Plaintiff v Defendant

3 On 3 March 2005 the defendant, Maxwell Andrew Poyser, lodged a caveat over the property as evidence of a loan which had previously made by him to Mrs Gagic.

4 The loan had been agreed to in October 2004 but the advance took place on 29 November 2004. On 29 November the solicitor for Mrs Gagic settled with Bruce Wainwright, the solicitor for Mr Poyser, and handed to him an executed mortgage. Mr Wainwright said that interest had been prepaid. The mortgage as it stood at that stage is Exhibit PC1 to the affidavit of Mr Strangio of 2 November 2007. Mr Wainwright said that he inserted the date of settlement as the date of the mortgage. The instrument of mortgage which was in fact lodged in the Titles Office on 25 May 2005, some months after this date, contains further changes to the document which was produced at the settlement.

5 First, in the document Exhibit PC1, the commencing date of the mortgage is simply an unspecified date in October 2004. The mortgage also requires payment of interest in these terms: "The whole of the interest payable in advance" and in the box dated first payment there is an unspecified date in October 2004.

6 In each of these boxes Mr Wainwright made entries in his own handwriting so that date for the payment of interest became the first of each month and the date of the first payment was to be 29 November 2004. As I have indicated Mr Wainwright says that the interest was in fact prepaid and so that it was, in fact, not payable on the first of each month. The loan is repayable to Mr Poyser on 31 October 2005.

7 What has since happened is that in Mr Poyser upon the failure of the borrower, Mrs Gagic, to pay the principal sum on the date for completion of the mortgage has on 7 March 2006 brought proceeding No. 5016 of 2006 to recover the money lent. The judgment of the Court of Appeal shows that on 7 April 2006 Mrs Gagic and her husband, who was also a defendant, entered an appearance but on 11 May 2006 default judgment was entered against them entitling Mr Poyser to recover possession of the property. On 19 May 2006 he sought possession.

8 That proceeding made its way to the Court of Appeal and, ultimately, the default judgment was not disturbed. Mr Poyser now is about to obtain possession of the property. The contest is now not between Mr Poyser and Mrs Gagic as the owner, but between Mr Poyser and Paradise Constructors as the assignee of Hill Stephens who is a creditor of Mrs Gagic. The situation that then arises here is that Mr Poyser has a registered mortgage which he seeks to enforce. Paradise Constructors has an unregistered security protected by the caveat. I should add that there are two later caveats lodged.

9 The point before me is a short one but one about which I have no doubt. The proposition put on behalf of Paradise Constructors in order to defeat the entitlement of Mr Poyser to possession is that the changes made by Mr Wainwright to the mortgage, which I have described, have rendered the document void in accordance with the principle that a material amendment to a document has that effect. It is put on behalf of Paradise Constructors that there is at least an arguable point as to this.

10 The facts are not in dispute so that there is no requirement for the matter to go to trial to explore the circumstances. The area of debate, if there is an area of debate, is as to the impact of the principle relating to subsequent material amendments to a document in the circumstances as they here appear. I was referred to the decision of Birrell v Stafford[1] in which Tadgell J considered the situation and discussed the authorities. It was accepted by all parties that his Honour's exposition of the law was correct.

11 The point that his Honour considered was how to formulate the principle. The authority which his Honour acted upon was to the effect that an instrument will have been altered in a material way if it has a different operation than it would have had in its original condition.

12 If one was to put in this case the two mortgages, the one before Mr Wainwright's amendments beside the one after his amendments, it could scarcely be disputed that the instrument had a different legal effect. What was put however was that the circumstances of this case took away that consequence. The fact was that the only material change, apart from the dating of the instrument, which I would not take to be a material change in the circumstances of this case, is the change to the obligation of the mortgagor to pay interest.

13 Since the mortgagor had paid the interest, the circumstances are such that, from a commercial point of view, the document had no different effect at all by reason of Mr Wainwright's insertion of some other arrangement to pay the interest. The matter might be tested if it came to a conflict between the parties as to the non-payment of interest in terms of the amendment made by Mr Wainwright. It would seem to me that any claim by Mr Poyser based on the non-payment of a monthly instalment, in breach of the term inserted by Mr Wainwright's amendment, would be a futile one and would be easily rejected by the fact common to the parties that all the interest had been prepaid.

14 In the circumstances, I have no doubt that the point taken on behalf of Paradise Constructors is of no value and, accordingly, there is no good purpose to be served in sending the matter to trial. The application for an interlocutory injunction will be dismissed with costs including any reserved costs.

15 Counsel for the plaintiff made an oral application that I should, nevertheless, direct that, assuming Mr Poyser goes ahead and sells, the whole of the proceeds including, presumably, the first $250,000, or whatever is necessary to satisfy Mr Poyser's entitlements, should be paid into court or in some way secured to protect the interests of Paradise Constructors. I refused the application. An application that the proceeds should be put aside either by security or by lodging them in court presupposes the success of the argument which I have found without substance. Accordingly, that application too must fail. The consequence will be simply that the application for the interlocutory relief is rejected with costs including reserved costs.

I certify that this and the 3 preceding pages are a true copy of the reasons for judgment of Byrne J of the Supreme Court of Victoria delivered on 2 November 2007.

[1] [1988] VicRp 39; [1988] VR 281.