Perpetual Trustees Victoria Ltd v English & Anor

To accept this Offer You and, if there is more than one person all of You, must sign and return to the Lender's solicitors the original copy of this Offer so that it is received by the Lender's solicitors or settlement agent within 21 days of the date of the Offer. …

We have each received a copy of this Offer, the Security documentsand the Terms and Conditions. … We agree to the terms of and accept this Offer." 14 Mr English accepted the offer by signing it. His signature was witnessed by Mr Clive A Potts, a solicitor. 15 Mr English also forged Ms English's signature on this document. Mr Potts purported to witness her signature. 16 Accompanying the offer was the booklet entitled "Interstar Loan Terms and Conditions Booklet" to which reference was made in the opening of the offer document. This booklet contains detailed provisions setting out the agreement between Perpetual and Mr English (and, purportedly, Ms English). Relevant among the terms and conditions are the following: "20.3 Joint and several liability

If the Loan is being made to more than one person, then each person will be liable individually, and every 2 or more persons are liable jointly, for all amounts due under the Loan. … " 17 Together, the signed offer document and the Terms and Conditions Booklet constitute the Loan Agreement. 18 Perpetual prepared and presented to Mr English for signature a one page Mortgage. The Mortgage expressly incorporated the provisions of a Memorandum filed, pursuant to s 80A of the Real Property Act 1900 ("the Act"), in the office of the Registrar-General. It did not expressly incorporate the Loan Agreement. The Mortgage named Niel William English and Kerrie Diane Therese English as "Mortgagor". 19 Mr English signed the Mortgage on his own behalf, and, for the third time, forged the signature of Ms English. Again, Mr Potts witnessed the signature of Mr English and purported to witness the signature of Ms English. 20 The Mortgage is dated 6 June 2003. It was duly registered. 21 It is in the Memorandum that the detailed provisions of the agreement are contained. 22 Clause 1 of the Memorandum is headed "UNDERSTANDING THE MORTGAGE".

Clause 1.1 is headed " Definitions "; Clause 1.2 is headed " Interpretation ".

Clause 1.1 defines ( inter alia ) the following terms in the manner set out: "' I ' means the person or persons named and described as the Mortgagor in the Mortgage Form and ' me ' and ' my ' and, if there is more than one of us, ' us ' has a corresponding meaning."

"' You ' means the person or persons named and described as the Mortgagee in the Mortgage Form and ' your ' has a corresponding meaning."

"' Mortgage ' means the Mortgage Form including all schedules and annexures and this document."

"' Mortgage Form ' means the form of mortgage which I have executed which refers to and incorporates this document."

"' Secured Agreement ' means: · any present or future agreement between me or us, or any one of us, and you which I acknowledge in writing to be an agreement secured by the Mortgage (italics added), or · an agreement which varies such an agreement."

"' Secured Money ' means: · all amounts which are payable at any time or are contingently owing or payable to you under a Secured Agreement, and · … " 23 Under clause 1.2 ("Interpretation") the following of relevance appears: "In the Mortgage unless the context otherwise requires: · a word importing the singular includes the plural and vice versa." 24 The following provisions in the Memorandum are of present relevance. Clause 2.2: " Pay Secured Money

The Mortgage is security for payment to you of the Secured Money and for the performance of all of my obligations under the Mortgage. I agree to pay the Secured Money as and when the Secured Money becomes due and payable in accordance with the provisions of each Secured Agreement or the Mortgage."

You may give me notice by delivering it to me personally or by leaving it at or by sending it … to my residential or business address or the Property …"

If I am comprised of more than one person, any notice will be given to each one of the persons."

Clause 10.6: " Change of name or address

If I change my name or address, I must notify you in writing immediately specifying details of the change."

Clause 11.7: " Joint and several liability

If I am comprised of more than one person, each person will be liable individually, and every two or more persons are liable jointly, for all promises and obligations under the Mortgage."

Clauses 7 and 8 were directed to circumstances of default. By Clause 8.1 Perpetual was entitled, in the event of unrectified default, and having taken the appropriate preliminary action, to: "[e]nter on and take possession of the Property and manage or use the Property."

At this point, it is worth flagging, for future reference, the terminology of the definition of "Secured Agreement". The words I have italicised, "which I acknowledge in writing to be an agreement secured by the Mortgage", are important. 25 It is not in dispute that Mr English defaulted on the mortgage obligations, nor that the necessary preliminary steps towards enforcement of its rights under Clause 8.1 were taken by Perpetual. At issue between the active parties (Perpetual and Ms English) is whether, on those undisputed facts, Perpetual is entitled to an order for possession of the entire property. Perpetual contends that it is. Ms English contends to the contrary. Her primary contention is that, on the proper construction of the contractual documents, the mortgage "secures nothing" and Perpetual has no interest in the property. As an alternative, it was suggested on her behalf, an order that would have the effect of transferring the half interest of Mr English to Perpetual, and leave her half interest in her name, ought to be made. (The alternative has the immediate attraction of appearing to achieve a just result; it may or may not properly reflect the consequence of the contractual arrangements between Perpetual and Mr English, and the effect of the registration of the mortgage.) Resolution of the issue depends purely upon the construction of the contractual documents. 26 Underlying, and fundamental to, Perpetual's claim for possession is recognition of the concept of indefeasibility provided for in s 42 of the Act. That that principle applies is not in contest. It was accepted that the registration of the forged mortgage confers upon Perpetual, pursuant to s 42, an indefeasible right to enforce "the estate or interest" in the land conferred by the mortgage (and its associated documents). What is at issue is what that "estate or interest" or title is. 27 It seems to me that this is the position. The principle of indefeasibility is not in doubt, is not difficult to state, and is not difficult to comprehend. It is in its application that difficulties arise. It is, therefore, worth reproducing s 42 of the Real Property Act. It is in the following terms: "42(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 …" (italics added; there follows a list of exceptions that need not be here recorded) (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." 28 It seems that subs (2) is necessary because s 57(1) provides that a mortgage has effect as a security, but does not operate as a transfer of the land mortgaged. Absent the provisions of s 42(2), some doubt may have existed as to whether a mortgage of land subject to the Act created an "estate or interest in land". 29 Section 58 confers on a mortgagee a power to sell the mortgaged property in the event of default in the obligations of the mortgage, on the proviso that certain steps and procedures prescribed by s 57 have been taken and implemented. 30 To adopt the language commonly used, the effect of s 42 is that, upon registration, the "estate or interest" registered is indefeasible, and this is so no matter how flawed (absent fraud affecting the mortgagee, and absent the existence of any of the exceptions listed in s 42(1)) its acquisition may have been. 31 The crucial issue is not whether registration confers or creates indefeasibility: that is undoubted. The crucial issue is the identification of the "estate or interest" that, upon registration, is made indefeasible. In PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643, Giles J (as his Honour then was) said: "Registration does not validate all the terms and conditions of the instrument 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." (p 679) 32 In each case, identification of "the estate or interest" is to be made by reference to and analysis of the contractual documents that bring the "estate or interest" into existence, to the extent that those documents are, or are part of, what is registered. 33 It is that exercise that has given rise to significant difficulty, perhaps because, if and when applied strictly, the principle of indefeasibility can produce patently unjust results. (That that potential was recognised at the time of passing the Real Property Act emerges plainly from the enactment of Pt 14 thereof, creating a "Torrens Assurance Fund".) 34 Counsel for Perpetual formulated the issue for determination as: " … whether, given the forgery, the Mortgage over Mrs English's interest in the Property secures the obligation of Mr English to repay to [Perpetual] the amount borrowed by him (plus interest etc) under the Loan Agreement." (underlining in original)

I do not understand that formulation to be disputed. 35 A good number of previous cases have involved factual circumstances with similarities to the present. Indeed, examination of those cases might lead one to believe that lending institutions are beset by individuals, often, but not always, co-owners of the land, forging signatures of registered proprietors on contractual documents. No fewer than three of the recent cases involve the present plaintiff, Perpetual. 36 Not one of those, though, is based on a set of facts precisely the same as those here present. It is as well, here, to review those cases to which I was referred. It is most convenient to do that chronologically. In undertaking this exercise, I am not seeking to elucidate principle, which, as I have said, is not controversial. I am seeking to detect guidance in respect of the proper application of principle. That is a far more elusive objective.

PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 (Giles J) 37 This was a case in which an elderly woman in dubious health (Mrs Thompson) was induced to sign, in favour of a company of which PT Ltd ("PT") became assignee, a mortgage over a property in her name that was her matrimonial home. The purpose of the mortgage was to secure money advanced by PT's assignor company to a company (Maradona Pty Ltd - "Maradona") of which her husband and son were directors. 38 The mortgage was registered. Mrs Thompson also signed a personal guarantee for the same purpose. On default by Maradona in the repayment of the principle and interest, PT brought proceedings against Maradona and, relying on their guarantees, against Messrs Thompson senior and junior, and against Mrs Thompson. As against Mrs Thompson, PT sought (relevantly) possession of the land the subject of the mortgage. The proceedings against Maradona and the two Thompson men may, for present purposes, be disregarded. 39 For reasons that need not here be explained, Giles J held that Mrs Thompson had made out a defence of non est factum. That being so, her personal guarantee was unenforceable. 40 The question that then arose concerned the effect (if any) of the finding of non est factum on PT's entitlement to enforce the mortgage and take possession of the property. 41 Giles J held that, on the proper construction of the mortgage documents, no monies owed by Mrs Thompson were thereby secured. This was because Mrs Thompson herself did not owe money, either on her guarantee (because of the non est factum defence) or otherwise, and, by reason of the terminology of the definition of "secured moneys" in the mortgage, neither did any other person. Put as briefly as possible, "Moneys Hereby Secured" was defined to mean moneys owing - by the mortgagor, Mrs Thompson (of which, by reason of the successful defence of non est factum, there were none); or moneys owing by any "other indebted person", which, in turn, was defined to mean any person jointly or severally liable with the mortgagor (and by reason of the fact that Mrs Thompson was not liable, there could be no person jointly or severally liable with her). Accordingly, "Moneys Hereby Secured" was an empty phrase, devoid of content. 42 In a passage that has since been widely quoted, Giles J said: "The general position thus indicated is, I think, as follows. 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 instrument 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." 43 It was because of the successful defence of non est factum that the claim on the personal guarantee failed. That had, in effect, a chain reaction. By its terminology, the mortgage depended upon there being a personal debt owed by Mrs Thompson. That personal debt was the substratum of the mortgage. Once it fell away, there was no debt owing by Mrs Thompson to PT, and the requirements of the definition of "Moneys Hereby Secured" could not be met. 44 But what is, I think, implicit in the judgment is that, if the mortgage had been effective to identify a debt which it secured, then its registration would have achieved indefeasibility for PT's title, notwithstanding Mrs Thompson's lack of capacity. 45 By way of illustration, had the mortgage secured a debt owing by a third person, independently of Mrs Thompson, then her lack of capacity in signing the mortgage would not have prevented s 42 from operating to secure PT's title. 46 It must be observed that the decision turned very much upon the interpretation of the language in which the definition of "secured monies" was expressed, and, leaving aside the statement of principle I have extracted above, the decision itself provides little guidance to me in the present exercise. Essential to the result, however, was the conclusion that, because Mrs Thompson was not liable under the guarantee she had signed, no debt, owing by her or anybody else, came within the definition of "Moneys Hereby Secured" contained in the mortgage.

Small v Tomassetti [2001] NSWSC 1112 (Campbell J) 47 This matter came before Campbell J (as his Honour then was) by way of application for continuation of an injunction restraining the plaintiffs in the principal proceedings (mortgagees) from disposing of the proceeds of sale of real estate. This his Honour declined to do. 48 The real estate had been subject to two mortgages, which were registered. Mrs Tomassetti (the second defendant) was one of two joint proprietors. Her husband was the other. Mrs Tomassetti's signature on the mortgages was forged. 49 The mortgages were expressed to be security for debts in specified sums owed by "the mortgagor" to the mortgagees, and at specified interest rates. (The judgment was delivered ex-tempore. I assume that, as is usual, the mortgages identified or defined "the mortgagor" to mean the two co-owners, Mr and Mrs Tomassetti.) 50 It was recognised that the registration of the mortgage conferred indefeasibility on the mortgagees, to the extent of their "estate or interest" in the land. 51 What was put in issue on Mrs Tomassetti's behalf was whether the mortgagees had any such "estate or interest", since there was no debt owing to them by Mrs Tomassetti (see s 56 of the Act. The existence of "a debt" provides the foundation for a mortgage.) If there were no "debt", there was no mortgage or, on the approach taken by Giles J in Maradona, nothing secured by the mortgage. 52 It was in this context that Campbell J posed the question, which has since been repeatedly quoted: "Indefeasibility for what?" 53 Notwithstanding that Mrs Tomassetti was not personally liable for any of the debts secured by the mortgage, Campbell J declined to continue the injunction. This was because registration of the mortgages achieved indefeasibility of the "estate or interest" of the mortgagees in the land to the extent that it secured repayment of the specified sums. 54 It is clear that, so far as Mr Tomassetti was concerned, there was a "debt" secured by the mortgage. However, that does not appear to me to have been the critical factor in the decision. Campbell J, having referred to the terms of the mortgages (which specified the sums owing), said: "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 [the specified sums] together with interest which accrues on [them] and is unpaid …" 55 It seems to me that it was the specification of the sums owing that defined and delineated "the estate or interest" in the land secured by the mortgage, and achieved indefeasibility. That result, it seems to me, would have followed even if the signatures of both Mr and Mrs Tomassetti had been forged. And that result is in accordance with the decision of the High Court in Breskvar v Wall [1971] HCA 70; 126 CLR 376. 56 Because the sums secured were specified in the mortgages, it was unnecessary to embark upon an analysis of the terminology of those contractual provisions that delineated the "estate or interest" secured. That is not the present case because the mortgage did not (expressly) incorporate the Loan Agreement documents, and the sum advanced was not specified in the mortgage. Accordingly, Small v Tomassetti does not provide guidance of the kind I am seeking.

Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745 (Young CJ in Eq) 57 Tsai is another decision that is frequently cited, not always for the same proposition. In a later case (Chandra v Perpetual Trustees Victoria Ltd, see below) Bryson AJ disagreed with two of the propositions stated therein. 58 Tsai was an ex tempore decision of Young CJ in Eq (as his Honour then was), on an appeal from an order for summary judgment for possession of real estate given by a master (as associate judges were then known). The property was subject to a mortgage which was registered, but which had been forged. Registration had the consequence of indefeasibility. Young CJ in Eq adopted the approach taken by Campbell J in Tomassetti and asked "indefeasibility for what?". He considered that the answer to the question will "to a great degree" depend upon the wording of the covenant conferring the "estate or interest". The mortgage was expressed in clause 2.2 to secure payment to the mortgagee of "the Secured Money", the amount of which was, in a schedule to the mortgage, specified. However, what was said in the schedule to be granted was not the loan of money, but a facility to draw down the specified sum. There was no assertion of an actual advance having been completed. 59 Young CJ in Eq set aside the order of the master. It appears to me, on my reading of the ex tempore judgment, that this was because the statement of claim by which the proceedings were commenced omitted to plead that any money had actually been advanced ([10]) and that the evidence that a loan was made, and made to the (purported) mortgagor was deficient ([27]). 60 Those deficiencies do not afflict the present case. 61 At [16] - [17] his Honour referred to and adopted a statement of Powell JA in the Court of Appeal in Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, to the effect that, notwithstanding indefeasibility, a personal covenant contained in a forged document is not enforceable; Young CJ in Eq considered this to be consistent with what he regarded as "first principles" - that a personal covenant (including a guarantee) is part of the "package of rights" protected by the indefeasibility principle. That is because it "maps out or may map out the extent of the quantum of the interest of the mortgagee in the land" and is therefore closely related to title, requiring it to be considered as limiting the rights conferred. 62 At first sight, those two statements do not appear to sit easily together. However, when Grgic is read closely, any difficulties dissipate. In Grgic a mortgage was forged, and registered. The Court of Appeal held that, notwithstanding the forgery, the indefeasibility conferred by s 42 of the Act applied, and the mortgagee was entitled to enforce it against the entirely innocent owner of the land the subject of the mortgage. None of that is surprising. 63 What, it seems to me, Powell JA was saying, in the short passage referred to, was that the personal covenant contained in the mortgage was not enforceable independently of, or other than by way of, the enforcement provisions of the Act and against the land. In the event of a shortfall, the mortgagee had no recourse against the landowner by way of the personal covenant. When that is recognised, there is nothing inconsistent about saying that a personal covenant in a forged document is unenforceable, and that a personal covenant (even one that is forged) is part of the "package of rights" that, on registration, is indefeasible and therefore enforceable. 64 That statement by Young CJ in Eq about the effect of the personal covenants appears helpful. But, since Bryson AJ later expressly disagreed with it (see Chandra, below), it is difficult to regard it as authoritative.

Printy v Provident Capital Ltd [2007] NSWSC 287 (per Studdert J) 65 These proceedings were commenced after a mortgagee had exercised its power of sale over property the subject of two forged registered mortgages. The (formerly) registered proprietor sought to recover the proceeds of sale from the mortgagee. 66 A Deed of Loan (also forged) provided for an advance of $550,000 and additional monies. 67 "Secured money" was defined to mean all money owed by the mortgagor to the mortgagee, alone or with any other person, including monies owing under a "related agreement", which, in turn, was defined to mean any agreement or arrangement under which the mortgagee lent money or incurred any obligation or liability or had any security interest which "relate[d] to the mortgagor". 68 The posited "related agreement" was a Deed of Loan which recorded a loan of $550,000 by the mortgagee to the person named as mortgagor. The "mortgagor"'s signature on this document, like the "mortgagor"'s signature on the mortgage, was forged. 69 Studdert J listed his reasons for concluding that the mortgage did not achieve indefeasibility of any interest in the land of the "mortgagee". As I read the judgment, they were:

(i) the Deed of Loan was not incorporated into the mortgage, and therefore indefeasibility conferred by the mortgage did not extend to the provisions of the Deed of Loan;

(ii) in order to achieve indefeasibility, any obligations of the landowner had to be found in the memorandum incorporated in the mortgage, and this could not be done;

(iii) the memorandum imposed an obligation on the mortgagor to pay "secured money", that is, money that the mortgagor owed to the mortgagee but, because of the forgery, no money was owed by the plaintiff landowner to the mortgagee;

(iv) the Deed of Loan, posited as a "related agreement" did not come within the definition of that term, because it did not "relate to" the plaintiff. 70 It is interesting that, in Printy, the second mortgage expressly specified the amount secured, and, even though it was just as much a forgery as the first mortgage, it was, in effect, complete in itself and s 42 conferred indefeasibility on the interest in land thereby (purportedly) conveyed. 71 (For the judgment on appeal in Printy, see below.)

Chandra & Anor v Perpetual Trustees Victoria Ltd & Ors [2007] NSWSC 694 (Bryson AJ) 72 This matter came before Bryson AJ by way of an application by husband and wife owners of real estate for a declaration that a mortgage, which named them jointly as "mortgagor" and was forged, on its proper construction, secured no debt. The mortgage was registered. 73 Bryson AJ accepted that the mortgage created an indefeasible title "to the estate or interest in land which it purports to create". There appears to have been no dispute about this. 74 The mortgagee (which, it will be noticed, happened to be Perpetual, the present plaintiff) began the processes necessary to take possession of the property. Mr and Mrs Chandra commenced proceedings, claiming declarations that no money was secured to Perpetual by the mortgage. Bryson AJ made an order in those terms. It appears from the judgment that the Chandras accepted that Perpetual had acquired an indefeasible title to "the estate or interest" in the land secured by the mortgage, even though it was forged. The question was what that "estate or interest" was. 75 Bryson AJ also adopted as his starting point Campbell J's (becoming immortal) question "indefeasibility for what?" His Honour also quoted the almost as frequently cited passage of Giles J from Maradona. Campbell J's question was to be answered by construction of the relevant contractual documents. 76 Bryson AJ discerned a distinction (not always readily identifiable, but a distinction nevertheless) between an obligation charged on the land (which, upon registration, confers the benefit of indefeasibility) and a personal obligation to pay a debt (which, even when the instrument in which it is contained is registered, does not have the benefit of indefeasibility). His Honour observed (at [28]) that Campbell J's question: " … must receive an answer that identifies an estate or interest in land, or some obligation which is part of or secured by an estate or interest in land."

He went on to say that distinguishing between an estate or interest in land and a personal obligation created by a registered instrument can be difficult. 77 He then said (at [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."

It was in this respect that his Honour expressly disagreed with the observations of Young CJ in Eq in Tsai , that a guarantee is sufficiently close to the mortgage to be protected, and that the personal covenant is part of the "package of rights" protected by the mortgage. 78 For Bryson AJ, the key was to ascertain the debt secured by the mortgage: see [31]. That was to be achieved by determining the proper construction of the mortgage. 79 It is therefore necessary to look to the contractual terms in Chandra to determine whether the approach taken by Bryson AJ should guide me to a like result. 80 As in the present case (and unlike Tsai and Tomassetti), the mortgage did not specify the amount of, or quantify, the loan. (Not surprisingly, given the identity of the mortgagee in each case, the terminology of the documentation in Chandra bears a close resemblance to the terminology of the documentation in the present case. It is not, however, identical, and the departures may be of some significance.) 81 The operative clause in Chandra was cl 2.2, in the following terms: "2.2 Pay Secured Money The Mortgage is security for payment to Us of the Secured Money and for the performance of all of your obligations under the Mortgage. You agree to pay the Secured Money as and when the Secured Money becomes due and payable in accordance with the provisions of each Secured Agreement or the Mortgage."

Of cl 2.2, Bryson AJ said: "38 … the first sentence of cl 2.2 is the provision which imposes or charges money on the land. The second sentence is an agreement by which, according to its terms, the mortgagor incurs personal liability." 82 "Secured Agreement" was defined as: "any present or future agreement between Us and You, or any of You, and an agreement that varies such an agreement."

"Secured Money" was defined to mean: · "all amounts that are payable at any time or are contingently owing or payable to Us under a Secured Agreement, · all amounts that are payable at any time by You, or any of You, to Us on any other account whatsoever, and · …" 83 Para [39] is, perhaps, the nub of Bryson AJ's decision. It reads: "39 The only agreement which might fall within the definition of 'Secured Agreement' and comes under consideration now is the loan agreement, and it is altogether clear that it is not, in fact, an agreement between Perpetual Trustees Victoria and the plaintiffs; the plaintiffs had nothing to do with it. … As I find that, with certainty, the loan agreement was not signed by the plaintiffs at all, I conclude that cl 2.2 and references in it to 'Secured Money' and 'Secured Agreement' do not relate to that loan agreement." 84 I will return to a consideration of the extent to which an approach taken by Bryson AJ in Chandra is available, or ought, to be followed.

Sabah Yazgi v Permanent Custodians Ltd [2007] NSWCA 240 (per Beazley JA, with whom Ipp and Tobias JJA agreed) 85 This was an appeal from Harrison AsJ (although the judgment does not disclose the nature of the orders made by her Honour). 86 The property was held in joint ownership by the appellant and her husband. Mr Yazgi entered into a contract of loan attached to which was a document entitled "Terms and Conditions". The loan purported to be secured by a mortgage over the property. Mr Yazgi signed both the loan contract and the mortgage documents, and forged Mrs Yazgi's signature thereon. 87 In these circumstances there was no dispute that Mr Yazgi's indebtedness was secured on his interest in the property. (This is an important point of departure from the present case.) 88 The question on appeal was identified by Beazley JA as: whether any money owing under the loan contract or the mortgage were secured over Mrs Yazgi's interest in the property [2]; and: what was secured by the mortgage? [11] 89 Although it does not expressly say so in the judgment, I assume that "mortgagor" was defined as Mr and Mrs Yazgi. 90 A schedule was annexed to the mortgage which defined "mortgage debt" as "mean[ing] and includ[ing]: (a) all moneys actually or contingently owing or payable from time to time under the Housing Loan Contract by the Borrower to the Mortgagee …" (italics added)

together with interest accrued. "Borrower" was defined to mean both the appellant and her husband. 91 Incorporated into the mortgage was a memorandum registered under s 80A of the Act. This memorandum also contained a definition of "Mortgage Debt", which was in slightly different terms to that of the schedule. The opening words of the definition did not include the word "includes". "Mortgage Debt" was defined as: " … mean[ing] all money which any one or more of you: (a) owe us now …" (italics added) 92 "Secured Agreement" was defined as any agreement which "the mortgagor" and the mortgagee: " … agree in writing is a Secured Agreement." 93 "You" was defined to mean: "the Mortgagor … if there is more than one person specified as the Mortgagor, 'you' means those persons separately and all of them as a group. …" 94 The Housing Loan Contract (which was not incorporated into the mortgage) contained an interpretation clause, pursuant to which, inter alia: " … the singular includes the plural and vice versa." 95 Another clause, cl 2, provided that the loan contract was a: "Secured Agreement for the purposes of the Mortgage …" 96 Clause 5 of the schedule to the mortgage defined "Housing Loan Contract" as meaning: " … the Residential Housing Loan Contract … between the Borrower and the Mortgagee." 97 It was common ground that, by reason of the forgery, cl 5 did not refer to the loan contract, because the appellant was not legally a party to that contract. 98 Clause 3 of the schedule expressly recognised the possibility of inconsistency and provided that, in the event of any inconsistency between the schedule and the memorandum, the schedule prevailed. 99 Beazley JA then redefined the question on appeal as: " … what was secured by the mortgage?"

The answer to that question depended upon what was encompassed in the definition of "Mortgage Debt" in the schedule. 100 It was also common ground that, because of the forgery, the personal covenant was not enforceable: Grgic; Tsai. (On one interpretation of this paragraph, the personal covenant was not enforceable against Mr Yazgi as well as Mrs Yazgi. I do not think this is what her Honour meant.) 101 It was also accepted by the parties that registration gave indefeasible title in respect of the mortgaged interests, notwithstanding the forgery; but that indefeasibility was not in general terms - it was necessary to ascertain the extent of the mortgagee's interest. 102 The positions of the parties are stated at [16] of the judgment. It was Mrs Yazgi's contention that the (admittedly indefeasible) title created by the registered mortgage was limited to Mr Yazgi's interest in the property and did not extend to hers: the mortgagee contended that its indefeasible title extended to the whole of the property. 103 The Court of Appeal set aside the judgment of Harrison AsJ and declared that, in respect of the interest of Mrs Yazgi in the property, the total amount secured by the mortgage was nil; that Mrs Yazgi was entitled to a discharge of the mortgage insofar as it affected her interest in the property, and ordered a discharge accordingly; and made orders to the effect that trustees for sale of the property be appointed, and that half the proceeds of the sale be allocated to Mrs Yazgi, half to the mortgagee. 104 Two things need here be noted: firstly, the case proceeded on the basis of substantial agreement (not present here) as to the entitlements of the parties and the applicable law; and, in the ultimate, its resolution depended upon the construction of the documents. In particular, the Court found that an inconsistency in the definitions of "mortgage debt" existed, and that the Mortgage Debt, as defined in the schedule (which prevailed) contemplated a joint (not a joint and/or several) borrowing under the loan contract. By reason of the forgery, there was no such joint borrowing.

Provident Capital Ltd v Printy [2008] NSWCA 131 per Basten JA (with whom Tobias and McColl JJA agreed) 105 The decision of Studdert J in Printy (above) was upheld on appeal: Basten JA identified as "the short point raised by the appeal": " … whether a mortgagee under a registered mortgage can validly exercise a power of sale … where the debt is identified in a separate deed of loan, and in circumstances where both the mortgage and the deed of loan were ineffective to impose an obligation on the [landowner] under the general law." 106 Basten JA paraphrased the effects of ss 41 and 42 as follows: " … upon registration, the land becomes charged as security for the debt [expressed to be] secured by the mortgage, regardless of any form of invalidity which may afflict the mortgage under the general law." [30]

(The words in parenthesis are my suggested refinement of Basten JA's formulation. Where the documents registered are forgeries, there is, in reality, fact, and law, no " debt " owing by the landowner to the mortgagee for which the land is charged as security; it is the expression, in the mortgage documents, of the debt, false though it is, that is registered, and which thereby achieves indefeasibility. A mortgagee has a statutory right, as against the land, to recover the "debt" (that is, the amount stated, even though it is patently not a "debt", at least a debt owing by the landowner to the mortgagee.)). 107 Basten JA also said: " … where the loan is contained in the mortgage, although it will involve a separate personal covenant, registration of the mortgage will allow the mortgagee to enforce the debt by sale of the land, despite not being able to sue the mortgagor personally …" [32] " … if the liability were set out in full in the mortgage, or in a document incorporated into the mortgage, the fact that the mortgage or the incorporated document (or both) is a forgery will not prevent the mortgagee obtaining the benefit of a right to enforce the debt against the land in the event of default." [33]

His Honour then noted this: "Nevertheless, there remains a question, where the covenant in the mortgage reflects a covenant in a separate agreement, as to whether indefeasibility extends to the latter covenant or is limited to the former, so that, if the separate agreement is void, there is no debt secured." [42]

The extract from para [32] was a recognition of the distinction drawn in Grgic between the enforceability of a mortgage debt and enforceability of a personal covenant. The extract from para [33] was a recitation of a proposition accepted by the plaintiff (landowner) and Studdert J (at first instance) but appears to be one that his Honour also accepted.

Basten JA then referred to authorities supporting the view that the Act does not render enforceable against the land a debt arising under an agreement separate from the mortgage. He cited Tsai and Yazgi . 108 At [47] he distinguished between a debt contained in: "(a) the mortgage, (b) a separate deed or agreement expressly incorporated into the mortgage, [and] (c) a separate deed or agreement, for which the mortgage is expressed to constitute security." 109 The nub of his Honour's decision appears to me to be contained in [50] and [51], in the following terms: "50 … Unless the terms of that deed [the deed of loan] are properly described as covenants, agreements or conditions 'expressed … in the mortgage', [the mortgagee] will have failed to bring itself within s 57(2)(a) …" "51 … [that construction limit[s]] 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'." 110 In that case, because the deed of loan could not be read as part of the mortgage, and was not expressly incorporated, its terms could not properly be described as "covenants, agreements or conditions expressed in the mortgage". The debt the subject of the loan was not secured by the mortgage. The appeal against the orders of Studdert J was dismissed.

Perpetual Trustees Victoria Ltd v Cipri & Anor [2008] NSWSC 1128 (Hall J) 111 This is another case in which a husband and wife were joint owners of the property. A mortgage in favour of the plaintiff (Perpetual, the present plaintiff) was registered. The mortgage purported to bear the signatures of both the husband and the wife. While the signature of Mrs Cipri was genuine, that of Mr Cipri was forged. 112 "The mortgagor" was identified in the mortgage as both Mr and Mrs Cipri. 113 The obligation was stated to be joint and several. A loan agreement (also forged in respect of Mr Cipri) created "joint and several liability". 114 "Secured money" was defined as money owing "by all or any" of the individuals named as "mortgagor". 115 Hall J held (at [90]): "Given that the Mortgage secured Mrs Cipri's indebtedness (that being the entire amount lent under the Loan Agreement) and as the whole of the property was subject to the Mortgage, Perpetual is entitled to enforce the Mortgage against both the first and second defendant's interests in the property."

Perpetual Trustees Victoria Ltd v Peter Van den Heuvel & Anor [2009] NSWSC 57 (Price J) 116 The two defendants, husband and wife, were the owners, in joint tenancy, of property that constituted their family home. A mortgage was registered on the title to the property, identifying Mr and Mrs Van den Heuvel as mortgagors and Perpetual (again, the present plaintiff) as mortgagee. 117 It was not in dispute that Mrs Van den Heuvel's signature on the mortgage was forged, as was her signature on an accompanying document, entitled "Loan Agreement" purportedly made between Perpetual and the two defendants. The loan agreement incorporated a "Terms and Conditions Booklet", which, presumably, was identical or similar to that in the present case. Indeed, although the terms of the documents are not in all respects identical, they are, as would be expected, very similar. (There is, I here note, one divergence which may be of significance.) 118 The Terms and Conditions Booklet provided for "joint and several liability", in now familiar terms. The obligation of the mortgagor created by the mortgage was to pay "Secured Money", which was, in turn, defined to mean all amounts payable by the mortgagor to Perpetual, in accordance with any "Secured Agreement" or the Mortgage. 119 "Secured Agreement" was defined to mean: " … any present or future agreement between [the mortgagor], or any one of [the mortgagors] and [Perpetual]."

It is in this clause that the divergence I mentioned lies. There is no reference in this definition, as in the present case, to acknowledgment in writing of a "Secured Agreement" (see para [24] above) 120 Having reviewed the authorities, Price J held that registration of the mortgage conferred on Perpetual an indefeasible interest over the whole of the property, which secured the entire amount lent under the loan agreement. * * * 121 Although no clear line or pattern emerges from these authorities, and each case must be determined in the light of its own contractual provisions, it seems to me that the trend is to impose a strict level of proof on the mortgagee to establish that the mortgage is to be seen as security for a debt created by a forgery. If it can, then indefeasibility follows. 122 It also seems that, where the amount of the debt is specified in the body of the mortgage (or in a document expressly incorporated in the mortgage), then s 42 confers indefeasibility, even where the "debt" arises from a forgery. In Printy, Basten JA said: "Because a mortgage is a charge on land 'created merely for securing the payment of a debt', it might be surprising if a mortgage failed in its purpose because the debt arose under an ineffective collateral agreement secured by the mortgage, but that the mortgage would be effective where the debt was identified in the mortgage itself, although that was equally a forgery."

Surprising it may be, but that appears to me to be the conclusion to which his Honour ultimately came. It appears to me that this is the position. 123 Where a mortgage (including its incorporated documents) expressly states the quantum of the debt, even if the "debt" is created by a forgery, then, upon registration, indefeasibility is conferred. That must be because quantifying the debt marks out or delimits (see Maradona) the "estate or interest" of the mortgagee that is registered. 124 Where the mortgage does not expressly state the quantum of the debt, but adopts it by reference to a separate document (that is not incorporated in the mortgage), that does not confer indefeasibility, because what is contained in the separate document is merely a personal covenant: see Chandra, Printy. 125 Of course, the "debt" (where the documents are forged) is no more a "debt", just because it is contained in the mortgage, than it is when contained only in the loan documents. However, it seems to me, in those circumstances, s 42 creates an irrebuttable fiction that it is a debt. 126 It may seem odd that the fate of an innocent owner, entirely ignorant of a purported loan and mortgage in his/her name, can depend upon the fortuitous circumstance that the mortgagee has or has not included, with sufficient specificity in the mortgage documents, the debt the subject of the mortgage. Yet that appears to be the position. Printy provides a fine illustration. 127 Where, as in the second mortgage in Printy, an amount is specified - even though the owner of the property was wholly unaware of, and did not receive, any loan - registration rules and indefeasibility renders the loan security for that amount. But where, as in the first mortgage in Printy, it is necessary to look to documents other than the mortgage and those expressly incorporated in it - even if they are identified and the sum said to be owing is therein quantified - registration fails to achieve indefeasibility. 128 Odd, perhaps, and even unsatisfactory, but that appears, on the authority of Chandra and Printy, to be the position.

Application of authorities 129 Here, the quantum of the debt was not specified in the mortgage or any incorporated document. It was therefore accepted that resolution of the issue between the parties depends upon the construction of the relevant documents. Specifically, they are the mortgage and the memorandum. 130 A submission was put on behalf of Perpetual in the following terms: "25(d) If a covenant in the mortgage requires payment in accordance with a separate loan agreement, then, provided moneys are in fact and in law owing under that separate loan agreement, the mortgagee is entitled to exercise its power of sale under s 58 of [the Act] by virtue of a default in the observance of that covenant."

The Court of Appeal decision in Printy , and the decision of Hall J in Cipri , were cited as authorities. 131 There is no question here that moneys are in fact and in law owing (by Mr English) under the Loan Agreement. There is equally no question that no such moneys are owing by Ms English. 132 In my opinion the proposition is inconsistent with the judgment of Bryson AJ in Chandra, and is not supported by either of the authorities cited. In Printy at [50] Basten JA dealt, at some length, with this issue. He held that, in order to achieve indefeasibility, the appellant (the mortgagee) "had to demonstrate a default in the observance of a covenant in the … mortgage." He said: "Unless the terms of [the loan agreement] 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) and must account for the relevant proceeds of sale to the plaintiff."

That is, where the terms of the separate loan agreement are expressly (or, possibly, by clear implication) incorporated in the mortgage, default will enable the mortgagee to take possession; it is otherwise (notwithstanding the views of Young CJ in Eq in Tsai ) if the loan agreement is not incorporated and stands separately. 133 But, in any event, it is not to the point. In each of Maradona, Tsai, Printy and Chandra, the mortgage contained a covenant in terms similar to clause 2.2 of the present mortgage. (The judgment in Yazgi does not extract the operative covenant, but it may be assumed that it contained a clause to similar effect.) 134 In Maradona, Printy and Chandra the mortgagees failed in their claims because, the separate loan agreements being forged, (or in the case of Maradona, ineffective), they did not bind the landowners, the purported mortgagors. 135 The cases establish, I think, that registration confers upon a mortgage indefeasibility of whatever title is registered, forgery notwithstanding; they do not establish that registration of a mortgage (forged or not, but all of the cases to which I was referred do involve forgeries) renders a forged loan agreement binding upon the landowner, such as to attract to the mortgagee the benefit of s 42.

The submissions of the parties 136 It is convenient here to set out the primary argument put on behalf of Ms English, that the mortgage is not enforceable against either herself or against Mr English. 137 That argument had three distinct strands. They were put in written submissions as follows (I paraphrase):

1. the Loan Agreement is not part of the mortgage and is not secured by the mortgage. There is therefore no "Secured Agreement" within the meaning of the mortgage documents, and therefore no debt secured by the mortgage;

2. the Loan Agreement is, by reason of the forgery, void as against Ms English (a proposition I do not understand to be disputed) and, further, also by reason of the forgery, is unenforceable against Mr English (a proposition that is disputed, and, since Mr English was responsible for the forgery, is, at first sight at least, a somewhat surprising one, but one which must be examined);

3. there is no acknowledgement in the Loan Agreement itself that it is an agreement secured by the mortgage (see the definition of Secured Agreement, in particular that phrase that I have italicised); it is therefore not a "Secured Agreement".

(a) is there a "Secured Agreement"?: · Ms English's position: 138 The first argument put on behalf of Ms English hinged primarily upon the definition of "I" in the memorandum. As set out above, "I" is defined as meaning "the person or persons" named or described in the mortgage as "the mortgagor". That is unequivocally both Mr and Ms English. Where "the mortgagor" is identified as more than one person, the definition leaves no scope for reading "I" as meaning "any or either of the persons described in the mortgage as 'the Mortgagor'." 139 That that is so can be seen starkly in the definition of "Secured Agreement". "Secured Agreement" is defined to mean: "Any present or future agreement between me or us, or any one of us , and you [ie Perpetual] which I acknowledge in writing to be an agreement secured by the Mortgage." (italics added) 140 In the first part of the definition, it is clearly envisaged that, where "the Mortgagor" is a plurality of persons, that either or any might enter into a relevant agreement; that is not so in the second part of the definition, which envisages that "the Mortgagor" - that is, all persons named as Mortgagor - must give the written acknowledgement. The consequence of Ms English's construction is this. Although Mr English acknowledged in writing that his agreement was an agreement secured by the mortgage, he did not do so as "the Mortgagor" - because "the Mortgagor" as identified in the mortgage was a composite of himself and Ms English. The important words: " … which I acknowledge in writing to be an agreement secured by the Mortgage"

did not encompass such an acknowledgement by one only of the persons identified as "the Mortgagor". 141 There was thus no acknowledgement in writing by "the Mortgagor", and therefore no "Secured Agreement". 142 The operative clause in the memorandum to the mortgage is clause 2.2, which provides that the mortgage is security for payment to Perpetual of the Secured Money. But "Secured Money" is money owing or payable to Perpetual under a "Secured Agreement". Since there is no "Secured Agreement", there is no money owing under a "Secured Agreement", and the mortgage secures nothing. · Perpetual's position: 143 Essentially, the response by Perpetual to this argument was that each of Mr and Ms English was, individually, a mortgagor. Counsel called in aid the orders made in Yazgi, that separated the interests of the two co-owners. 144 But examination of the judgment in Yazgi shows that that case substantially proceeded by concession. Beazley JA stated, initially, the issue on appeal as whether any moneys owing under the loan contract or the mortgage were secured on Ms Yazgi's interest in the property; it was assumed that the moneys owing were secured on Mr Yazgi's interest. 145 It is plain from the report that, even if Mr Yazgi had been a party to the proceedings, he was not a participant in the appeal. Beazley JA recorded Ms Yazgi's position on the appeal as: "16 … [Ms Yazgi] said that [the mortgagee's] indefeasible title created by its registered mortgage was limited to [Mr Yazgi's] interest in the property and did not extend to her interest in the property." 146 The Court of Appeal was therefore not concerned with any proposed failure of the mortgage to secure a debt owed by Mr Yazgi. 147 Counsel for Perpetual then pointed out that, although on its face "I" in the definition of "Secured Agreement" refers to two persons, by clause 1.2 (unless the context otherwise requires): "a word importing the singular includes the plural and vice versa."

They therefore argued that, in the definition of "Secured Agreement", "I" ought to be read as importing the singular. 148 Counsel for Perpetual also set out a number of instances in the mortgage (and memorandum) where the word "I" appears. They argued that each makes: "perfectly good commercial sense if read in an ambulatory way". · Conclusion: 149 Perpetual's approach cannot survive the most cursory examination of the language of the contractual documents. The mortgage document itself refers to "the Mortgagor" in the singular, even though two individuals are named. The use of the pronoun "I" to stand for both individuals indicates that, for the purpose of the contractual arrangements, they are to be regarded as a single entity, or a composite. 150 The fallacy in Perpetual's argument can readily be seen in the last proposition put. It was: "Each [of two mortgagors] mortgaged his or her own interest in the land." 151 It is patently clear that this is not so. Ms English certainly did not mortgage her interest in the land. She knew nothing of the loan, and nothing of the mortgage. Registration of a forged mortgage may create a fiction that the purported mortgagor mortgaged the land, but that does not carry over to the construction of the mortgage documents. 152 I also reject the proposition that, in the definition of "Secured Agreement", "I" ought to be read as meaning Mr English only. Firstly, clause 1.2 should not be taken to affect the definitions contained in clause 1.1. Clause 1.2 is directed to the interpretation of words and phrases contained in the mortgage, not otherwise defined. "I" is given a clear and comprehensive definition in clause 1.1, and for good reasons. It is not altered or modified by clause 1.2. Secondly, even if the point otherwise had merit, I am satisfied that the context requires otherwise. My reasons for that conclusion are set out below. 153 It may be true that the various clauses in which the word "I" appears make "perfectly good commercial sense" if read in an ambulatory way; but they also make "perfectly good commercial sense" if read in accordance with the definition. There is nothing in the documents that requires or permits departure from the definition, and much to support adhering to it. 154 And Ms English's construction has the advantage of reasonableness, fairness and justice. If "I" could be construed as meaning any or either of a plurality of mortgagors, then one or more of the original borrowers could further encumber an already mortgaged property without the knowledge or consent of the other or others. For a construction with that consequence to be accepted, the language would need to be very clear. What Ms English's construction does is to allow for further borrowing by any individual mortgagor, and for that borrowing to be secured on the property; but only if all of the individuals constituting "the Mortgagor" acknowledge that the document recording the subsequent borrowing is "a Secured Agreement". 155 I take by way of illustration the following scenario. Five co-owners of property enter into a loan agreement and each acknowledges the loan agreement to be a "Secured Agreement" for which, therefore, the interests of all co-owners become security. Subsequently, one co-owner, unknown to the others, enters into a further loan agreement with the mortgagee. By reason of the definition of "Secured Agreement" ("any present or future agreement between me and us, or any of us …"), that can also become a "secured agreement". If Perpetual's construction were adopted, the individual borrower, without the knowledge or consent of the co-owners, could acknowledge in writing that the second agreement was a "Secured Agreement", thereby encumbering the property to the extent of the second loan, without any knowledge of that on the part of the co-owners. That cannot be what the contract meant. Indeed, I would be surprised if any financial institution would prepare a document that would allow that to happen - if only because no responsible legal adviser would permit a client to sign it. I reject Perpetual's construction. 156 The consequence is that there is no "Secured Agreement", and the mortgage secures nothing, including Mr English's interest in the property. I recognise the unfairness to Perpetual of this result, but the principle of indefeasibility is apt to create unfairness.

(b) is the Loan Agreement unenforceable against Ms English?: 157 The second point made on behalf of Ms English is not dissimilar to the first, except that it concerns the construction of the Loan Agreement. 158 Clause 10 of the offer document requires acceptance by signature of all [named] borrowers. Since Ms English did not sign the offer, there was, within the meaning of the document, no acceptance, and the Loan Agreement must meet the same fate as the mortgage and memorandum. 159 This point, it seems to me, is directed to the extent (if any) to which the Loan Agreement, as a separate document and independently of its association with the mortgage documents, imposed binding obligations on either Mr or Ms English. Certainly, so far as Ms English is concerned, it does not and cannot do so, and it was not suggested otherwise. 160 But it would be a surprising - and unfair - result if that also were the case in respect of Mr English, merely because, by his own engineering, one of the named offerees had not signed the offer. 161 The offer document incorporates the Terms and Conditions Booklet; together, on acceptance, the two make up the Loan Agreement. In the booklet, "You" is defined as meaning "the person or persons to whom the offer is made …" 162 The offer is addressed to Mr English and Ms English. 163 Although I have concluded that the absence of Ms English's acknowledgement that the Loan Agreement is a Secured Agreement is fatal to Perpetual's reliance on the security of the mortgage, it does not follow that the absence of her signature on the Loan Agreement is fatal to Perpetual's reliance on that document as creating a personal liability in Mr English. Unlike the requirements of the mortgage, in my opinion the requirement that both purported borrowers sign the loan offer is severable. 164 However, the issue can be put to one side as, at best, peripheral. Mr English has not participated in these proceedings. Perpetual's claim against Ms English is for possession of the property. It has abandoned any claim against her based on the Loan Agreement independently of the mortgage. I have already concluded that it cannot enforce the mortgage against either Mr or Ms English's interest in the property. Whether it can enforce the Loan Agreement against Mr English is not a matter for present resolution.

(c) is the Loan Agreement a "Secured Agreement"?: 165 Finally, it was submitted on behalf of Ms English that what has been taken to be an acknowledgement in the Loan Agreement was, in fact, not an acknowledgement at all. There were two independent bases for this proposition. 166 Firstly, "Secured Agreement" is defined as an agreement acknowledged in writing to be an agreement secured by "the Mortgage"; but "the Mortgage" is defined to mean "the Mortgage Form"; and "Mortgage Form", in turn, is defined to mean "the form of mortgage which I have executed"; and "I", of course, means both Mr English and Ms English. There is, therefore, no "Mortgage Form" executed by Mr English and Ms English; there is, therefore, no "Mortgage" within the meaning of the definition. 167 Secondly, what is put forward on behalf of Perpetual as the "acknowledgement in writing" (in clause 5 of the Loan Agreement) is not an acknowledgment of a "Loan Agreement", but is an acknowledgement in writing of a "Loan". 168 I have concluded that both points are good. Perpetual must fail on this basis as well. 169 It follows that the statement of claim must be dismissed. 170 Orders:

(2) The plaintiff is to pay the second defendant's costs of the proceedings. **********

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