National Australia Bank Limited v Thirup and Anor

Supreme Court of NSW|2011-07-29|Before: Johnson J, Cole J

(Cole J, 3 February 1989, BC8902608) Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited [1986] HCA 14; 160 CLR 226 Burston Finance Limited v Speirway Limited [1974] 1 WLR 1649 Highland v Exception Holdings Pty Limited (In Liq) [2006] NSWCA 318; 60 ACSR 223 Bofinger v Kingsway Group Ltd [2009] HCA 44; 239 CLR 269 MDN Mortgages Pty Limited v Caradonna [2010] NSWSC 1298 Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; 126 CLR 161 Horrobin v Australia and New Zealand Banking Group Limited (1996) 40 NSWLR 89

Hannon v Afro Pacific Capital Limited [2009] NSWSC 564 McGuirk v University of New South Wales [2009] NSWSC 1424 Category: Interlocutory applications Parties: National Australia Bank Limited (Plaintiff/First Cross Defendant) Patricia Edith Thirup (First Defendant/First Cross Claimant) Harold Soren Christian Thirup (Second Defendant/Second Cross Claimant) Mortgage House of Australia Pty Limited trading as Mortgage House (Second Cross Defendant) Registrar General of New South Wales (Third Cross Defendant) Representation: Mr DC Price (Plaintiff/First Cross Defendant) Mr PE King; Ms F Sinclair (Defendants/Cross Claimants) Mr A Young (Second Cross Defendant) Mr H Altan (Third Cross Defendant) DibbsBarker (Plaintiff/First Cross Defendant) McKells Solicitors (Defendants/Cross Claimants) HWL Ebsworth (Second Cross Defendant) Solicitor for the Registrar General (Third Cross Defendant) File Number(s): 2010/49771

Judgment 1JOHNSON J : By Statement of Claim filed on 25 February 2010, the Plaintiff, National Australia Bank Limited, sought judgment for possession of land known as 74 Gregory Road, Leppington ("the Leppington property"), together with judgment for the sum of $1,087,788.30 against the Defendants, Patricia Edith Thirup and Harold Soren Christian Thirup, arising from alleged mortgage default. 2The Defendants filed a Defence on 20 July 2010. On the same day, the Defendants filed a Cross-Claim against the Plaintiff, Mortgage House of Australia Pty Limited trading as Mortgage House ("Mortgage House") and the Land and Property Management Authority ("the Registrar General"). 3On 12 October 2010, the Plaintiff filed a Defence to the Cross-Claim.

The Present Applications 4This judgment arises from the joint hearing of a number of applications: (a) an application by the Defendants, by Notice of Motion filed 8 April 2011, for leave to file and serve an Amended Defence and an Amended Statement of Cross-Claim; (b) an application by the Plaintiff, by Notice of Motion filed 29 July 2011, for summary judgment under Rule 13.1 Uniform Civil Procedure Rules 2005 ("UCPR") or, alternatively, that the Defence filed 20 July 2010 be struck out and that default judgment be given for the Plaintiff under Rule 16.4 UCPR; (c) application by the Registrar General, by Notice of Motion filed 1 August 2011, for an order under Rule 13.4 UCPR summarily dismissing the Cross-Claim against the Registrar General or, alternatively, an order under Rule 14.28 UCPR that the Cross-Claim be struck out against the Registrar General. 5The Plaintiff, Mortgage House and the Registrar General oppose the Defendants' application for leave to file and serve an Amended Defence and Amended Cross-Claim.

Hearing of the Applications 6The proceedings came before me initially on 8 April 2011 in accordance with the Judicial Directions Hearing procedure under the Possession List Practice Note SC CL 6. The directions hearing was adjourned to 5 May 2011. On that day, I adjourned the Defendants' Notice of Motion filed 8 April 2011 to 29 July 2011 for hearing. 7The hearing of the Defendants' application commenced before me on 29 July 2011. 8The hearing could not be completed that day. The Plaintiff and the Registrar General sought leave to file their Notices of Motion in advance of the resumed hearing date on 12 August 2011. That was done, and a joint hearing of the three Notices of Motion proceeded on 12 and 15 August 2011. 9Mr DC Price of counsel appeared for the Plaintiff. Mr PE King and Ms F Sinclair appeared for the Defendants. Mr A Young, solicitor, appeared for Mortgage House. Mr H Altan of counsel appeared for the Registrar General. 10A number of affidavits were read and several bundles of documents were tendered at the hearing of the applications. 11Detailed written submissions were furnished by the parties between 17 June 2011 and 16 August 2011. Those written submissions are on the file. They recount the submissions made on the applications. It is not necessary to recite the submissions for the purpose of this judgment.

The Core Facts 12There are a number of basic or foundational or core facts. 13At some time prior to 2008, the Defendants became registered proprietors (as joint tenants) of the Leppington property. 14As at 8 July 2008, the Leppington property was subject to a mortgage to Permanent Custodians Limited ("PCL"). 15At some point prior to July 2008, the Defendants decided to take out a fresh mortgage over the Leppington property and to discharge the existing mortgage to PCL as part of that process. According to paragraph 3 of the verified Statement of Cross-Claim filed 20 July 2010, the Defendants approached a mortgage broker at Fairfield "for the purpose of refinancing their existing loan with the Royal Guardian [the broker for the purpose of the PCL mortgage] for $860,000 and to obtain a financial accommodation to complete house renovations and extensions to enable additional income by payment for accommodation to meet the mortgage and overdraft" . The Defendants approached a mortgage broker, Victor Sumitra, for this purpose. Some documents at least were signed by the Defendants as part of this process. 16The Plaintiff agreed to advance loan monies to the Defendants, secured by a mortgage. In due course, on 8 July 2008, a settlement took place at which a bank cheque drawn in favour of PCL in the sum of $859,067.72 was handed over by the Plaintiff. A mortgage purportedly executed by the Defendants over the Leppington property was handed to the Plaintiff. 17In due course, the mortgage in favour of PCL was discharged and was removed from the Register. A mortgage in favour of the Plaintiff was registered. 18On 8 July 2008, a total sum of $945,000.00 was credited to a business cheque account with the Plaintiff in the name of the Defendants. From this sum, a number of amounts were deducted to reflect the payment out of the loan owing to PCL and associated sums with respect to the registration of the mortgage to the Plaintiff (Exhibit 2, page 69). 19Thereafter, various withdrawals were made from that account between 14 July 2008 and 29 August 2008 with certain deposits being made between 1 September 2008 and 15 September 2008 (Exhibit 2, pages 69-70). 20The Defendants are in default with respect to payments due to the Plaintiff under the mortgage.

The Defendants' Account of Events 21Beyond these core facts, a number of further facts are alleged by the Defendants. 22The Defendants assert that, although they instructed Mr Sumitra to act for them on the loan application, they did not agree to the terms of the loan and mortgage with the Plaintiff. Indeed, the Defendants allege that they did not sign the mortgage or any loan documents and that their signatures on these documents have been forged. The Defendants contend that they would not have entered into a loan arrangement with the Plaintiff in the terms which came about as they would not have been able to service the loan. 23Although the Defendants acknowledge that the pre-existing mortgage to PCL was discharged as part of this process, they maintain that they did not know that this was happening in July 2008. The Defendants assert that they only came to learn of what had been done by Mr Sumitra, apparently on their behalf, at a later time. 24The Defendants assert that there was fraud on the part of Mr Sumitra and that this fraud can be sheeted home to the Plaintiff. 25In addition, the Defendants contend that, in some imprecise way, there was wrongful conduct on the part of officers of the Plaintiff, Gary Chan and Rose Loong, employed by the Plaintiff in their dealings with the Defendants' loan and mortgage. 26The Defendants contend, as well, that Mr Sumitra was acting as an agent for Mortgage House. 27The Defendants' claim against the Registrar General asserts that they have suffered loss or damage as a result of the operation of the Real Property Act 1900 in respect of the Leppington property, so that a claim is made upon the Torrens Assurance Fund pursuant to Part 14 (ss.128-135) Real Property Act 1900 .

The Plaintiff's Claim for Summary Judgment 28The appropriate starting point if the Plaintiff's claim for summary judgment. 29The applicable principles on a summary judgment application are clear. Before a Court will give summary judgment to a plaintiff, it is necessary for the Court to reach a high level of satisfaction that the order should be made. The principles are well known - a very clear case is required before summary judgment is granted and the power to order summary judgment should be sparingly employed: Dey v Victorian Railway Commissioners [1949] HCA 1; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129; Webster v Lampard [1993] HCA 57; 177 CLR 598 at 602-3; and Cosmos E-C Commerce Pty Ltd v Bidwell and Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]. 30The claim for summary judgment by the Plaintiff in this case involves consideration of the nature of the Plaintiff's claim and an assessment whether a triable or arguable defence to that claim is disclosed. 31The Plaintiff seeks summary judgment involving: (a) judgment for possession of the Leppington property; (b) leave to issue a writ of possession to enforce judgment for possession of the Leppington property; (c) judgment for the sum of $1,379,685.23, calculated as at 16 August 2011, together with interest until the date of payment at the rate specified in paragraph 24 of the Statement of Claim; (d) an order that the Defendants pay the Plaintiff's costs on a full indemnity basis as provided for in Clause 13.4 of the Memorandum of Terms incorporated into the Defendants' mortgage dated 8 July 2008. 32Mr Price submitted that the Plaintiff's primary submission was that summary judgment ought be given in its favour in relation to each of these components but that, at the very least, summary judgment ought be given involving judgment for possession of the Leppington property together with leave to issue a writ a possession to enforce that judgment. 33The Plaintiff seeks summary judgment upon the basis that: (a) it has the benefit of indefeasibility pursuant to s.42 Real Property Act 1900 flowing from the registration of the mortgage dated 8 July 2008; (b) s.60 Real Property Act 1900 entitles the mortgagee to possession of the mortgaged land upon default in payment of the principal sum, or any part thereof, secured by the mortgage, there being clear default by the Defendants in this case; (c) the Defendants concede that monies advanced by the Plaintiff were used to discharge the previous mortgage to PCL over the Leppington property so that, even if the registered mortgage in favour of the Plaintiff was not valid, the Plaintiff relies upon the principle of subrogation as the basis of its entitlements. 34The Defendants submit that they are entitled to rely upon the fraud exception in s.42 Real Property Act 1900 . With respect to the other heads of the Plaintiff's claim for summary judgment, the Defendants submit that there are significant factual issues which would need to be determined at trial concerning the acts of Mr Chan and Ms Loong which may sheet home fraud and forgery to officers of the Plaintiff. All of this, it was submitted, may constitute equitable or legal defences to the Plaintiff's claim for possession and monetary judgment. 35The detailed submissions made on behalf of the Plaintiff and the Defendants on these issues are contained in the written submissions on file, and the transcript of what became a lengthy hearing extending over parts of three separate sitting days. 36I turn to the resolution of the matters falling for decision. 37If it be the case that a mortgage has been executed fraudulently, it does not follow automatically that the mortgage is unenforceable: Van Den Heuvel v Perpetual Trustees Victoria Limited [2010] NSWCA 171. Good title may be obtained by the mortgagee provided that the fraud is not the fraud of the mortgagee or his agent: Schultz v Corwill Properties Pty Limited (1969) 90 WN (Pt1) (NSW) 529 at 537-539. 38In addition to the pleadings and proposed pleadings, there are (perhaps unusually) at this point, a number of affidavits which have been sworn by the Defendant, Mrs Thirup, in addition to the verified Defence and verified Statement of Cross-Claim, both filed on 20 July 2010. Accordingly, there are available at this time sworn accounts from Mrs Thirup concerning certain factual aspects of the case. There are, as well, the proposed Amended Defence and proposed Amended Statement of Cross-Claim (Exhibits PT-7 and PT-8 to the affidavit of Mrs Thirup sworn 31 May 2011). These proposed amended pleadings contain variations from the verified Defence and verified Statement of Cross-Claim filed on 20 July 2010. 39I will not purport to resolve areas of factual dispute for the purpose of this summary judgment application. That is not appropriate on an application of this type. However, in my view, it is appropriate for the Court to have regard to sworn accounts given by Mrs Thirup concerning dealings between herself and her husband and Mr Sumitra. 40The conversations which Mrs Thirup says occurred with Mr Sumitra, point to Mr Sumitra acting as the mortgage broker for the Defendants. Mrs Thirup states that Mr Sumitra indicated that applications to refinance could be made to the Plaintiff or the St George Bank. It is not alleged that Mr Sumitra stated to Mrs Thirup that he was, in some way, an agent for the Plaintiff. 41In other documents, the Defendants have asserted expressly that the person who is alleged to have committed the fraudulent acts is Mr Sumitra, whom they described as "their loan broker" (page 10, Annexure C, affidavit of Mr McKell sworn 27 April 2011). 42There is no pleading in the Defence filed 20 July 2010 that Mr Sumitra was the agent of the Plaintiff, it being positively pleaded that Mr Sumitra was the agent of Mortgage House. 43A finance broker is the agent of the borrower: Octapon Pty Limited v Esanda Finance Corporation Limited (Cole J, 3 February 1989, BC8902608, page 27) applying Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited [1986] HCA 14; 160 CLR 226 at 234. 44I accept the Plaintiff's submission that fraud on the part of the Defendants' agent, Mr Sumitra, is not fraud which undermines the Plaintiff's title for the purposes of s.42 Real Property Act 1900. It was, perhaps, for this reason that Mr King sought to contend that the fraud which the Defendants wished to rely upon for this purpose was the fraud (or knowledge of fraud) of officers of the Plaintiff, namely Mr Chan and Ms Loong. In this way, Mr King sought to bring the Defendants' proposed case within the first situation referred to by Street J in Schultz v Corwill Properties Pty Limited at 537. 45In my view, there is a fundamental difficulty for the Defendants on this issue. Their presently pleaded case asserts that Mr Sumitra was the agent of Mortgage House, not the Plaintiff. Relevant legal principles point to Mr Sumitra being the agent of the Defendants. The Defendants' case appears to be that it was Mr Sumitra who acted fraudulently and forged relevant documents. The Defendants' case appears to be that officers of the Plaintiff had knowledge, in some way, that a fraud had been committed. This falls within the second situation identified by Street J in Schultz v Corwill Properties Pty Limited at 537-539. The Defendants' case against the Plaintiff, in truth, falls within the second situation, and not the first, as identified by Street J. Applying the principles stated by Street J in that case, the Defendants do not fall within the fraud exception in s.42 Real Property Act 1900 . 46In approaching the matter in this way, I am not, of course, making a finding or expressing a conclusion that the officers of the Plaintiff engaged in wrongful conduct. Rather, I am taking the Defendants' case at its highest for the purpose of testing the legal foundation for the suggested defence to the Plaintiff's claim. 47I am satisfied that this part of the Defendants' proposed defence does not represent a viable or arguable defence to the Plaintiff's claim. 48If, however, the position was sufficiently arguable for the Defendants to survive the summary judgment application on this basis, there remains the second and third grounds upon which the Plaintiff seeks summary judgment. 49With respect to the second ground, there is no question that there has been default, at least in part, by the Defendants under the mortgage to the Plaintiff so as to attract the provisions in s.60 Real Property Act 1900 . 50The third ground, in my view, operates decisively in favour of the Plaintiff, when taken with the second ground. 51Prior to July 2008, the Leppington property was subject to a mortgage to PCL which secured a loan which exceeded $700,000.00, and was calculated on discharge in July 2008 in the sum of $859,067.72. Monies advanced by the Plaintiff under the loan and mortgage arrangement were used to discharge that mortgage, in favour of the Defendants, with the PCL mortgage thereafter being removed (in the ordinary way) from the Register. The mortgage in favour of the Plaintiff was then registered. 52Although Mr King sought to suggest that, in some way, there may have been some problem with respect to the discharge of the PCL mortgage, the title searches are in evidence and point irresistibly to the conclusion that the PCL mortgage was discharged and removed from the Register on the payment of the bank cheque drawn from monies of the Plaintiff. In my view, any suggestion that there is any outstanding question concerning the discharge of the PCL mortgage, using the Plaintiff's monies, is fanciful. 53Accordingly, even if the Plaintiff's registered mortgage was not valid, the Plaintiff can rely upon the principle of subrogation as the basis of its entitlement. The principle of subrogation as applied in the area of mortgage law is that stated by Walton J in Burston Finance Limited v Speirway Limited [1974] 1 WLR 1649 at 1652. The principle of subrogation has been applied in the area of mortgage law in Australia: Highland v Exception Holdings Pty Limited (In Liq) [2006] NSWCA 318; 60 ACSR 223 at [102]; Bofinger v Kingsway Group Ltd [2009] HCA 44; 239 CLR 269 at [6], [88]-[98]; MDN Mortgages Pty Limited v Caradonna [2010] NSWSC 1298 at [261]-[264]. 54I accept the Plaintiff's submission that the present case is one where the Plaintiff advanced monies on the basis that it was receiving security for that advance, and there is no basis for inferring that the Plaintiff intended that the previous mortgage would be extinguished if it did not obtain its security. 55As the Plaintiff had paid out the PCL mortgage, I accept that the Plaintiff is subrogated to the rights of PCL, with the consequence that it is entitled to an order for possession under s.60 Real Property Act 1900 as a consequence of default by the Defendants in paying at least part of the amount secured. 56Mr King submits that the Statement of Claim does not plead a case based upon subrogation. That is true. However, I accept the Plaintiff's submission that the factual foundation for such a claim is admitted by the Defendants in documents relied upon by them, and in submissions made by counsel on their behalf. I accept the Plaintiff's submission that these admissions may found a judgment against the Defendants under Rule 17.7 UCPR. The subrogation claim involves application of legal principle to facts which have been admitted, and which are, in any event, clearly established. 57Mr King submits that, if subrogation was pleaded by the Plaintiff in the Statement of Claim, there would be equitable defences available to the Defendants to plead including a want of clean hands on the part of the Plaintiff. Such a defence, it is said, would relate to the alleged wrongdoing on the part of officers of the Plaintiff with respect to the mortgage and the activities of Mr Sumitra. 58Even if such an argument might be available, and I allow that prospect hypothetically for present purposes, the Defendants have a fundamental difficulty in resisting the Plaintiff's claim. 59The Defendants obtained the benefit of the discharge of the PCL mortgage, a result achieved using the Plaintiff's monies advanced for that purpose. As a result, the PCL mortgage was removed from the Defendants' title. According to the Defendants' verified Statement of Cross-Claim, they had approached Mr Sumitra with a view to obtaining refinancing to pay out $860,000.00 owed on the existing mortgage and to obtain additional monies for other purposes. 60Although the Defendants complain that Mr Sumitra engaged in forgery, and that officers of the Plaintiff are said somehow to have had knowledge of Mr Sumitra's wrongdoing, the unavoidable conclusion is that the Defendants' indebtedness to PCL in the order of $860,000.00 was expunged using the Plaintiff's monies. 61In the course of submissions, I raised with Mr King the consequences of his argument. If the Defendants' argument was to be accepted, the PCL mortgage has been discharged, but the Plaintiff would have no entitlement to obtain possession of the Leppington property or to sue the Defendants for the sum of $945,000.00 plus interest and other charges advanced by the Plaintiff, or indeed any lesser sum. I raised with Mr King the question whether this consequence would result in a windfall for the Defendants, who would be left with unencumbered title to the Leppington property without any debt to the Plaintiff. In my view, no submission advanced for the Defendants constituted a satisfactory arguable response to this question. 62I am satisfied that, the Plaintiff has made good its claim for summary judgment with respect to the claim of possession of the Leppington property and the issue of a writ of possession to enforce that judgment. I base this conclusion upon my acceptance of the Plaintiff's submissions with respect to the three grounds relied upon. However, even if the Defendants had an arguable defence with respect to the s.42 issue (and I do not think that they do), there is a clear and powerful basis for the Plaintiff having summary judgment of the type which I have mentioned. 63In my view, the arguments which the Defendants seek to advance, at their highest, may operate to reduce the total level of indebtedness which they have to the Plaintiff. That controversy would involve consideration as to whether the Plaintiff might be confined to monetary judgment in the order of $860,000.00 rather than the present claimed figure which exceeds $1.3 million, or some figure in between. The existence of that controversy, however, does not constitute an impediment to the Plaintiff having summary judgment for possession of the Leppington property upon the clear bases which I have found established. 64To the extent that the Defendants seek to rely upon a form of set-off by way of defence or cross-claim, I note that a cross-claim or set-off is not a defence to a claim for possession of land: Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; 126 CLR 161 at 165-167, 169; Horrobin v Australia and New Zealand Banking Group Limited (1996) 40 NSWLR 89 at 99-100. 65I propose to grant summary judgment to the Plaintiff by way of an order for possession and the issue of a writ of possession but not, at this time, by way of monetary judgment.

The Registrar General's Claim for Summary Dismissal or Striking Out of the Statement of Cross Claim 66The stringent test referred to earlier (at [29]) for summary judgment has equal application on a summary dismissal application. It is necessary for the Registrar General to demonstrate a very clear case for summary dismissal before that power will be exercised. 67I am satisfied that the claim against the Registrar General in the Statement of Cross-Claim filed 20 July 2010 (at paragraph 32) does not comply with pleading rules in fundamental respects. It is no doubt for that reason that the Defendants seek leave to file an Amended Statement of Cross-Claim which attempts to articulate in more detail the claim sought to be made against the Registrar General. 68The determination of the Registrar General's application for summary dismissal ought extend to an assessment of the Defendants' proposed claim, if leave was granted to amend the Cross-Claim. 69It is appropriate at this point to refer, as well, to the function of pleadings, an issue to which I will return later in this judgment. In Hannon v Afro Pacific Capital Limited [2009] NSWSC 564, I said at [10]-[15]: "10 The principles applicable on a strike-out application under Part 14 rule 28 of the Rules are likewise not in doubt. The function of pleadings is to state, with sufficient clarity, the case that must be met by the other party. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and to define the issues for decision: Banque Commerciale SA In Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286, 296, 302-303. 11 The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible upon the grounds of relevance: Banque Commerciale at 296. 12 Pleadings also provide the structure upon which interlocutory processes such as discovery, are governed and they constitute the record of the matters which the Court has resolved and become relevant if, in any subsequent proceedings, any party claims issue estoppel or res judicata: Australian Competition and Consumer Commission v Fox Symes and Associates Pty Ltd [2005] FCA 1071 at [100]-[103]. 13 A pleading is embarrassing where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him: Gunns Ltd v Marr [2005] VSC 251 at [14]-[15]. 14 In Shelton v National Roads and Motorists Association Ltd [2004] FCA 1363, Tamberlin J explained the concept of 'embarrassment' with respect to pleadings at [18]: ''Embarrassment' in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434.' 15 A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Ltd (Bryson J, 7 March 1995, BC9504276 at pages 5-6)." 70The statutory foundation for the Defendants' claim against the Registrar General is contained in s.129 Real Property Act 1900 which provides: "129 Circumstances in which compensation payable (1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from: (a) any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land, or (b) the registration (otherwise than under section 45E) of some other person as proprietor of the land, or of any estate or interest in the land, or (c) any error, misdescription or omission in the Register in relation to the land, or (d) the land having been brought under the provisions of this Act, or (e) the person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud, or (f) an error or omission in an official search in relation to the land, or (g) any error of the Registrar-General in recording details supplied in the notice referred to in section 39 (1B), is entitled to payment of compensation from the Torrens Assurance Fund. (2) Compensation is not payable in relation to any loss or damage suffered by any person: (a) to the extent to which the loss or damage is a consequence of any act or omission by that person, or (b) to the extent to which the loss or damage: (i) is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer, real estate agent or information broker, and (ii) is compensable under an indemnity given by a professional indemnity insurer, or (c) to the extent to which that person has failed to mitigate the loss or damage, or (d) to the extent to which the loss or damage has been offset by some other benefit to that person that has arisen from substantially the same circumstances as those from which the loss or damage has arisen, or (e) where the loss or damage arises because of an error or miscalculation in the measurement of land, or (f) where the loss or damage arises from: (i) the breach by a registered proprietor of any trust (whether express, implied or constructive), or (ii) the inclusion of the same land in two or more grants, or (g) where the loss or damage arises from the recording, or the omitting to record, in the Register of an approved determination of native title or other matter relating to native title rights and interests, or (h) where the loss or damage arises from circumstances in respect of which this Act provides that proceedings against the Registrar-General do not lie, or (i) where the loss or damage arises from an error contained in a plan lodged in accordance with Division 3C of Part 2 of the Conveyancing Act 1919, or (j) where the loss or damage arises from the person's failure, as mortgagee or transferee of a mortgage, to comply with section 56C or from the cancellation of a recording with respect to a mortgage in accordance with section 56C (6), or (k) where the loss or damage arises from the recording of a Registrar-General's caveat in the Register under section 12 (1) (e) or (f) or the removal of such a caveat by the Registrar-General, or (l) where the loss or damage arises from the execution of an instrument by an attorney (under a power of attorney) acting contrary to, or outside of, the authority conferred on him or her by the power of attorney, or (m) where the loss or damage is the result of an easement not being recorded in the Register (except where the easement is not recorded in the Register due to an error of the Registrar-General), or (n) where the loss or damage arises from the improper exercise of a power of sale, or (o) where the loss or damage arises from the operation of section 129 of the Corporations Act 2001 of the Commonwealth, or (p) where the loss or damage arises from the provision by the Registrar-General of information supplied in the notice referred to in section 39 (1B) (subject to subsection (1) (g)). (3) Subsection (2) (g) applies whether the loss or damage is alleged to have been suffered: (a) by a holder of native title or a claimant for native title, or (b) by a person deprived of land or an estate or interest in land as a result of the making of an approved determination of native title, or (c) by any other person, but does not apply to an error made by the Registrar-General in the recording of matter in the Register. (4) For the purposes of subsection (2) (m), an error of the Registrar-General does not extend to the Registrar-General's failure, in relation to the creation of a qualified folio of the Register under Part 4A, to make searches or inquiries as to the existence of any easement. (5) The entitlement to compensation under subsection (1) does not confer any entitlement to compensation for personal injury. (6) In this section, information broker means a person who has entered into an agreement with the Registrar-General to make information in the Register available in accordance with the conditions determined by the Registrar-General under section 96B (2)." 71The Defendants' formulation of their claim against the Registrar General, as contained in the proposed Amended Cross-Claim, is in the following terms (paragraph 36): "The Cross-Claimants have suffered loss or damage as a result of the discharge of the PCL loan and the subsequent registration of the NAB mortgage. Particulars i) The Cross-Claimants have lost monies (full amount yet to be determined) on both the discharge of the PCL mortgage and on the registration of the NAB mortgage. ii) The Cross- Claimants have received some but not all of the monies that the First Cross-Defendant alleges were advanced to them and some of the monies advanced have been misappropriated by persons unknown to the Cross-Claimants. iii) The Cross-Claimants are bound by a more onerous loan with the First Cross-Defendant as mortgagee and are required to pay greater charges and a higher rate of interest than they were paving in respect of the PCL loan. iv) The Cross-Claimants are bound by a loan with rates of interest and a repayment schedule they would have never agreed to and which they are unable to service. v) The loan with the First Cross-Defendant increases the Cross-Claimants overall level of indebtedness which they are not in a position financially to service and as a consequence they are at risk of the Leppington property being repossessed. vi) The Cross-Claimants have incurred substantial costs and charges (full amount yet to be determined). vii) The Cross-Claimants health and reputations have been adversely affected." 72Mr Altan submits that no version of the pleaded or proposed claim of the Defendants discloses a reasonable cause of action against the Registrar General. He submits that the Defendants have failed to articulate any loss which is capable of being compensable loss for the purpose of s.129 Real Property Act 1900 . 73Mr King submitted that the losses sought to be claimed by the Defendants include bank fees and charges incurred in relation to the discharge of the PCL mortgage, the fact that the Defendants applied for a five-year housing loan but ended up with two-year loan with a higher interest rate which they were unable to service and alleged loss of reputation and personal suffering. 74I accept the submissions of the Registrar General that the Defendants' claimed losses are not losses that could, on any view, have been suffered "as a result of the operation of this Act in respect of any land" , the threshold requirement in s.129 to entitle a person to compensation under the Torrens Assurance Fund. 75The compensation provisions in Part 14 of the Real Property Act 1900 are intended to address the hardship that may be caused by the effects of indefeasibility. I accept that none of the alleged losses set out in paragraph 36 of the proposed Amended Cross-Claim, or otherwise contended for on behalf of the Defendants, can be sheeted home to the Register. Rather, they are alleged losses said to arise from the Defendants entering into what they allege was an improvident loan brought about by the alleged action of the Plaintiff and/or Mortgage House. 76Further, I accept the Registrar General's submission that s.129(2)(d) would constitute a bar to any claim by the Defendants in this case given that they obtained a benefit from the circumstances in the form of the discharge of the PCL mortgage. 77Should the claim against the Registrar General be summarily dismissed so that the Defendants will be shut out from pursuing any further claim under s.129 Real Property Act 1900 ? I keep in mind the demanding test for summary dismissal. 78The Defendants joined the Registrar General in the Statement of Cross-Claim filed on 20 July 2010 in an entirely flawed and embarrassing claim. The claim against the Registrar General in the proposed Amended Statement of Cross-Claim does not, in my view, disclose a reasonable cause of action against the Registrar General by way of a claim for compensable loss under s.129 Real Property Act 1900 . 79I am satisfied that a proper basis has been demonstrated for summary dismissal of the claim against the Registrar General. In due course, orders will be made dismissing the Cross-Claim as against the Registrar General. As it would be futile to grant leave to the Defendants to amend the Cross-Claim against the Registrar General, I will refuse leave in that respect as well.

Application by Defendants for Leave to Rely Upon an Amended Defence and an Amended Statement of Cross-Claim 80I have reached the point in this judgment where: (a) summary judgment will be granted to the Plaintiff for possession of land, but not by way of monetary judgment; (b) summary dismissal will be ordered with respect to the claim against the Registrar General. 81A range of submissions have been made for the Plaintiff and Mortgage House resisting a grant of leave to the Defendants to file an Amended Defence and an Amended Statement of Cross Claim. These submissions range from arguments that amendment would be futile to submissions that parts of the proposed pleadings are embarrassing and infringe the principles summarised at [69] above. 82I have determined that the only part of the Defendants' Defence and Cross-Claim which may remain on foot against the Plaintiff is that which relates to monetary judgment. Accordingly, any parts of the proposed Amended Defence and the proposed Amended Statement of Cross-Claim directed to the Plaintiff must be confined to that topic. In effect, I consider that the remaining controversy is whether the Plaintiff is to be confined to an entitlement in the order of $860,000.00 or the full current claim which exceeds $1.3 million, or some intermediate figure. This is a discrete topic which is not the subject of precise attention in the current proposed pleadings. 83Accordingly, I do not propose to grant leave to the Defendants to file the current proposed Amended Defence and current proposed Amended Statement of Cross-Claim as against the Plaintiff. If the Defendants seek an opportunity to reconsider the form of these proposed pleadings so that they might be confined in light of this judgment, I will consider their application to do so. As I have said, that issue is separate from the question of the Plaintiff's entitlement to an order for possession of the Leppington property, which I have already determined in the Plaintiff's favour. 84Mr Young has made a number of submissions concerning the vagueness and uncertainty of parts of the pleadings in the proposed Amended Cross-Claim against Mortgage House. Mr Young does not seek summary dismissal of the Cross-Claim against his client. Rather, he resists the application for leave to amend on a range of pleading grounds. 85There is considerable force in Mr Young's complaints concerning the proposed amended pleading against Mortgage House. Indeed, Mr King acknowledged in the course of submissions that there were deficiencies in the present formulation. I do not propose to grant the Defendants leave to file the proposed Amended Cross-Claim against Mortgage House. 86If the Defendants seek an opportunity to reformulate the proposed pleading against Mortgage House, I will consider their application to do so. As against that possibility, I observe that I accept the submissions of Mr Young concerning deficiencies in the proposed pleadings against Mortgage House. 87It is not the task of the Court or opposing parties to settle the Defendants' pleadings: McGuirk v University of New South Wales [2009] NSWSC 1424 at [35]. However, I observe that, at the least, the current proposed pleading fails to properly plead the basis upon which it is said that Mr Sumitra was the agent for Mortgage House and that parts of paragraph 16 of the proposed Amended Statement of Cross-Claim are vague and embarrassing in content. 88I do not propose to grant the Defendants leave to file the proposed Amended Defence and proposed Amended Statement of Cross-Claim in their present form.

Conclusion and Orders 89The Plaintiff has succeeded in obtaining summary judgment on its primary claim for possession of land, and has successfully resisted the Defendants' application to amend their pleadings. In these circumstances, I have in mind ordering the Defendants to pay the Plaintiff's costs of the hearing of the Notices of Motion. 90The Registrar General has succeeded on his Notice of Motion and has successfully resisted the Defendants' Notice of Motion. I have in mind ordering the Defendants to pay the costs of the Registrar General of the Notices of Motion. 91Mortgage House has successfully resisted the Defendants' application for leave to amend their pleadings. I have in mind ordering that the Defendants pay the costs of Mortgage House of the Notice of Motion. 92I will give the parties an opportunity to make submissions at the conclusion of this judgment on the question of costs, before making costs orders. 93I make the following orders: (a) pursuant to Rule 13.1 Uniform Civil Procedure Rules 2005 , I give judgment for the Plaintiff for possession of the whole of the land referred to in Certificate of Title Folio Identifier 37/221083 and known as 74 Gregory Road, Leppington, New South Wales; (b) I grant leave to the Plaintiff to issue a writ of possession to enforce the judgment for possession referred to above; (c) I decline the Plaintiff's application for summary judgment in monetary terms; (d) pursuant to Rule 13.4 Uniform Civil Procedure Rules 2005 , I order that the Cross-Claim be dismissed as against the Registrar General; (e) I refuse the Defendants' application for leave to file and serve an Amended Defence and an Amended Statement of Cross-Claim. 94I will now hear the parties on costs and any application by the Defendants for a further opportunity to make application for leave to serve an Amended Defence against the Plaintiff, and an Amended Statement of Cross-Claim against the Plaintiff and Mortgage House. [Counsel addressed] 95The Court has now heard submissions on outstanding questions including costs and other orders arising from my judgment. 96The Plaintiff seeks an order that the Defendants pay the costs of the Plaintiff's Notice of Motion and the costs of the Defendants' Notice of Motion. It is submitted that costs should follow the event and that the Plaintiff has succeeded almost entirely on its Motion and has succeeded entirely on the Defendants' Notice of Motion. 97Ms Sinclair, for the Defendants, submits that those orders ought not be made, but that the appropriate order with respect to the Defendants' Notice of Motion is that costs be costs in the cause. It was submitted that the Plaintiff has not succeeded entirely on its own Notice of Motion. 98In my view, the Plaintiff has succeeded almost entirely on its own Motion, although it has not succeeded to the full extent of obtaining summary judgment on all aspects of the claim. I think the appropriate order is that the Defendants should pay 80% of the Plaintiff's costs on the Plaintiff's Notice of Motion. It is appropriate, in my view, that the Defendants pay the Plaintiff's costs of the Defendants' own Notice of Motion and I will, in due course, make those orders. 99The Registrar General seeks orders that the Defendants pay the Registrar General's costs of the Registrar General's Notice of Motion and the Defendants' Notice of Motion, and the Registrar General's costs of the proceedings generally. The effect of the orders which I have made is that the Registrar General has succeeded entirely and the proceedings against that party have been dismissed. 100Ms Sinclair did not advance any substantial argument contrary to those orders so I will, in due course, make those orders. 101Mr Young, for Mortgage House, submitted that costs should follow the event on the Defendants' Notice of Motion where his client has successfully resisted the application. 102Ms Sinclair submitted that costs should be costs in the cause on that application, as there will be an opportunity for the Defendants to at least serve further amended pleadings with a view to seeking leave to rely on them. A problem for the Defendants, in respect of Mortgage House, is that the Defendants failed in a significant way on the pleading issues. 103I am satisfied that the appropriate order is that costs follow the event, and I will make an order that the Defendants pay the costs of Mortgage House of the Defendants' Motion. 104Ms Sinclair sought an order that the Defendants have leave to serve an Amended Defence and an Amended Cross-Claim within 14 days to reflect the state of the litigation as it stands after my judgment delivered today. I will give a direction to that effect. The direction will not grant leave for such amended pleadings to be filed at this stage. Rather, the direction will be that the proposed amended pleadings be served on the affected parties (and copies provided to my Associate) and then the question of what happens next will be considered when the matter is next before me on 13 September 2011. 105Ms Sinclair sought a stay of execution of the writ of possession for a period, either until the final hearing of the matter or for three months. It was submitted that the Defendants are experiencing some financial difficulty and their ability to consider refinancing for the purpose of paying out the Plaintiff is limited. 106The Plaintiff opposes the grant of a stay of execution of the writ of possession. In the circumstances of the litigation, I am satisfied that the appropriate order is to stay the execution of the writ of possession until the matter is next before me, which will be in about four weeks' time. If there is to be any further application for a stay, then that application can be considered in light of the evidence and arguments advanced at that time. 107Ms Sinclair raised an issue relating to Veda credit reports concerning the Defendants (MFI1 and MFI2) and possible action which the Plaintiff might take concerning those reports. It is a matter for the legal representatives of the Defendants to communicate with the legal representatives for the Plaintiff with respect to those matters. I do not think that the Court can make any order in that respect, and I merely note that the matter was raised in the course of the submissions today. 108I make the following orders: (a) The Defendants are to pay 80% of the costs of the Plaintiff with respect to the Plaintiff's Notice of Motion filed 29 July 2011. (b) The Defendants are to pay the Plaintiff's costs with respect to the Defendants' Notice of Motion filed 8 April 2011. (c) The Defendants are to pay the Registrar General's costs with respect to the Registrar General's Notice of Motion filed 1 August 2011. (d) The Defendants are to pay the Registrar General's costs with respect to the Defendants' Notice of Motion filed 8 April 2011. (e) The Defendants are to pay the Registrar General's costs with respect to the proceedings which have been dismissed as against the Registrar General. (f) The Defendants are to pay the costs of Mortgage House with respect to the Defendants' Notice of Motion filed 8 April 2011. (g) I direct the Defendants to serve upon affected parties by 31 August 2011, and at the same time provide copies to my Associate, any proposed Amended Defence and proposed Amended Statement of Cross-Claim. (h) I stand the matter over for further directions before me at 9.30 am on Tuesday, 13 September 2011. (i) I stay the execution of a writ of possession obtained with respect to the Leppington property until 4.00 pm on 13 September 2011.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 August 2011

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