MATTER : Trustees Act of Western Australia, s 89, s 92

ROWENA NOMINEES PTY LTD (RECEIVER & MANAGER APPOINTED) (IN LIQ) (SUPERVISOR APPOINTED)

MARK ANTHONY CONLAN (AS LIQUIDATOR OF OAKLEIGH ACQUISITIONS PTY LTD)

MARK ANTHONY CONLAN (AS SUPERVISOR OF ROWENA NOMINEES PTY LTD)

Practice and procedure - Application to set aside ex parte interim orders granting injunctive relief - Collapse of finance broker - Several different classes of investors affected - How to administer available trust funds amongst different classes - Indefeasibility of title - Whether to continue injunctive relief against investors having prima facie indefeasible title as registered proprietors of mortgages - Serious issues to be tried on some questions relating to indefeasibility - Inappropriate to continue injunctive relief on balance of convenience - Interim orders set aside - Alternative regime suggested

Finance Brokers Control Act 1975

Transfer of Land Act 1893

Trustees Act 1962

Armagas Ltd v Mundogas SA [1985] UKHL 11; [1986] AC 717

ASC v Buckley; Becke v National Australia Bank Ltd, unreported; SCt of NSW; 20 December 1996

Assets Company Ltd v Mere Roihi [1905] AC 176

Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604

Bain v Fothergill (1874) LR 7 HL 158

Beach Petroleum NL v Johnson [1993] FCA 283; (1993) 115 ALR 411

Bishopgate Investments Ltd v Homan [1994] EWCA Civ 33; [1994] 3 WLR 1270

Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571

Cave v Cave (1880) 15 Ch D 639

Clay v Clay [1999] WASCA 8; (1999) 20 WAR 427

El Ajou v Dollar Land Holdings plc [1993] EWCA Civ 4; [1994] 2 All ER 685

Godfrey Constructions v Kanangra Park [1972] HCA 36; (1972) 128 CLR 529

Harrison v Mills [1976] 1 NSWLR 42

Hartigan Nominees Pty Ltd & Anor v Rydge (1992) 29 NSWLR 405

Homestyle Pty Ltd v City of Belmont (1999) 32 ACSR 473

Horwath Corporation Pty Ltd v Huie [1999] NSWSC 583; (1999) 32 ACSR 413

Hoskins v Van Den Braak (1998) 43 NSWLR 290

Humphris v Jenshol (1997) 25 ACSR 212

Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161

Kinsella v Caldwell [1975] HCA 10; (1975) 132 CLR 458

Kooragang Investments Pty Ltd v Richardson & Wrench Ltd [1982] AC 462

Lloyd v Grace, Smith & Co [1912] UKHL 1; [1912] AC 716

Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] All ER 198

News Ltd v Australian Rugby League [1996] FCA 870; (1996) 64 FCR 410

Official Receiver v Klau & Ors (1987) 74 ALR 67

Pyramid Building Society (In Liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188

Re Global Finance Group Pty Ltd (In Liq); ex parte Read v Shankland Nominees Pty Ltd [1999] WASC 23

Re Goldcorp Exchange Ltd [1994] UKPC 3; [1995] 1 AC 74

Re Marsh [1991] FCA 558; (1991) 32 FCR 482

Re Oatway (1903) 2 Ch 356

Re Pritchard (1963) Ch 502

Re Speargold Enterprises Pty Ltd [1999] NSWSC 623; (1999) 32 ACSR 363

Re Universal Distributing Co Ltd (In Liq) [1933] HCA 2; (1933) 48 CLR 171

Schultz v Corwill Properties Pty Ltd (1969) 90 WN (NSW) 529

Scott v Scott [1963] HCA 65; (1963) 109 CLR 649

Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536

Sutton v State of Victoria [1998] HCA 56; (1998) 156 ALR 579

Valoutin Pty Ltd v Furst [1998] FCA 339; (1988) 154 ALR 119

White v Weston (1968) 2 QB 647

Willow Green v Smithers (1994) 1 WLR 832

1 OWEN J: This is an application by certain persons (called "the Objectors") to set aside interim orders made in favour of the applicants by a Judge of this Court ex parte on 30 September 1999.

2 This application is but one of many arising from the collapse of a finance broking operation operated by the fourth applicant ("Rowena"). The issues are of more than usual complexity. Because of the circumstances of many of the parties concerned, the matter has the potential to cause great personal hardship.

3 The applicant Mark Anthony Conlan ("Conlan") is the liquidator of Rowena and of the third applicant ("Oakleigh"). In May 1999 he was appointed by this Court as an independent accountant to investigate the affairs of GGFB. He was appointed provisional liquidator of Rowena on 16 July 1999 and of Oakleigh on 21 July 1999. He was appointed as liquidator of Rowena on 21 July 1999 and of Oakleigh on 25 August 1999. Rowena was a finance broker licensed under the Finance Brokers Control Act 1975 ("the Act"). It carried on business under the name "Graeme Grubb Finance Broker" ("GGFB"). On 23 July 1999 Conlan was appointed supervisor of the business pursuant to powers set out in s 73 of the Act.

4 During this time, Conlan inspected the books and records of Rowena. He formed the view that they did not properly identify transactions entered into between investors and borrowers for whom Rowena acted as finance broker. The course of dealing customarily utilised by Rowena was as follows. Promises were made to potential investors that they would be given a first mortgage security over identified property. In the main, Oakleigh did little more than act as trustee for investors who had supplied the funds to Rowena for the advances to borrowers. Often the mortgage was registered in the name of Oakleigh as mortgagee. Some of the mortgages remained in that state. In relation to others, there was a transfer of mortgage from Oakleigh to named investors. In other instances the mortgages were registered in the names of investors as mortgagees. In many instances GGFB offered investors a cash flow guarantee, described in the documentation in this way: "GGFB will pay to you the monthly interest regardless of whether the borrower has paid us".

5 Rowena maintained a trust account. It maintained a separate account styled "cash flow guarantee account". On about 84 occasions between August 1997 and May 1999 the trust account was overdrawn at the close of business on a particular day, sometimes to a significant extent. This was caused, at least in part, by the way the cash flow guarantee was administered. Rowena would pay interest to the investors from the cash flow guarantee account. If there was insufficient money in that account the shortfall would be made up by transferring money from the trust account. There were many other transactions, not related to the cash flow guarantee, that resulted in the trust account being in overdraft. Just how a trust account of this nature can be permitted to fall into deficit is one of the many extraordinary features of this saga that will have to be investigated in due course.

6 Conlan, in his capacity as liquidator of Rowena and as supervisor of the GGFB business, has the unenviable task of sorting out the competing claims to various assets of the failed business. I am told that there are about 600 mortgages or investors whose interests are affected and the total sums involved may be in the region of $34,000,000. They fall into several different classes, each with differing interests and concerns. The central problem is how to administer the trust funds that are available in the trust account and which represent returns from the various individual mortgages. There are numerous aspects to the claims and they are highlighted by the multiplicity of litigious proceedings that have been commenced in this Court and elsewhere.

7 Of primary concern to me at the moment is the treatment of investors who are shown on titles as the registered proprietors of mortgages. At first glance they appear to have the protection of the indefeasibility provisions of the Transfer of Land Act 1893. But the question is whether, in the unusual and complex circumstances which have arisen, the prima facie benefits of indefeasibility have been lost or postponed so that they cannot take priority over other claimants against the trust account. I have put it in that way but even that is an over-simplification. We still remain at the interlocutory stage and the question is whether injunctive relief should be granted pending a full trial and, if so, in what terms.

8 I can illustrate the problem by reference to one of the mortgages. This is an illustration only and, by mentioning it, I should not be taken as saying that it raises all of the issues that are likely to fall, eventually, for resolution. As I have already said, there are a myriad of different classes of claimant with differing interests.

9 On 5 March 1998 GGFB wrote to George and Ina Webber ("the Webbers") "confirming [their] first mortgage investment" in accordance with the details set out in the letter. The borrower is not named but the principal is shown as $150,000 of which $10,000 is to be advanced immediately and $140,000 on 6 May 1998. For the purposes of this discussion the borrower can be described as Sertorio. According to the bank records of the trust account, on 5 May 1998 GGFB banked $140,000 received from the Webbers. The bank records also show a payment to Sertorio on 8 May 1998 of $46,750.58. According to a settlement statement dated 8 May 1998 addressed to Sertorio, that figure of $46,750 was part of the advance of a total of $150,000 which included a payment of $97,436.92 to BankWest, presumably to discharge an existing mortgage. The balance of the funds were expended as the first month's interest and to cover brokerage fees. The bank records of GGFB indicate that the payment of $97,436 to BankWest was made initially on 6 May 1998 but, incorrectly, from an account of GGFB other than the trust account. On 27 May 1998 it was debited to the trust account and credited to the other account from which it had been incorrectly withdrawn.

10 There are at least two complicating factors. First, the evidence seems to bear out that on 5 and 8 May 1998 the trust account was not overdrawn. However, on 25 May 1998 it went into debit but it was in credit again on 27 May 1998, when the transfer of the $97,436 took place. The second complicating factor is this. The Webbers say they advanced $150,000, not $140,000. The records of GGFB indicate that, of the Sertorio loan of $150,000, only $140,000 was advanced by the Webbers and the remaining $10,000 was provided by a Mrs Johnson.

11 The Webbers are the registered proprietors of the mortgage over the Sertorio titles securing the advance. I could not find a copy of the mortgage document in the materials so I do not know whether it is for $150,000 or $140,000. I have been told that the Webbers have been receiving interest payments on the loan. I understand that Conlan has physical possession of the duplicate certificates of title to the Sertorio properties. Sertorio wishes to discharge the mortgage so that he can deal with the properties. As far as I am aware there is no dispute as to the amount owing by Sertorio under the mortgage and he is in a position to pay the moneys in return for a registrable discharge document and the titles.

12 I have used this mortgage as an example because it illustrates many of the problems. It shows the inadequacies in the financial records of GGFB. It also highlights the difficult issues of law and equity that are raised. For example, what is the effect of an advance purportedly on behalf of an investor from a trust account that was overdrawn on the date of payment? What, if anything, is the effect of such a payment on the indefeasibility that might otherwise be expected to protect the registered mortgagee? I should add that there is no evidence that the Webbers had knowledge, actual or constructive, that the trust account was overdrawn when the payment was made or of any other deleterious circumstances affecting the mortgage arrangement.

13 In the originating summons the applicants seek wide-ranging relief. They seek several declarations or orders, which I will paraphrase in numbered paragraphs, that:

1. A borrower who obtained a loan through GGFB can repay the loan to Conlan (as supervisor) and Conlan's receipt will be a full discharge of the borrower's debt "to those investors who in [Conlan's] opinion advanced moneys to that borrower" through GGFB.

2. All mortgages in the name of Oakleigh are held on trust for Rowena and they be transferred to Rowena to be held by Rowena "on trust for those persons who have claims upon the trust account".

3. If money was advanced from the trust account to a borrower without the investor's authority, or if Rowena's own money was advanced to a borrower, Conlan can attend settlement of a discharge of the mortgage and receive an amount equal to the amount paid without authority or the amount of Rowena's money so advanced in priority to all other payment.

4. If the trust account went into overdraft between the date an investor paid the moneys to Rowena and the date on which the money was paid to a borrower, the money received on a discharge of the mortgage or by way of interest be paid to Conlan to be held on trust pending further order.

5. If Conlan's inquiries reveal that a registered mortgagee did not provide the money advanced to a borrower, moneys paid in discharge of the mortgage or in payment of interest are to be held by Conlan on trust pending further order.

(a) an investor's money can be traced into a loan secured by a mortgage granted by a borrower to whom the investor had agreed to lend funds; and

(b) there were sufficient funds in the trust account at the date of the advance for the advance to be made without recourse to funds held on trust for any person other than the investor or borrower,

all mortgages, whether registered or not, be held on trust for all claimants upon the trust account.

7. The transfer of a mortgage by Oakleigh is void except for those mortgages transferred to an investor whose money can be traced to the loan, repayment of which was secured by the mortgage.

8. All mortgages transferred by Oakleigh are held in trust for all claimants upon the trust fund except for those mortgages transferred to an investor whose money can be traced to the loan, repayment of which was secured by the mortgage.

14 The gravamen of the claim on which these declarations and orders are based is that Rowena acted beyond authority and in fraud of investors by:

(a) registering mortgages in the names of investors whose funds had not been advanced to the borrower who executed the mortgage;

(b) causing mortgages to be registered in the name of Oakleigh, rather than the name of the investor, without the investor's knowledge or consent;

(c) using trust moneys for purposes that were not authorised by the beneficiary of the trust;

(d) advancing money to borrowers from a trust account that was overdrawn at some time between the date when the investor's money was paid into the trust account and the date when the borrower signed the mortgage or the date when the advance was paid out of the trust account to the borrower;

(e) obtaining executed discharges of mortgage from investors and registering those discharges, even though the borrower had not repaid the moneys;

(f) causing an investor to become registered as a mortgagee, following a fraudulently obtained discharge of a previous mortgage, even though that investor had not advanced funds to the borrower.

15 The claims in relation to Oakleigh are, essentially, that the transfers of mortgage were done with intent to defeat or delay creditors of Oakleigh or Rowena. A further or alternative basis is that they were uncommercial, unfair or insolvent transactions within the meaning of Div 2 of Pt 5.7B of the Corporations Law.

16 The relief claimed highlights the enormous breadth of the investigations that those charged with unravelling the affairs of GGFB have been making and will be required to make. It gives a lead to the types of situations and the classes of persons or entities likely to be affected by and in the action and related litigation. It also highlights the wide range of issues that the Court will be asked to resolve.

17 On 30 September 1999 the applicants appeared before a Judge of this Court ex parte and obtained a number of orders. Paragraph 1 provides:

"Unless [Conlan] consents in writing or until otherwise ordered, the Registrar of Titles be enjoined from registering any person as a transferee or proprietor of and of any instrument affecting any certificate of title listed in the Schedule to this order."

18 His Honour made declarations in the terms asked in par 1, par 2 and par 3 of the originating summons. They are to the effect set out in the paragraphs numbered 1, 2 and 3 in the preceding section of these reasons. Other orders were made dealing with service of process and the like but they are not of any immediate materiality. The Schedule to the order lists the certificate of title details, loan folio numbers and mortgagor's name in respect of more than 300 loans.

19 I should add that Conlan, in his capacity, gave an undertaking as to damages in the usual form.

20 On 15 October 1999 another Judge made an order, again ex parte, extending the injunction that I have recited above to a further 32 certificates of title. From time to time applications have been made to the Court to vary the orders in one way or another in relation to particular mortgages or loans. However, the orders remain in place and unaltered in relation to the great bulk of the loans or mortgages referred to in the Schedule.

21 The Objectors number in excess of 100. They are all registered on titles as the proprietors of mortgages. They seek to have the ex parte orders set aside wholly or, in the alternative, in part. There are, of course, many other investors who have not to date sought to be represented in the action. Issues will inevitably arise as to representation and classes but those questions can be left for another day. The question that I have to answer is whether the ex parte orders should stand or whether some other course should be followed.

22 I wish to deal with two preliminary matters. Counsel for the Objectors made much of the fact that as the Objectors had not been joined as parties to the action they had a right ex debito justitiae to have set aside orders made in their absence and which affect their rights. The phrase ex debito justitiae means that a person is entitled to a remedy as of right rather than by way of the exercise of discretion. While I acknowledge that technically this may be correct, I tend to find arguments of this nature somewhat sterile and barren. A person has a right to apply to the Court to have any order made ex parte set aside: O 58 r 23. The Court has a discretion whether to set the order aside. It is a discretion of the broadest kind. As the court said in Bell Group NV (In Liq) v Aspinall (1998) 19 WAR 561 in relation to applications under O 58 r 23, at 570:

"The role of the judge is to administer justice. Each case depends on its own facts. In making a decision whether or not to vary or set aside an order made ex parte the reviewing judge will be obliged to take into account the circumstances as they actually exist and the likely effect of the order on the parties and on the administration of justice generally."

23 This case is complicated. I can well understand why Conlan took the step that he did. He was seised of a difficult administration and he reached the view that the assets the subject of the administration or investigation on which he had embarked were at risk. The range of potential interests is, as I have already said, extensive. An essential part of the pre-trial steps will be the ascertainment of those interests so that the decision in the substantive proceedings can be arrived at by giving all those affected a reasonable opportunity to participate. But to have attempted to identify those interests and give them notice of the application at that stage might well have made the position untenable.

24 I think I should approach the matter from the perspective that I am now required to consider all of the material and, on the basis of all of the material, decide what the interests of justice require.

25 The second preliminary matter comes from the comment made by counsel for the Objectors to the effect that the investors, or perhaps more correctly the Objectors, had no confidence in Conlan and wanted nothing further to do with him. I can see both sides to that argument. I can well understand the frustration of the investors who advanced money in good faith to the operation of a licensed finance broking business but who are now being kept out of the money they believe is rightfully theirs. Some of them are dependent on the capital and the returns on it so invested for their livelihoods. They have seen the problems associated with the collapse of GGFB seem to grow since at least May 1999 without much apparent progress. On the other hand the task facing the Supervisor is complex and he has, to some extent, been hampered by the fact that other related investigations are also being conducted. In the end, those considerations have not weighed with me at all. The official investigations must continue. The litigation will continue. In the meantime everyone concerned with this saga will have to do the best he or she can to weigh and accommodate the disparate interests.

26 This is essentially an application for injunctive relief or for relief that has aspects of the enjoining powers of the Court. I think it was common ground that the applicants were required to establish a serious question to be tried and, if they could do so, balance of convenience questions would then arise.

27 In this section of the reasons, when I refer to "the applicants" I am referring to the applicants in the substantive originating summons rather than to the Objectors, who are the applicants for the relief claimed by way of setting aside the ex parte orders.

28 The applicants clearly recognise that they must confront the prima facie claim that the registered proprietors of mortgages have to an indefeasible title in accordance with conventional Torrens system law. It is, as counsel for the Objectors pointed out, a system which involves title by registration rather than one of registration of titles. I do not need to set out here the myriad of court decisions on the Torrens system that found that proposition. I think it is appropriate to use as a starting point that those who have become registered as the proprietors of mortgages have an indefeasible title unless the applicants can demonstrate an arguable case (in the sense of a serious question to be tried) to the contrary.

29 I will assume for the purposes of this application that the evidence establishes that Rowena acted beyond authority and in fraud of investors by, among other things:

(a) registering mortgages in the names of investors whose funds had not been advanced to the borrower who executed the mortgage; and

(b) advancing money to borrowers from a trust account that was overdrawn at some time between the date when the investor's money was paid into the trust account and the date when the borrower signed the mortgage or the date when the advance was paid out of the trust account to the borrower.

30 As I understand it, counsel for the applicants puts the argument against the operation of the prima facie effect of indefeasibility in five ways. First, whether there has been a fundamental mistake that affects these mortgages. Secondly, whether, due to the mixing of the trust funds from which the money was advanced and the fact that the trust account was, from time to time, overdrawn, the resulting mortgages are held on a constructive trust for those who have claims on the trust fund. Thirdly, whether the mortgagees, or at least some of them, are volunteers and, if so, whether that defeats indefeasibility. Fourthly, whether the investors are tainted by the fraud perpetrated by GGFB. Fifthly, there is an argument based on the concept of unjust enrichment. I will deal with each of them in turn

31 The first of those issues proceeds from the factual base that some of the investors who have become the registered proprietors of mortgages did not advance the funds that were lent to the borrower. Counsel for the applicants submitted that registration of a mortgage does not interfere with the ordinary effect of the instrument at law or in equity. Thus, if the borrower thought or assumed that the mortgage was being executed in favour of the person who actually lent the moneys and that was not the case, there would be a fundamental mistake, as per Bell v Lever Bros Ltd [1931] UKHL 2; [1932] AC 161 at 235 - 36. In this case the agent of the investor knew of the mistake and the breach of trust and so the mortgage should be held for the benefit of the person to whom the mortgage should have been granted.

32 This begs a number of questions. It assumes, I think, that the mistake relates to an issue of significance to the parties who made it. Can it be assumed, in the absence of evidence, that the identity of the investor was an issue of significance to the borrower such as to go the very heart of the bargain? The issue relates to the question of agency. In circumstances such as we have here, I wonder whether the mortgagee, who has no knowledge of the mistake or the breach of trust, would be bound by the actions of a person who was not his agent for the purposes of that particular transaction. I am not particularly attracted to the case in so far as it is based on fundamental mistake.

33 As to the second issue, I think it is common ground that the equitable remedy of tracing cannot be applied to an overdrawn trust account: Barlow Clowes International Ltd (In Liq) v Vaughan [1991] EWCA Civ 11; [1992] 4 All ER 22 at 42. That means it may well be impossible to pursue remedies in rem. However, even if the mortgagees have indefeasible title protecting them from remedies in rem, a claim in personam may be pursued. Counsel for the applicants submitted that in these circumstances, and to the extent that moneys other than the registered mortgagee's funds were advanced to the borrower, the mortgagee held the mortgage on a constructive trust for the trust fund.

34 On the authority of cases such as Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd [1994] FCA 1031; (1994) 49 FCR 334, I think the proposition is arguable. However, for the purposes of interlocutory relief of this nature, there are some serious difficulties. Normally, the in personam remedy would be pursued by a rival claimant to the fund who can directly assert the personal equity against the registered mortgagee. Once all the classes of claimant have been established and they are represented the situation may alter. But at the present, I am not sure that there is a person who can properly assert a personal equity such as to defeat indefeasibility.

35 The next question is whether the registered mortgagees (or some of them) are volunteers and, if so, whether that causes them to lose the protection of indefeasibility. Again, this proceeds from the factual base that some registered mortgagees did not advance the funds that were provided to the borrower in relation to the mortgage in question. The applicants rely on IAC (Finance) Pty Ltd v Courtenay [1963] HCA 64; (1962) 110 CLR 550 at 572 for the proposition that investors in that situation could be classed as volunteers.

36 There is authority for the proposition that indefeasibility of title operates in favour of a volunteer: Bogdanovic v Koteff (1988) 12 NSWLR 472 . There are other cases which take the contrary position: see, for example, Rasmussen v Rasmussen [1995] VicRp 38; [1995] 1 VR 613 at 632. Clearly, there is a serious question to be tried on that point. But there is an evidentiary difficulty. I do not think that it would be a proper exercise of discretion to make a global prohibition against all of the registered mortgagees from having access to moneys to which they are, on prima facie grounds of indefeasibility, entitled.

37 It is here that the Webber and Sertorio factual situation provides a lead to what I think should be done on an interim basis. Putting the evidence at its lowest point for the investors, the Webbers advanced $140,000, not $150,000 and the remainder was advanced by Mrs Johnson. I am leaving to one side here any issues arising from the fact that the trust account may have been overdrawn when the funds were paid out. I do not think the fact that the Webbers paid $140,000 instead of $150,000 is enough to render the Webbers "volunteers" to the extent necessary to defeat indefeasibility. However, if the full $150,000 is repaid by Sertorio, it would be a just result (all other things being equal) for them to receive the $140,000 and for the remaining $10,000 to be held on trust.

38 I think this highlights the major difficulty that I have with this whole sorry saga. The effect of the orders is a global prohibition on all of the investors from having access to funds to which they are prima facie entitled (in accordance with the principle of indefeasibility) on the basis that some of them may not have advanced the funds that went to the borrowers in relation to the loans to which the mortgages relate. If there is evidence that a particular mortgagee advanced nothing at all then the position would be different. That may be the case with some of the "in-house" transactions or with transactions benefiting related parties, but I think evidence would be required to sheet home the problem to a particular mortgagee.

39 The fourth issue relates to fraud. I will assume for the moment that the various entities that make up GGFB have committed the frauds alleged against them. A registered proprietor's title may be impugned by fraud by the registered proprietor's agent, but the fraud must be "brought home" to the registered proprietor. The great difficulty with this aspect of the claim is that the fraud, so far as it affects the investors was the mixing and misuse (counsel for the Objectors used the term "theft"). The investors engaged GGFB as their agent to lend their funds on security of registered mortgages and to collect interest payments and remit them to the investors. Counsel for the Objectors submitted that the fraud alleged could not tenably have arisen in the course of GGFB's actual or ostensible agency. Accordingly, the investors cannot be vicariously liable for GGFB's conduct. I think there is considerable force in that submission.

40 This is another area in which there would need to be evidence sheeting home to a particular investor knowledge of, or complicity in, the fraud committed by GGFB. In the absence of evidence to that effect I would be loath to grant a global prohibition for the reasons already advanced.

41 Finally, there is the issue of unjust enrichment. The argument is that the registered mortgagees are accountable on the basis of unjust enrichment. They have received a benefit, namely the registration in their favour of a mortgage, as a result of misapplied trust property and that it would be unjust for them to retain the benefit even though at the time they obtained the benefit they were unaware of the misapplication of the trust property. Counsel for the applicants referred to Koorootang Nominees Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] 3 VR 16 at 100 - 05 in support of the argument. Reference was also made to a most interesting article entitled "Equity, restitution, and in personam claims under the Torrens system: Part Two" by Jonathon Moore published in Volume 73 of the Australian Law Journal at 712. The difficulty, I think, lies in decisions such as Macquarie Bank Ltd v Sixty Fourth Throne Pty Ltd [1998] 3 VR 133 where it was held that mere receipt of trust property is insufficient to give rise to a personal equity such as would defeat an otherwise indefeasible title. Nonetheless, and particularly if the investors, or some of them, can be classed as volunteers (in which case it may not be necessary to establish dishonesty: Lord v Spinelly (1991) 4 WAR 158 at 172), the case might be arguable on a "knowing receipt" basis. But, once again, my reticence to grant a global prohibition in the absence of evidence of particular situations, comes to the fore.

42 The Objectors raised some other issues. For example, whether there was an improper delegation of judicial power to Conlan, whether the powers of the Supervisor under the Finance Brokers Control Act 1975 were wide enough to sanction what he was doing, and whether there is any comfort for the applicants in s 89 and s 92 of the Trustees Act 1962.

43 I think the question of delegation of judicial power probably falls away as a result of the conclusion to which I have come. The other matters can be left for another day.

44 It will, be apparent from what I have said that there are serious issues to be tried on some questions but I am worried about the effect of the prohibitions that have been sought on the investors as a group.

45 I have taken into account all of the matters set out in par 12 to par 14 of the Applicants Amended Outline of Submissions dated 16 November 1999. I appreciate the difficulties that this administration presents. I am conscious that not continuing with the relief that was granted on 30 September 1999 has the potential to create mischief because it may become necessary to deal with individual loans on a case-by-case basis. I also appreciate that it will create a divide between investors who, perhaps by accident or good fortune, became registered and those, who by misfortune but through no fault of their own, did not.

46 On the other hand, if the prohibitions are to continue, some persons who are reliant on the moneys for their livelihood will be denied access to them on an evidentiary base that may or may not apply to them.

47 In the end I have come to the view that to do justice the global prohibition should not be continued against bona fide independent investors who have become registered as the proprietors of mortgages. The principle of indefeasibility of title must be given full effect, even in the interim stages. However, I appreciate that the situation is fluid and research and investigations are ongoing. For that reason Conlan should be given notice of transactions affecting the mortgages.

1. The orders made on 30 September 1999 and 15 October 1999 should be set aside.

2. The impugned mortgages should be split into four categories:

Category 1: mortgages of which Oakleigh is the sole proprietor;

Category 2: mortgages which are registered in the name of Oakleigh and other investors;

Category 3: mortgages registered in the name of a person or company associated with Oakleigh, Rowena or Graeme Grubb;

3. The mortgages the subject of the four categories should be listed in a Schedule to the orders made as a result of these reasons.

4. There should be an injunction restraining the Registrar of Titles from registering a discharge of, or other dealing affecting, a mortgage:

(a) in relation to Categories 1 and 3, unless it is signed by Conlan or unless the discharge or dealing, is accompanied by a written consent by Conlan to the discharge or dealing;

(b) in relation to Categories 2 and 4, unless the discharge or dealing is accompanied by a document signed by Conlan verifying that he was given not less than 5 days notice of intention to present the discharge or dealing for registration and that he has not applied to the Court for further relief in relation to that mortgage.

5. In relation to Category 1 and 2 mortgages, on discharge or dealing, the share or interest of Oakleigh and of any co-mortgagee who is a person or company associated with Oakleigh, Rowena or Graeme Grubb shall be held by Conlan on trust until further order but the share or interest of any other person shall be paid to that person.

6. In relation to Category 4 mortgages, provided the registered mortgagee has given to Conlan the notice referred to in par 4(b) and the Court has not made any further order in relation to the mortgage, on discharge or dealing the funds arising from the discharge or dealing shall be paid to the registered mortgagee.

7. The funds presently held by Conlan on trust arising from discharges shall be held by him or paid to person who were, prior to discharge the registered mortgagee, in accordance with the regime in par 5 and par 6.

I will hear counsel as to the formulation of these orders.