff purchased tiles, lights, computers, a television and electronic items. In relation to some of these items the plaintiff complained about being expected to pay. The defendant replied to the following effect: You've got the money. It's not a big deal and you'll get it back when I get my tax cheque.
3. The plaintiff and the defendant went together to Westpac Bank to enquire whether the loan amount could be increased to cover additional costs that were being incurred in the building and fitting out. The loans officer to whom they spoke said that no more could be advanced under the mortgage facility and any additional borrowing would have to be by way of personal loan. This would have incurred higher interest rates. The defendant denies having made this approach to Westpac but I prefer the evidence of the plaintiff.
4. After this the plaintiff complained to the defendant that his spending on the property was getting out of control and that it was ridiculous that she had to pay for the extra items. The defendant responded: You'll always get your money back. and The money's there in the house so there's nothing to worry about.
5. The defendant does not dispute that numerous payments of the above nature were made by the plaintiff on his behalf during the course of the building works, up to their completion by mid-May 2004. All of these payments, together with the deposit, stamp duty, solicitor's fees and balance of purchase price that had been paid to enable completion of the acquisition of the land, have been set out in a schedule prepared by the plaintiff. The defendant admits all but a few items on this schedule. The total of the admitted payments to his benefit is the sum of $217,713.14 referred to at [2] above. As referred to at [15]-[16] above, the defendant asserts that he had reimbursed the plaintiff for many of these payments, as they were incurred or from month to month.
6. The conversations that accompanied at least some of the payments for extra construction costs and fitting out expenses are quoted above from the plaintiff's affidavit. I accept the plaintiff's evidence about those conversations. The defendant denies them. He deposed that the plaintiff: managed everything in relation to the purchase of the Property and the construction of the home on it, including arranging the loan from Westpac (I gave Westpac an authority for [the plaintiff] to make arrangements on my behalf), paying the deposit [on the purchase] of around $20,000, and choosing all the materials and furnishings … I presented myself to sign documents when I was apparently required to do so, as directed by [the plaintiff] who I trusted. I did not engage a solicitor to purchase the property and I am not aware of [the plaintiff] having done so either.
7. I find that the defendant's highly implausible denial of knowing the purchase price of the property or the total amount of his borrowing from Westpac is part of a general endeavour in his evidence to distance himself from the choices that were made concerning materials and furnishings and from all decisions with respect to the purchase of the land, the loan and the building work. I find that that defendant has untruthfully sought to disown involvement in these decisions in an attempt to further his case that all expenditures were outlaid by the plaintiff in her own interest without reference to or approval by him. In this way he has sought to establish that he never became liable to the plaintiff to repay any of her expenditures on his behalf and to make it appear improbable that he would have knowingly promised to repay her $200,000 by signing loan and mortgage documents in May 2004.
8. In cross-examination the plaintiff acknowledged that as the payments made by her on the defendant's behalf mounted up in 2003 and early 2004 it became apparent that the defendant's annual income tax refund cheques and bonuses would not be sufficient to cover reimbursement to her. She thought the total was "going to be paid off gradually". She also acknowledged that she kept meeting the defendant's expenses because she knew he could not afford them himself, given the amount of his repayments to Westpac Bank. She also said that she wanted to keep the defendant happy and to see his house completed. Notwithstanding the unreality of the defendant's promises of repayment, the plaintiff gave the following evidence when asked what was said between the parties as outgoings continued: That I would always get my money back. That's all he ever said. The plaintiff said statements to this effect were made by the defendant with respect to "all of [the payments], the total of them".
9. Although Jandson Pty Ltd commenced work soon after completion of the land purchase, the building contract was not signed until 24 July 2003. The contract bears the defendant's signature on the front page and his initials at the foot of each of the next 26 pages. Despite this, the defendant does not admit to having signed the document. In evidence he denied ever having known the price payable under the building contract, which I find implausible for the same reasons as apply to his claimed ignorance of the price of the land and of the total amount borrowed from Westpac. I am satisfied that, at all times from when Jandson Pty Ltd provided their quotation of 31 January 2003, the defendant knew the contract price of the building work.

The defendant's execution of the mortgage - Issue 2

1. The plaintiff gave evidence that in early May 2004 she spoke to a solicitor at Reimer Winter Williamson about preparing a new will. Her then current will made an equal division of her estate between the defendant and Belinda McLeod. Because by this date the plaintiff had paid more than $200,000 for the benefit of the defendant, she had in mind to give him less out of her estate. The plaintiff spoke to the solicitor alone. She told him that the defendant said he would pay back the $200,000 but she was unsure how he would do so and wanted to make sure Belinda was not disadvantaged if the plaintiff should die before repayment been made. The plaintiff had recently undergone a bowel resection to remove cancer and thought she might not live to be repaid by the defendant.
2. The solicitor advised the plaintiff to "put in place a loan agreement with Jamie" and secure it by way of a caveat on the title. The plaintiff accepted this advice and asked the solicitor to proceed with loan and mortgage documents, as described below. The solicitor prepared a new will. It provided that upon her death any part of the $200,000 still outstanding from the defendant would be forgiven, there would be a bequest of $200,000 for Belinda and the residue would be divided equally between the two siblings. This would achieve the plaintiff's objective of equality between the beneficiaries if (and only if) the entire $200,000 was still owing from the defendant at the date of death. I infer that in her then state of health the plaintiff thought that this was a probable outcome.
3. The defendant deposed that either on the same day as her consultation with the solicitor referred to above, or on a later day, the defendant joined her in discussion with the solicitor. She deposed to the following conversation: Solicitor: Your mum wants to put a loan agreement in place in relation to the moneys she has lent you to build the house. She tells me that she spent over $200,000 on completing the home but would be happy to accept $200,000 as the total loan amount. The loan would be secured by way of a caveat on the title and that would secure the money she's lent you to finish the home. Would you be agreeable to that? Defendant: I'm happy to do that. Solicitor: We can make the loan agreement over twenty years to give you time to pay it back but in the interim we'd need to have an interest clause. We can use minimal interest. What's the minimum amount of interest you'd be willing to pay each month to your mum? Defendant: Forty dollars.
4. The plaintiff was cross-examined about this conversation along the lines that she would never have asked the defendant to enter into loan documentation because she knew he would not agree. She rejected this and, over a page of questioning at the end of her cross-examination, adhered to the above account "as best I can remember". She deposed that after leaving the solicitors' office with the defendant she said to him: I want to cover my $200,000. I want to make sure if you get a partner I do not lose my money.
5. When challenged about this in cross-examination the plaintiff said: I explained to him what I was doing. … I did explain it all to him why and the reasons I was doing it.
6. The defendant did not agree that he had any conversation with a solicitor at Reimer Winter Williamson, or with the plaintiff afterwards, concerning a loan agreement. I accept the plaintiff's evidence on this. I found her generally a forthright and reliable witness. She did not evade questions, she conceded matters put to her where appropriate and I detected no embellishment or internal inconsistency. The inherent probability is that the plaintiff would have forewarned the defendant that loan documentation was going to be prepared and that she would have sought his agreement in principle, rather than engage the solicitor to draw up the documents and take the risk that the defendant would not agree. It made good sense to have the solicitor explain directly to the defendant the nature of the documents that he advised should be prepared. I am satisfied that that is what occurred.
7. As against the logic and probability of the plaintiff's evidence on this subject, the defendant's contention that he was never told that loan or mortgage documentation would be submitted for his signature and that his mother deceived him as to what was presented for his signature is highly unlikely. Having read the entirety of the plaintiff's affidavits and heard her cross-examined over most of one day, I do not consider that such subterfuge is within her character or her capability or that she would have had any inclination to act so dishonestly.
8. By 25 May 2004 Reimer Winter Williamson had prepared a mortgage in registrable form and a Pre Contractual Statement. The defendant does not dispute that he executed the documents on that date. His signature was witnessed by Mr JWD Rees who was then practising as a solicitor in North Penrith. Mr Rees practised in New South Wales from 1968 until he retired in 2012. The broad range of his work included conveyancing. He frequently received from Reimer Winter Williamson referrals of clients who required explanation of mortgage and loan documents before signing. Between the mid-1990s and 2012 Mr Rees received, from Reimer Winter Williamson and from other firms, approximately 20-30 such referrals per annum.
9. Mr Rees was called by the plaintiff. He had no independent recollection of having met with the defendant or of having advised him about the mortgage and the Pre Contractual Statement signed on 25 May 2004. However, he identified his signature on the mortgage as witness to the defendant's signature and again at the foot of each of Annexures A and B to the mortgage, in each case adjacent to the defendant's signature. On the Pre Contractual Statement Mr Rees identified his writing of the date next to where the defendant signed as "Borrower". On the second page of this document there appears the following certificate, within which Mr Rees said he wrote his name and address and entered the date and his signature: I, Jonathan William David Rees of 12 Macquarie Avenue Penrith Solicitor state as follows: I am the solicitor for the mortgagor. I explained prior to the execution thereof the legal and practical effect of the annexed mortgage to the mortgagor who appeared to understand the provisions thereof and their practical effect. [Date entered; signature of Mr Rees placed above the words "Solicitor for the Mortgagor"]
10. Relying upon his writings on the documents and his recollection of his usual practice, Mr Rees said the defendant was referred to him by Reimer Winter Williamson, that he attended Mr Rees' office by appointment and that Mr Rees gave him an explanation of the mortgage and of the Pre Contractual Statement, before seeing the defendant sign the documents in his presence. Mr Rees gave the following evidence: [A]bout the only slight recollection I have of this matter is I'd have made a comment on the amount of interest that his mother was charging him for this loan. I said, "You really could not expect to do better anywhere with a bank or a building society. That is a very generous rate of interest." But that stands in my mind, but I'm afraid that all the other details have - this is some 15 years ago your Honour and the rest of the details escape me. I have to say I can't even recognise Mr McLeod or Mrs McLeod.
11. Despite his understandable lack of specific recollection. Mr Rees said he could "certainly indicate the matters that I certainly would have covered". He gave these answers: A The first document I would have addressed in my discussion with Mr McLeod was the pre contractual statement because that set out the financial terms of the loan and that, that was really important. It set out the amount of the loan. It set out two rates of interest, one of which was to apply provided that he paid the monthly instalment of interest on time, and was a very small amount, $41.67, and there was what's called the default interest rate which is also in the mortgage called a higher rate of interest, which will apply only if he failed to make the payment of interest on time. The other aspect was that there was no obligation on Mr McLeod to repay the whole or any part of the loan for 20 years unless of course there was some default under the, under the mortgage. And there was also a provision for early repayment provided that he gave at least six months' notice in writing to his mother. Q Did you explain that to Mr McLeod? A Certainly.
12. Mr Rees was asked to describe his usual practice in advising a prospective mortgagor who had been referred to him by another firm. He said: A [T]he client would come to me with the documents, the loan documents, with or without a mortgage, or a guarantee, and I would make a practice of seeing whether there was any loan contract. If there was a loan contract I would explain to the client all the main financial terms of that loan contract, and then I would go on, if that was associated with a mortgage, I would then go on to explain to him what the main obligations were of any person giving a mortgage, that is that you have to look after the property, that you have to insure it, and you also have to pay all rates of outgoings on the property, and you must, you must - it must comply with the terms, the financial terms of the contract, otherwise it amounts to a default and you're liable to have the mortgage called up and also to face ejectment proceedings so that the mortgagee can sell with vacant possession. Those were the standard issues that I explained in relation to every loan and every mortgage in relation to which I provided independent legal advice. Q. Were those matters explained to the defendant? A. They certainly were, yes. … A I certainly wouldn't read out every, every printed clause of a mortgage or a loan document. I felt it was my duty to summarise and explain in lay terms, without any legal jargon, what the financial terms were and also what the legal consequences would be of signing the loan contract and also signing the mortgage.
13. Mr Rees said his practice was to send a bill to the solicitor who had referred the client to him. His fee gradually increased from $100 to $200 over the years. He retained any documents relating to such matters on a miscellaneous file and did not open a separate file in relation to each one. Mr Rees said he would have placed on the miscellaneous file any papers relevant to his dealings with the defendant, together with a copy of his invoice. The documents produced on subpoena by Reimer Winter Williamson do not include an invoice from Mr Rees. This is of no significance, as those records are manifestly incomplete. Reimer Winter Williamson's invoice to the plaintiff and the firm's correspondence with her do not identify a disbursement for Mr Rees' fee. Although this is not explained on the evidence I do not doubt that Mr Rees met with the defendant, gave advice in accordance with his usual practice and witnessed the defendant's execution of the documents just as he described in his oral testimony.
14. In cross-examination it was put to Mr Rees that the absence of any record of his invoice amongst the documents produced by Reimer Winter Williamson indicated that he may not have followed his usual practice with respect to tendering advice. He answered as follows: A. No, no, my, my practice would have been exactly the same on this occasion as on all other occasions. It surely is no surprise that, that the invoice would have, would have - would undoubtedly have been sent to Reimer Winter before the end of May 2004. Here we are more than 15 years further on and in that time I have searched for my own files to, to try to find this particular bill. We sold the practice in 2012, the files were all handed over to the successor firm. I have since been in touch with them to try and find whether this - find out whether this, this particular document exists or any - my file relating to this particular matter and they said that they have long since been destroyed because they - it is their practice to destroy them after seven years.
15. The defendant deposed that he attended a solicitor's office in about the last week of May 2004 at the request of the plaintiff, who said, "You need to sign the final documentation for your mortgage with Westpac". He claims that he met the plaintiff at the front of the solicitor's office and she directed him to "just come in and sign the forms". He deposed that there was "a man sitting behind a desk" with whom a conversation took place as follows, in the plaintiff's presence: Man: Hi Jamie. So, your mother has explained everything to you? Defendant: Yes. Plaintiff: He is in a hurry.
16. According to the defendant, he remained standing while the plaintiff sat down. "The man" shuffled through papers, presented some that had "Sign Here" stickers on them and instructed him to "Sign here where the stickers are". The defendant deposed that he did as he was asked and then walked out without having received any explanation about the documents. In cross-examination he said that he was in this meeting for the signing of documents for "not even" a few minutes. The defendant expressly denied having received the explanation that Mr Rees said he gave.
17. The plaintiff refutes the defendant's account, except that she agrees she went with him to Mr Rees' office. She picked the defendant up and drove him there. In her first affidavit the plaintiff deposed that the solicitor to whom she took the defendant was a member or employee of Reimer Winter Williamson. She was mistaken about this. That is understandable as Mr Rees' office was only two doors further along the street from that of the plaintiff's own solicitor. The plaintiff denies having told the defendant that the documents he was to sign had anything to do with his mortgage to the Westpac Bank or that she was present when the defendant executed them. I accept her on this.
18. Mr Rees said he had no recollection of a conversation to the effect quoted at [61] above. He was asked whether it would have made any difference to the practice he would have followed in dealing with the defendant if he had been told that the documents had already been explained to him by his mother. He said: A Absolutely not, your Honour. I had a job to do and throughout the years of practice that I did this work I did it to the best of my ability. I, I regarded myself as, as the lawyer for the, the person who'd been referred to me. That person was my client, not, not the, not the lender nor the solicitor for the lender, although we had a very good business relationship. It was, it was a point of honour for me that I - they should know and I explained to them at the outset that I was acting not for anyone else but for them. If they had any misgivings, doubts or fears about the matter after I explained it or before I explained it, they should raise them with me because I was acting for them. I was their lawyer, not the lawyer for anyone else.
19. As Mr Rees himself pointed out in the course of his evidence, for him to have procured the defendant's signatures without having offered any explanation would have been: … totally inconsistent … with my certificate that I gave. … I would have had to sign a false and misleading certificate if I had behaved in a manner that Mr McLeod suggests … I behaved.
20. Mr Rees plainly denies the defendant's assertion that he failed to explain the documents and, by necessary implication, that he signed a false certificate. I accept Mr Rees' evidence without reservation and reject that of the defendant. I can find nothing in all of the material before the Court in this case to suggest any reason why Mr Rees would have acted so unprofessionally, not to say dishonestly, as is alleged by the defendant. Mr Rees was not challenged as to the length of his experience and the frequency with which he advised in matters such as this. There is no reason to doubt that he followed his usual practice in advising the defendant, as described in his evidence. There is also nothing in the material to suggest a reason why Mr Rees might have inadvertently departed from that practice.
21. Counsel for the defendant acknowledged that in order to adopt and act upon the defendant's evidence about this I would necessarily have to conclude on the balance of probabilities that Mr Rees acted fraudulently in signing the certificate. I am comfortably satisfied that he did not. Thus Issue 2 is resolved against the defendant. The mortgage was not procured by fraud and the defendant is not entitled to rescission of it.

Consideration for the loan and mortgage, obligations - Issue 1B

1. The Pre Contractual Statement takes the form of a list of mortgage particulars, followed by a statement that "The above offer is made by the Mortgagee, [the plaintiff]". This statement is signed by her solicitor. The particulars are followed by a clause signed by the defendant in the presence of Mr Rees on 25 May 2004 (as the latter described): I, James Campbell McLeod being Borrower and Mortgagor hereby accept the above terms and conditions.
2. The mortgage particulars include the address of the mortgaged property, the name of the defendant as Mortgagor, the principal amount ($200,000), the "Annual Percentage Rate" and "Monthly Interest Payment" (0.25% and $41.67, respectively) and the "Default Interest Rate" (2.25%). The term of the loan is not expressly stated but it is clearly 20 years because the total number of monthly "Repayments", that is, monthly interest instalments, is said to be 240 and the total amount of interest payable is said to be $10,000. A further particular of the loan is that a minimum of six months' notice in writing is required if the Mortgagor intends to discharge the mortgage.
3. Annexure A to the mortgage contains five clauses that refer to items numbered 6-14 in Annexure B. The clauses, in combination with the numbered items in Annexure B, replicate the particulars of the mortgage loan set out in the Pre Contractual Statement. Clause 2 in combination with item 6 expressly stipulates that the date for repayment is 25 May 2024. Clause 4 in combination with items 7-13 has the effect that: 1. interest instalments are payable on 25 June 2004 and on the 25th day of each month thereafter, on so much of the principal sum of $200,000 as may remain unpaid, at the rate of 2.25% per annum; provided that 2. interest at 0.25% (being $41.67 per month, calculated on the full amount of principal) will be accepted in lieu of interest at the higher rate, if paid on the due date or within seven days thereafter.
4. Putting to one side the effect of registration of the mortgage, the plaintiff contends that both the mortgage and the offer and acceptance recorded in the Pre Contractual Statement are unenforceable at the suit of the plaintiff, for want of consideration. As it is common ground that a sum of $200,000 was not paid across in one sum at or about the time these documents were executed, the defendant submits that that no consideration passed from the plaintiff to support his promises to pay the alleged debt and interest. However, payment of the loan amount by the lender at the time of the recipient promising repayment is not the only form of consideration that may support a liability in debt.
5. It is further submitted that there is insufficient evidence to substantiate that the defendant had promised to repay each of the plaintiff's individual payments for his benefit during 2003 and 2004, as they were made. The defendant contends that each payment therefore had the character of a gift and as a result the sum in excess of $200,000, of which the defendant received the benefit prior to 25 May 2004, became his absolutely. He submits that his promise to repay $200,000, made after he had received this series of gifts, could only be enforced if supported by fresh consideration given in May 2004.
6. I accept the evidence of the plaintiff that when many of the payments were made the defendant said he would repay the plaintiff. I am satisfied that such promises were sufficiently frequent to stamp the entire sequence of payments with the character of loans, repayable on demand. Although this gave rise to a debt obligation that was already in existence prior to 25 May 2004, further consideration was given on that date. The additional consideration was the plaintiff's allowance of a generous time for repayment, rather than on demand; the crystallisation of the amount at less than the full figure that had been advanced over time and the fixing of a very low interest-rate, far below that which the defendant would have incurred if he had had to borrow from some other source in order to repay the plaintiff immediately.
7. Recognition of those concessions as sufficient consideration is in accordance with PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515. In that case the Court (Wilcox, Gummow and von Doussa JJ) said: Payments or transfers of property made in discharge of an antecedent debt are to be distinguished from transactions where a debtor conveys property by way of assignment or mortgage as security for an existing indebtedness. A long line of authority holds that transactions of the latter kind will be held to be made for valuable consideration for the purpose of the avoiding provisions of the [Bankruptcy Act 1966 (Cth)] only where there is new valuable consideration moving from the party receiving the benefit of the security at the time of the transaction to the debtor. The position was summarised by Gibbs J in Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232 at 254: "It is clear that the mere existence of an antecedent debt is not consideration for the giving of a security in respect of that debt; 'in order to have consideration for a further security there must be an agreement, express or implied, to give time or some further consideration, or else there must be an actual forbearance which ex post facto may become the consideration to support the deed': Wigan v English and Scottish Law Life Assurance Assoc [1909] 1 Ch 291 at 303." See also Glegg v Bromley [1912] 3 KB 474; and N A Kratzmann Pty Ltd (in liq) v Tucker (No 1) (1966) 123 CLR 257 at 278, 289.
8. If, contrary to my conclusion expressed above, the numerous payments made by the plaintiff for the defendant's benefit during 2003 and early 2004, or any of them, were not accompanied or encompassed by promises sufficient to characterise them as loans, then the transactions of 25 May 2004 would be properly analysed in terms of accord and satisfaction. In May 2004 the plaintiff asserted a bona fide claim that she was entitled to be repaid. She made the claim expressly, through her solicitor, in the conversation recounted at [49] above. She reiterated it in her conversations with the defendant alone, as set out at [50] and [51].
9. Whether the plaintiff was right or wrong in her understanding that the defendant was obligated to repay what had been spent on his behalf, I am satisfied on the balance of probabilities that she held an honest belief that he had so promised and was bound. Further, this belief was held on reasonable grounds having regard to the significant number of occasions on which he had given assurance to the plaintiff that she would be reimbursed. Those circumstances are sufficient to make the transactions that followed enforceable: Wigan v Edwards (1973) 1 ALR 497 at 512-513.
10. The effect of what the plaintiff proposed - through her solicitor in the conversation referred to above at [49] and by having the Pre Contractual Statement and mortgage submitted for the defendant's signature on 25 May 2004 - was that the defendant would promise to pay the agreed amount by 25 May 2024, to pay interest each month and to mortgage his land as security in consideration for the plaintiff: 1. agreeing to accept $200,000 in lieu of the greater amount she contended was owing to her and 2. allowing 20 years for repayment at minimal interest in the meantime.
11. The defendant submitted that the plaintiff's agreement to accept a reduced sum, in the absence of a dispute between the parties of which the exchange of promises could be seen as a compromise, would not suffice as consideration for the defendants promise to pay that sum. However, on my reading of the authorities the existence of a dispute is only insisted upon where the debtor is seeking to enforce a creditor's agreement to accept less than full payment. In such a case the debtor must show that he or she gave something for the creditor's promise to accept less. The "something" will be the debtor's abandonment of a bona fide dispute about either liability or quantum. Here, it is the creditor (the plaintiff) who is seeking to enforce the debtor's agreement to pay the reduced amount with interest and to give security. Identifying valuable consideration that moved from the plaintiff to support the defendant's promises does not depend upon the parties having been in dispute. The plaintiff's promises as referred to at (1) and (2) in the preceding paragraph are sufficient.
12. Issue 1B raised by the defendant is therefore determined against him. His obligations under the loan document and mortgage have been supported by consideration from the date of execution of the documents.

Breakdown of relationship from August 2014

1. The defendant defaulted on the payment of interest under the mortgage from the first due date, 25 June 2004, and continuously thereafter. I accept the plaintiff's evidence that she reminded the defendant, "Your first payment's due", shortly before the first interest date and that he "just laughed". She did not have any further conversation with him about paying the interest at any time before the notice of default was served on 24 August 2017. From May 2004 until mid-August 2014 many of the defendant's expenditures were debited to the plaintiff's credit card and still more were paid by her on his behalf by other means. The defendant did not repay the plaintiff these amounts and, as she put it in her evidence, "I knew I couldn't get extra out of him". She thought it would be futile to press for the $41.67 per month in the circumstances.
2. In this period from May 2004 to mid-August 2014, payments by the plaintiff for the benefit of the defendant, at his request, included $10,500 to convert a garage into a theatre (to which the defendant contributed a bonus from his employer of $7000); the cost of a swimming pool; approximately $12,000 in veterinary fees for the defendant's dog; nearly $40,000 towards the cost of a car (to which the defendant contributed $4,000). As these outlays were made, plus payment by the plaintiff of the defendant's ongoing living expenses, the defendant repeatedly said that he would pay the plaintiff back. He did pay some amounts from month to month. Nevertheless the total expended by the plaintiff on his behalf from May 2004 mounted up to approximately $258,000 by mid-August 2014.
3. In 2007 the plaintiff received a bequest of about $186,000 from her mother's estate. I infer that this, together with the money left to her by her godmother in 2002, was used to cover the payments she made for the benefit of the defendant as well as her own living expenses. When the plaintiff swore her affidavit of 21 May 2018 she had retired and was no longer earning. I infer that she had retired quite some time before this date but precisely when has not been established.
4. The defendant's employment with Hoyts was terminated towards the end of 2011 or in 2012 and he was out of work for a substantial part of 2012. In about May 2013 the plaintiff and defendant discussed selling their respective houses and purchasing a single property in which they would both reside, at Umina on the Central Coast. During the remainder of 2013 they inspected properties for sale in that area. I accept the plaintiff's evidence that at about this time the defendant said, more than once: When I sell my house I'll pay the bank back and you can have the rest.
5. The defendant's property was put on the market in about January 2014. An offer of either $750,000 or $780,000 was made but he rejected it. In about August 2014 the plaintiff told the defendant that she was "down to [her] last $20,000". Shortly afterwards the defendant ceased communication with both the plaintiff and Belinda McLeod. From that time the plaintiff ceased paying the defendant's expenses. The parties have not been on speaking terms since then, right through to the present time.
6. It is clear that in May 2004 when the mortgage was executed the plaintiff did not expect to live as long as she has done. When the interest instalments under the mortgage went unpaid, although the plaintiff did not press for them or issue a notice of default for over 13 years, no representation was made to the defendant, either expressly or impliedly, that the plaintiff waived or abandoned her rights under the mortgage. I am not satisfied that the defendant drew a conclusion from anything said or done by the plaintiff relating to non-enforcement of the mortgage covenants or that he acted in any way in reliance upon such a conclusion.
7. The plaintiff's circumstances changed significantly between May 2004 and August 2014, in that she lived longer than she had expected and she exhausted the funds upon which she might have continued to support herself, largely by expending them on the defendant. I infer that at least for some years after May 2004 the plaintiff's reasons for not pursuing the unpaid interest included that it was a relatively small amount and that she did not wish to bring the default to a head in order to call in the principal. With an expectation of not having long to live, the plaintiff understood that her testamentary intentions would still be achieved if the debt remained outstanding until she died.
8. When the plaintiff lived past August 2014, had by then spent a further $258,000 on the defendant and had retained insufficient funds for her own support, she consulted a different solicitor in October 2016 for the purpose of having her will changed again. She was then advised that she could insist on her legal right to recover the principal. Her circumstances had so greatly changed that she needed to do so. She was again very unwell and had had a further, recent bowel resection. Accordingly, in the following year, she gave instructions for the mortgage to be registered and for a notice of default to be issued.

Default - Issue 5

1. The mortgage expressly incorporates Memorandum No Q860000 filed at Land and Property Information New South Wales. Clause 6 of that Memorandum is in the following terms (so far as relevant): 6 Upon default being made in payment at the respective times and in the manner shown in the mortgage of the principal sum or any part thereof, or of the interest thereon or any part thereof … the mortgagee shall (notwithstanding any omission, neglect or waiver of the right to exercise all or any of such powers on any former occasion) be at liberty to exercise all or any of the powers of a mortgagee under the [Real Property Act 1900] immediately upon or at any time after default as hereinbefore mentioned, subject however to compliance with any requirements of the said [Act] in respect of the exercise of such powers. If at any time default shall be made in the due payment of the Interest on any of the dates when the same respectively shall become payable or within the time thereafter mentioned in the schedule to the mortgage, or, if the power of sale given to the mortgagee under [the said Act] shall become exercisable, then the principal sum shall immediately become due and the mortgagor will thereafter pay the same on demand.
2. The plaintiff's s 57(2)(b) Real Property Act notice served on 24 August 2017 quantified the amount of unpaid interest at $59,250 and referred to it as "Arrears". The notice stated that the total Amount Outstanding was $259,250. It continued as follows: To remedy the Default(s), you are required to pay the Arrears to the Lender by no later than 1 October 2017 ("Grace Period"). If you do not pay the Arrears within the Grace Period, or if a default of the same type as specified in this notice occurs during the Grace Period and that default is not rectified within the Grace Period, then without further notice: 1. The Amount Outstanding and the Lenders costs and charges will automatically be due and payable and 2. After 1 October 2017 the Lender may commence enforcement proceedings claiming the Amount Outstanding and/or possession of the Property; and 3. The Lender may exercise power of sale in respect to the Property …
3. On the basis of the defendant's contention that the plaintiff gave no consideration for the covenants in the mortgage, he submits that he came under no obligation to pay interest until the mortgage achieved the status of a deed upon registration: s 36(11) of the Real Property Act. As that did not occur until 17 August 2017, the defendant submits that the first interest instalment he was legally obliged to pay was that which fell due on 25 August 2017. On this argument it is contended that there was no default at the date of the s 57(2)(b) notice, which was served one day short of the first enforceable interest due date of 25 August 2017. Because I have found that the mortgage, including the covenant to pay interest on the 25th of each month from June 2004, was supported by consideration, this argument fails at its first premise.
4. I find that the defendant defaulted on the payment of interest and also, as considered below, that the power of sale has become exercisable. In those circumstances the final words of Cl 6 in Memorandum Q860000 take effect: the principal sum has "immediately become due and the mortgagor will thereafter pay the same on demand". The defendant submits that there was no demand for the principal prior to the date of filing of the statement of claim, that therefore the principal had not become payable by that date and that the plaintiff is accordingly not entitled to judgment for the principal. This argument is of little practical significance. It is not suggested that it creates any impediment to the plaintiff having judgment for possession of the land or to her exercising the power of sale. Realisation of the land is, in the circumstances of this case, the only realistic avenue by which the plaintiff may recover the principal. Judgment for the money amount is not an important remedy for her.
5. In any event I consider the defendant's argument is unsustainable on the facts. Default in payment of interest had occurred before the s 57(2)(b) notice was issued. The notice itself contained a contingent demand for the principal. It stated that if the Arrears (being the unpaid interest) were not paid by 1 October 2017 then the Amount Outstanding (comprising both interest and principal) "will be automatically due and payable" and the mortgagee "may commence enforcement proceedings claiming the Amount Outstanding" without further notice. In circumstances where the defendant did not make up the Arrears by 1 October 2017, he was immediately subject to this demand for both the principal and the unpaid interest. The statement of claim was filed on 10 October 2017.
6. For these reasons I reject the defendant's arguments in connection with the Issue 5.

The estate or interest secured by the mortgage - Issue 1A

1. Section 56 of the Real Property Act relevantly provides: 56 Lands under this Act: how mortgaged or encumbered (1) Whenever any land or estate or interest in land under the provisions of this Act is intended to be charged with, or made security for, the payment of a debt, the proprietor shall execute a mortgage in the approved form.
2. Upon registration on 17 August 2017 the plaintiff acquired an indefeasible estate or interest in the subject property by force of s 42 of the Real Property Act, which is in these terms so far as presently relevant: 42 Estate of registered proprietor paramount (1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except: [exceptions (a)-(d) are not engaged on the present facts] (2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio. (3) This section prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section.
3. As Campbell J explained in Small v Tomassetti [2001] NSWSC 1112 at [9], where there is an issue of construction as to what nature and/or amount of liability is secured by a mortgage, the question will arise under s 42, "indefeasibility as to what?". In that case his Honour elaborated the question and then answered it, as follows: [10] In PT Limited v Maradona Pty Limited (1992) 25 NSWLR 643 Giles J considered a mortgage … which secured (inter alia) sums of money which were owing to the mortgagee by the mortgagor and any other indebted person or either or any of them. The particular problem in that case arose from the fact that a Mrs Thompson, who was a mortgagor, had executed a guarantee at a time when she lacked capacity. She also executed the mortgage at the time she lacked capacity. In consequence, Giles J held that a defence of non est factum would succeed. [11] In relation to the mortgage, his Honour needed to consider what the effect was of the registered mortgage being given indefeasible status. His Honour stated the relevant legal principle as follows (679B): That which is attained by registration is, in the words of s 42, an estate or interest in the land. Registration does not validate all the terms and conditions of the interest which is registered. It validates those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor. [12] In the case before him, Giles J held that the failure of the guarantee to create any obligation on the part of Mrs Thompson meant that the mortgagee in that case was indefeasibly entitled to a mortgage, but a mortgage which secured nothing. On the face of the registered mortgage, one could not tell what was the extent of the estate or interest of the mortgagee - one was, instead, referred to other documents which were not themselves registered, and which were void because of Mrs Thompson's lack of capacity. That case illustrates the way that one needs to look at the terms of the particular mortgage that is the subject of litigation to work out the scope of any estate or interest in the land which is created indefeasibly by the registration of that mortgage. [13] The first mortgage in the present case is one which contains the following term: The mortgagee has agreed to lend to the mortgagor and the mortgagor has agreed to borrow from the mortgagee the sum of $325,000 (hereinafter called the principal sum)... (3) The mortgagor covenants to pay to the mortgagee the principal sum or so much thereof as shall remain unpaid on the 12th day of May 2001. (4) The mortgagor will pay interest on the principal sum or on so much of it for the time being as shall remain unpaid...at the rate of $11.75 (Eleven dollars seventy five cents) percentage per annum as follows. [14] The terms of the second mortgage are identical in the respects just quoted, save that the principal sum is $65,000 and the rate of interest is 18.5 percent per annum. [15] In these circumstances, it is, in my view, clear that the estate or interest in the land which is created by the registration is a charge which secures at the least (so far as the first mortgage is concerned) the sum of $325,000, together with interest which accrues on it and is unpaid, and (so far as the second mortgage is concerned) the sum of $65,000, together with interest which accrues on it and is unpaid.
4. Bryson J followed and applied this reasoning in Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694 at [28]-[48], with an opposite result on the facts that case. At [28] his Honour quoted the same passage from the judgment of Giles J in PT Limited v Maradona Pty Limited as had been relied upon by Campbell J. The following further passages from Bryson J's judgment expand the point: [29] … To my mind the charge of the debt on the land is an estate or interest in land, and the personal covenant to pay the debt is not, even though it is necessary to understand the personal covenant to see what is charged upon the land. The operation of a mortgage to charge a money obligation on land is recognisable without any difficulty as an interest in land; the personal obligation of a mortgagor himself to pay the debt, by means of enforcement available for debts generally and not by enforcement specifically against the land is, I think, equally clearly not an interest in land; even though it would quite frequently happen that the same personal covenant to pay a debt identifies both what debt is charged on land and what debt the mortgagor is personally liable for. In Small v Tomassetti the careful expressions chosen by Campbell J in stating the conclusion at [15] show, to my mind, that his Honour adverted to the need to express the effect of indefeasibility in terms limited to the estate or interest in land created by registration, notwithstanding that the covenant at [13] was, according to its terms, a personal covenant. [31] All considerations of indefeasibility come later than ascertaining, on the construction of a mortgage, what, according to its true meaning and effect, is the debt which it secures. Sections 40 and 42 of the Act, while they create indefeasibility, do nothing to enhance what the mortgage actually says.
5. The mortgage in Chandra v Perpetual Trustees Victoria Ltd purported to identify the obligations charged upon the relevant land as "Secured Money" owing under any "Secured Agreement". Having construed these terms in their context in the mortgage and applied them to the circumstances, his Honour was unable to find that there was any amount of Secured Money identifiable by reference to any Secured Agreement. Therefore the mortgage, whilst being indefeasible, secured nothing and created no estate or interest in the land.
6. In Sabah Yazgi v Permanent Custodians Limited [2007] NSWCA 240 the signature of one of two registered proprietors was forged on a mortgage and on a housing loan that the mortgage was intended to secure. The mortgage was registered. The question on appeal was whether any monies owing under the housing loan or the mortgage were secured against the interest of the innocent registered proprietor. Beazley JA (as her Honour then was) (Ipp and Tobias JJA agreeing) noted: [15] [F]or the resolution of the issue on the appeal, it was accepted that the effect of registration does not give to the registered title holder an indefeasible title in general terms. Rather, it is necessary to ascertain the extent of the registered title holder's interest.
7. At [19]-[22] Beazley JA cited with approval the decisions in PT Limited v Maradona Pty Limited, Small v Tomassetti and Chandra v Perpetual Trustees Victoria Ltd. The relevant mortgage specified the debt secured only by reference to such extraneous "Secured Agreement" as the registered proprietors may have executed. As one of the registered proprietors had not executed the housing loan - a forgery of her signature having been affixed to it - there was no Secured Agreement to which the mortgage could be taken to refer. Accordingly, the same result followed as in Chandra v Perpetual Trustees Victoria Ltd: the mortgage secured nothing.
8. In Provident Capital Ltd v Printy [2008] NSWCA 131 two mortgages were forged by an impersonator of the registered proprietor. In one of these the secured money was defined only by reference to whatever might be owed under any loan agreement separately entered into between the mortgagor and mortgagee. The only such agreement to which this could refer was a deed of loan that had, like the mortgage, been fraudulently executed by the impersonator in the name of the registered proprietor. This deed of loan did not attain indefeasibility by force of ss 41 and 42 of the Real Property Act. Basten JA (Tobias and McColl JJA agreeing) said: [43] A number of authorities support the view that the Act does not render enforceable against the land a debt arising under an agreement separate from the mortgage.
9. As nothing was owed by the registered proprietor under the fraudulent deed of loan, no debt was secured by the mortgage. The mortgagee had exercised a power of sale and the question was whether it had been entitled to do so or whether it should account to the innocent registered proprietor for the proceeds. Basten JA analysed this in terms of s 57 of the Real Property Act, which includes the following provisions (extracted so far as relevant): 57 Procedure on default (2) A registered mortgagee … may, subject to this Act, exercise the powers conferred by section 58 [the power of sale] if: (a) in the case of a mortgage … default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage … or in the payment, in accordance with the terms of the mortgage … of the principal, interest … or other money the payment of which is secured by the mortgage … or of any part of that principal, interest … or other money, … (b) where: (i) the default relates to that payment …, a written notice that complies with subsection (3) has been served on the mortgagor … in the manner authorised by section 170 of the Conveyancing Act 1919, (b1) where a notice is required to be served under paragraph (b), a copy of that notice has been served (in the manner authorised by section 170 of the Conveyancing Act 1919) on [additional persons, as specified in subpars (i)-(iii)] and (c) where such a notice is so served, the requirements of the notice are not complied with within the time notified pursuant to subsection (3) (d).
10. The following extracts from [48]-[51] of Basten JA's judgment explain the basis on which the registered proprietor succeeded: [48] The resolution of the issue must turn upon the construction of s 57(2). It was that provision under which the appellant exercised its power of sale and it is therefore proper to consider whether the power was properly invoked. … [49] Section 57(2)(a) requires identification of a "default" in one of two circumstances which, relevantly for present purposes, may be identified as first, "in the observance of any covenant … in the mortgage"; or second, "in the payment, in accordance with the terms of the mortgage … of [money] the payment of which is secured by the mortgage". [50] Dealing with the second alternative first, it is difficult to see that the appellant could properly invoke a default of such a kind in the present case, because there was no payment "in accordance with the terms of the mortgage", in circumstances where the mortgage did not itself contain terms specifying the amounts of and times for making payments. Accordingly, in order to make out its entitlement under that provision, the appellant had to demonstrate a default in the observance of a covenant in the first mortgage. It was not suggested that any relevant covenant was to be implied; accordingly, the covenant must be one expressed in the mortgage. The relevant covenant was to be found in cl 2.1, which required that the mortgagor "must pay the secured money to the Mortgagee as provided in any related agreement" or, if there were no money owing under a related agreement, "must pay that secured money to the Mortgagee within 14 days after the Mortgagee demands payment" … . Default in that respect can therefore only be identified by reference to the terms of the deed of loan. Unless the terms of that deed are properly described as covenants, agreements or conditions "expressed … in the mortgage", the appellant will have failed to bring itself within s 57(2)(a) … . [51] One consequence of this reading is to limit the debts which, although unenforceable under the general law, will engage the power of sale attracted to a registered mortgage, to those identified in a covenant "in the mortgage" or required to be paid "in accordance with the terms of the mortgage".
11. In Perpetual Trustees Victoria Limited v English [2010] NSWCA 32, as in Sabah Yazgi v Permanent Custodians Limited, the signature of one of two registered proprietors had been forged on both a mortgage and a loan agreement that the mortgage was intended to secure. The mortgage was registered. Sackville JA (Allsop P and Campbell JA agreeing) said at [11]: [11] [The] question is whether the indefeasibility of the mortgagee's title effectively validates all the terms of what otherwise would be a void instrument and, if not, what is the test for identifying the provisions of the mortgage that can be enforced against the estate or interest of the innocent registered proprietor.
12. At [68] Sackville JA set out eight principles applicable to a case of this kind, the last four of which are presently relevant, as follows: (5) The registration of a forged mortgage validates those terms of the mortgage which delimit or qualify the estate or interest of the mortgagee or are otherwise necessary to assure that estate or interest to the registered proprietor: PT v Maradona at 679; Yazgi v Permanent Custodians at [19]-[20]. (6) It is necessary to construe the terms of a mortgage to determine the scope of the estate or interest in respect of which indefeasibility is conferred by registration of the mortgage: Yazgi v Permanent Custodians at [22]. Thus whether registration of a forged mortgage allows the mortgagee to enforce its security interest in the land in relation to a debt or obligation arising under an agreement separate from the mortgage is a question of construction of the mortgage: Westpac New Zealand Limited v Clark [2009] NZSC 73 at [43], per Blanchard, Tipping and Wilson JJ. (7) Generally speaking, if the mortgagee specifies a sum of money (plus interest) as the amount secured by the mortgage, the charge created by the mortgage will secure the amount so specified even if the document creating the indebtedness is void under general law principles: Small v Tomasetti. (8) However, if as a matter of construction, the mortgage does not take effect as a security over the land in relation to a claimed debt or obligation, registration of the mortgage will not entitle the mortgagee to exercise remedies, such as the power of sale, to enforce any such claimed debt or obligation: Provident Capital v Printy at [50]-[52]; Yazgi v Permanent Custodians at [25]ff. The question of construction may be particularly difficult where the registered mortgage refers to antecedent documentation which is not incorporated in the Torrens register and which may be invalid on general law principles.
13. Upon the proper construction of the terms of the mortgage including the expressions "Secured Money" and "Secured Agreement" employed therein, his Honour concluded that the loan agreement validly executed by only one of the registered proprietors was not a Secured Agreement as defined. The result was that the mortgage secured nothing.
14. The defendant in the present case placed great reliance upon Chaudhary v Chaudhary [2017] NSWCA 222, in which the two registered proprietors of a residential property, AC and JC, executed a mortgage in favour of V, who had provided $1.2 million to AC in order to fund AC's contribution to the purchase price of the property. The mortgage contained the following express covenants: 1. The Mortgagor [AC] will pay to the Mortgagee the principal sum of One million two hundred thousand ($1,200,000.00) dollars or so much thereof as shall remain unpaid, on demand. 5. The parties acknowledge that the co-borrower [JC] shall have no personal liability under this security and her liability shall be limited to the right of the lender to exercise a power of sale in respect of the property secured under this mortgage.
15. The mortgage was registered some years after the advance of $1.2 million had been made by V to AC. Following registration, demand was made by V for repayment. When this demand was not met, V commenced proceedings for possession of the security. JC contended that the advance had been a gift and was not repayable. The Court did not approach JC's contention on the basis that the mortgagee's estate or interest was indefeasible and that the question to be answered was whether that estate or interest was ascertainable or quantifiable. The Court did not refer to the cases discussed above, nor did their Honours examine whether the first covenant (quoted at [91] of the judgment) sufficiently defined the estate or interest of the mortgagee. It is implicit in the judgment of Emmett AJA (Payne JA and Sackville AJA agreeing) that the first covenant was considered insufficiently certain to show on its face that the mortgagee's estate under the mortgage was for repayment of a debt of $1.2 million. Emmett AJA found it necessary to make an examination of the circumstances surrounding the payment of the $1.2 million in order to ascertain whether it had been a gift or loan. It was found to have been a loan.
16. The defendant submits that a similar approach should be taken in the present case and that I should not treat the registered mortgage as conferring upon the plaintiff an indefeasible charge over the property for the repayment of $200,000 plus interest but should enquire behind the mortgage to determine whether that sum was a gift or loan. I reject that submission. The covenants in Annexure A to this mortgage, in combination with the items numbered 6-14 in Annexure B, very clearly delineate the mortgagee's interest as security for a precisely quantified loan. The case is very similar to Small v Tomassetti. The covenants in the mortgage that I have to consider do not exhibit uncertainty of the kind that had to be resolved in Chaudhary v Chaudhary. In any event, if examination of the underlying transaction were necessary, attention would be directed to the Pre Contractual Statement which I have found to be an offer and acceptance giving rise to a contract of loan supported by consideration. The result would be the same.
17. For these reasons, Issue 1A is also determined adversely to the defendant and I conclude that the mortgage is an effective, enforceable security for the debt of $200,000 and the interest payable in accordance with the mortgage covenants.

Relief under the Contracts Review Act - Issues 3 and 4

1. The following extracts from the Contracts Review Act are relevant to the way in which the defendant has put his case for relief under that legislation: 7 Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. 9 Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: … (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, … (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, ... ... (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.
2. Subparagraphs (d), (h) and (i) of s 9(2) are the factors highlighted by the defendant's counsel in her submissions as those which are said to bear upon injustice of the mortgage and loan agreement of 25 May 2004. Under subpar (d) the defendant submits that as at May 2004 he had already borrowed the maximum that Westpac Bank would lend against the land, leaving only approximately $80,000 of equity assuming that the value of the land equated to the price of the vacant block plus construction costs. The defendant submits that "it was inevitable that the defendant would not be able to repay the $200,000 in 2024" and that he would therefore necessarily default under the mortgage to the plaintiff. It is submitted that this amounted to "asset lending", a term that has been applied to situations where a lender knows that the borrower has no capacity to repay or is reckless as to that possibility. Reliance was placed upon cases in which such situations have been judicially considered, for example: Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [128] (Handley JA) and Egan v Egan [2018] NSWSC 202 at [97] (Davies J).
3. Because of the long timeframe for repayment, with no instalments of principal due in the meantime and a negligible rate of interest, I do not accept that from the perspective of May 2004 it was inevitable that the defendant would be unable to make repayment on the due date. His Westpac loan required repayments comprising both principal and interest and was for a term of 30 years after full drawdown. It would be expected that after 20 years a significant amount of the principal owing to Westpac would have been paid off and the defendant's equity would have correspondingly increased. Further, it would be reasonable to expect that over the course of 20 years the value of the defendant's land would improve, giving him yet more equity.
4. I see no reason why it should be regarded as inevitable that, by 25 May 2024, the defendant would be unable to refinance the debt to the plaintiff. It would also be reasonable to expect that over 20 years the defendant would accumulate savings. The Westpac Bank repayments were such that he had little surplus cash in 2004. But it was not to be expected that his income was fixed from that date forward. It would be a normal expectation that earnings may increase with maturity, seniority and experience, from the starting point of his remuneration at age 25.
5. The defendant relies upon the fact that before signing the mortgage he did not obtain financial advice regarding the risk that he might not be to make repayment in 20 years' time. It is apparent that no such advice was obtained. But that did not give rise to injustice in the circumstances in which the defendant committed to the transaction. The evidence does not disclose that such advice was sought. Certainly the plaintiff did not impede him from obtaining it. Nor did she seek to pressure him about execution of the documents in such a manner that he would not have had time to obtain advice.
6. The defendant relies upon the plaintiff's evidence that she told him "I want to make sure if you get a partner I do not lose my money": see [50] above. It is submitted on his behalf that this amounted to an expression of intention by the plaintiff that she would not enforce the mortgage unless the defendant entered into a relationship with a partner. The plaintiff's words did not convey such a representation and could not reasonably have been so understood. The plaintiff said nothing to negate the obligation of the defendant to make interest payments and, in due course, to repay the principal. No assurance was given or implied that he could disregard the instalments with impunity and that only the formation of a relationship would trigger enforcement.
7. More generally, I do not consider that any reason given by the plaintiff as to why she wanted the defendant to sign the mortgage and the loan document is relevant to whether the "contract [was] unjust in the circumstances relating to the contract at the time it was made," for the purposes of s 9(1) of the Contracts Review Act. The evidence suggests that the plaintiff perceived the mortgage would protect her right to be repaid against any partner with whom the defendant might enter into a relationship and that it would enable her to effect, in conjunction with her will, an equal distribution between her two children. These subjective purposes, either alone or in conjunction with other circumstances, do not make the mortgage or the loan agreement unjust.
8. The plaintiff gave evidence that she made further payments to the benefit of the defendant after May 2004 to a total of over $258,000 by mid October 2014. She said that she made many of these because she knew the defendant did not have the money for them. Contrary to the defendant's submission, this does not show that the plaintiff knew she was putting her son in a position of inevitable default by requesting him to execute the mortgage. The evidence does not suggest that the further payments by the plaintiff on the defendant's behalf were for necessities. On the contrary, the evidence is that the defendant was extravagant in his acquisitions, at the plaintiff's expense. Further, the only immediate liability to which the mortgage and Pre Contractual Statement gave rise was the negligible outgoing of $41.67 per month. I accept the plaintiff's evidence that she thought he could afford this. She only asked him for it on the first occasion that it fell due, 25 June 2004. The defendant responded dismissively. The fact that the plaintiff did not thereafter pursue this small monthly charge does not establish that she was aware, at the time when the mortgage was signed, of circumstances that rendered the transaction unjust.
9. For these reasons I will not grant the defendant relief against enforcement of the mortgage, pursuant to the Contracts Review Act.

Promissory Estoppel

1. The defendant contends that the plaintiff represented to him that the mortgage and loan agreement would not be enforced, in two ways. First, by telling him that she wanted to ensure that if he acquired a partner she would not "lose [her] money". I have stated above (at [116]) my conclusion that her expression of this purpose did not convey and could not reasonably have been taken to convey that the mortgage would be enforced only in the circumstances referred to. Secondly, the representation is said to have been conveyed by the fact that the plaintiff did not from month to month after 25 May 2004 demand payment of interest instalments and nor did she call in the principal when interest was not paid. Again, this tolerance of default did not, without more, convey a representation that the plaintiff would not at any time or in any circumstances insist upon her mortgage rights.
2. Nothing in the evidence persuades me that the defendant made an assumption, from the above-mentioned circumstances, that the plaintiff would not enforce the mortgage. The defendant has not given evidence of having made any such assumption and it would have been unsustainable for him to have done so. He denies having been aware of the loan agreement and mortgage and says he was misled into thinking that on 25 May 2004 he had only signed a formal document with Westpac. He denies that the plaintiff requested him to make the first interest payment in June 2004. When he received the s 57(2)(b) notice in August 2017 he sent an email denying all knowledge of a mortgage. He could hardly now assert that he was induced by representations or conduct or inaction of the plaintiff to assume that the mortgage would not be enforced according to its terms.
3. It follows also that the defendant has not shown that he acted to his detriment on the basis of any assumption so induced. Nothing has occurred that would make it unconscionable for the plaintiff now to enforce the mortgage. The defendant's promissory estoppel case has no substance.

Resulting trust

1. The plaintiff made an alternative claim that her contributions to the acquisition of the land and improvements gave rise to a constructive or resulting trust in her favour, for a proportionate interest in the fee simple. In view of my conclusions on the plaintiff's principal claim under the mortgage it is not necessary to examine the evidence and arguments concerning this claim. Usually the Court would resolve at first instance all issues and claims, with reasons, against the eventuality of a successful appeal against the primary basis of decision. However, this is a case involving a relatively small amount of money, albeit of great importance to the parties, and it has been litigated with exhaustive attention to a wide range of factual and legal questions. As I have formed a clear view on sufficient of the issues to permit disposition of the case, it would appear wasteful of Court resources for further time to be spent upon analysis of an alternative case for the plaintiff, which is not necessary to my decision to grant the primary relief sought.

Orders

1. The plaintiff has established her entitlement to judgment for possession of the land. Leave will be granted to issue a writ of execution. The plaintiff is also entitled to judgment for the amount of the principal debt and outstanding interest under the mortgage. I will hear the parties as to the costs of the proceedings, which on the face of the material presently before me should follow the event.

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