Robert Ian Mitchelson v Carolyn Eva Mitchelson [1979] FCA 48

Court of Australia Act 1976 and order 6 rule 1 of the Federal

"The Court or a Justice may order that any person be added as a party to an appeal, or that the proceedings be amended, and may impose

such conditions as appear just and give all consequential directions."

The background leading to the application nay be briefly summarised as follows. On 19 September 1978 the

respondent issued a bankruptcy notice against the applicant in respect of a sum of $7,963.26 alleged to be owing to her in respect of a judgment debt. The applicant alleged that he

had a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt which came within the terms of s.40(1)(g) of the Bankruptcy Act 1966.

On G November 1978 C.A. Sweeney J. ruled against this claim, stating:

",.,.1 do order as follows: the court determines that it is not satisfied that the debtor has a counter-claim,set-off or cross demand equal to or exceeding the amount of the judgment debt, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment was obtained."

From that order an appeal was brought by notice of appeal dated 29 November 1978, That notice listed three grounds as to all of which the Court has been informed the applicant no longer relies. Accordingly, this application Must be decided by principles applicable to an application for an extension of time in which to appeal or to amend an

otherwise valid notice of appeal by adding a new ground out

The ground of appeal which it is now desired to add

"4, That since the date of the declaration and determination referred to herein fresh evidence

new basis of counterclaim such as if known at the time of the hearing before the Honourable Mr. Justice Sweeney could have been raised under section 40

sub-section (1) paragraph (g) of the Bankruptcy Act 1966."

The applicant has established that the matters upon which he relies in his new cause of action, or some of them at least, did arise after the date of the judgment given against him and after the date at which he lodged his notice of

In Burns v. Grigg /1967/ V.R. 871 the Full Court of the Supreme Court of Victoria, Barry, Little and Gowans JJ. in dealing with an application to include an additional ground of appeal considered as a relevant factor the likelihood of

In Hughes v. National Trustees Executors and Agency Company of Australasia Limited [1978/7 V.R. 257, McInerney J.

discussed the principles governing the discretion to allow an appeal out of time. His Honour considered one significant question requiring attention to be the appellant's prospects of successfully prosecuting the appeal. See [1978/7 V.R. 257 at p.262.

In Vilenius v. Heinepar (1962) 36 A.L.J.R. 200 at p. 201, Kitto, Windeyer and Owen JJ. referred to a respondent's

w,..vested right to retain the judgment unless... this court under sub-rule 2 of rule 6 for special reasons should give leave to appeal".

These comments are I think applicable to the application before

There are two matters now relied upon and encapsulated in the proposed new ground of appeal which the applicant

1, That an instrument of mortgage dated 24 December 1976, and giving rise to the judgment debt, was altered by or with the authority of the respondent subsecuent to its execution and was thereby rendered void;

caveats against land comprised in certain cer- tificates of title in respect of an alleged equitable interest arising from a deed of settlement made between the parties dated 9 December 1974, referred to in the mortgage mentioned in the previous paragraph and the applicant suffered damage by reason thereof.

The caveats referred to had been lodged pursuant to clause 16

of the deed of settlement which was in the following terms:

by the husband shall be secured upon the properties set out in the second schedule

(a) The husband will deliver to the wife's solicitors a registerable instrument of mortgage over each of the said properties subject to the encumbrances set out in

(bo) The wife's solicitors will lodge caveats to protect the said mortgage but will not register the said mortgage until

default on the part of the husband in making any of the said payments and until such default the said ianstruments will be hela 1n escrow by the wife's solicitors."

The claim outlined in paragraph 2 is dependent upon it being established that at the time the caveats were lodged the instrument of mortgage referred to in paragraph 1 had become void. Default having been made in payments provided for in the deed of settlement the respondent lodged the mortgages for registration under the Transfer of Land Act 1958

As to the matter raised in paragraph 1 above, the alleged alteration of the mortgage was constituted by the stapling to the original and duplicate instruments of mortgage of the original deed of settlement and a copy thereof respectively. The deed of settlement was executed by the applicant and respondent and had been approved under s.87 (1)(k) of the Matrimonial Causes Act 1959. The stapling was effected by some person unknown while the mortgages were in the Victorian Titles Office awaiting registration. The solicitor for the respondent has deposed that neither she, nor to her knowledge any employee of her firm, personally stapled the deed to the mortgage and that she believes that it was so stapled under the direction of the Registrar of Titles. This evidence was not challengeda@d it was not suggested the respondent personally authorised the

In the body of the instrument of mortgage it is stated that the mortgage was given in consideration of

the parties having entered into the deed of settlement

referred to above for the purpose of securing the obligations of the applicant thereunder. There is also a convenant to the effect that the applicant will pay the principal sum payable under that deed as and when

establishes that it is the view of the Registrar of Titles that an instrument, the obligations under which can be ascertained only by reference to some other instrument referred to therein, will be registered only after production of that other instrument to the Registrar to be kept in his custody in the Titles Office, to enable members of the public searching the instrument of mortgage to ascertain the effect of all its terms. The Registrar

of Titles enforces this view and in this case' did demand production of the deed of settlement and a copy thereof. The only reasonable inference on the evidence is that someone in theTitles Office must have stapled the

document to the mortgage and did so not to vary its terms but by way of putting the deed of settlement and a copy thereof in a convenient place for reference in relation

to the mortgage. It would be very surprising and startling if such a procedure should have rendered the instrument of mortgage void and I am satisfied that there is no prospect

of the applicant being able to establish that it did so.

A statement of the principles to be applied in considering

the effect of an alteration to a deed is to be found in

Halsbury's Laws of England (4th edition) Vol.12, page 552, para-

"Tf an alteration (by erasure, inter-lineation or otherwise) is made in a material part of a deed, after its execution, by or with the consent of any party to or person entitled under it, but without the consent of the party or parties liable under it, the deed 18 made void." My task in considering this aspect of the proposed new ground of appeal is made easier by the fact that, only just over a year ago, a somewhat similar ground

of appeal was argued before the Full Court of the Suprome

Court of South Australia in Armor Coatings (Marketing) Pty. Ltd. v. General Credits (Finance) Pty. Ltd. (1978)

17 S.A.S.R. 259, In that case a mortgagee had, after receiving the mortgage executed by the mortgagor, completed blanks for details of dates and amounts of payments and lodged it for registration under the Real Property Act 1256 (S.A.). At a later time the mortgagee, because of the resumption of part of the land and requisitions of the Registrar-General of Deeds, had altered the description of the land and re-dated the mortgage. It appeared that all the alterations except the date of the mortgage itself conformed to the intention of the parties. The Full Court held that the alterations did not avoid the instrument of

(1) that the mortgagor in the circumstances had given to the mortgagee and its solicitors implied éuth- ority to fill in the pert2culars which were filled in before the mortgage was lodeed and tnat when a document 1s honded by one party to the other for registration under tne Torrens system, an

implied authority should readily be presumed to make alterations, not departing from the parties' bargain or varying their rights inter se, which are necessary for registration;

(2) that so far as the alterations made after the mortgage was lodged were concerned they were either not material, or in one case, if material were to the mortgagor's advantage and so could not be relied upon to avoid the instrument,

The judgments of the Full Court discuss in detail the authorities in this area beginning with Pigot's Case (1614) 41 Co. Rep. 26h 77 E.R. 1177. Reference may usefully be made to the following extracts. Bray C.J. at page 277 said:-

" 1.4. there is a distinction between cases where the formal document in question embodies a previous agreement in fact between the parties, so that in a proper case a court of equity would rectify it to make it conform to that previous agreement, and a case where the document itself for the first time puts the parties into a contractual relationship. In the second type of case... there may well be no implied authority to supplement it after one party has signed it."

",.,.. Where the document is intended by -oth parties to be registered under the Torrens system and one party hands it to the other intending that the other should register it, or knowing that the other will endeavour to register it, an implied authority to the other should readily te presumed to make whatever alterations or additions, not departing from the bargain between the parties or varying their rights or obligations inter se, are necessary to achieve registration."

Walters J. at page 283 said: "To my mind, the question of materiality depends cn whether the altered writing purvorts to affect the

legal relations previously existing, thet 1s whether the alteration would result in a change in the contractual

obligations between the parties, as they previously existed, so as to vary ingjguriously the rights against, and the duties to, the party making the alteration. Thus it is stated in Chitty's Law of Contracts,

(in Pigot's case) is ancorrect in cases where the alteration does not enhance the liability of the obligor.'

In support of this statement the learned author draws on the authority of the decision in Aldous v, Cornwell (1868) L.R. 3 Q.B. 573. There the Court of Queens Bench held that a promissorynote which did not express the time for payment, but to which, while it was

in the possession of the payee he had added without the assent of the maker the words 'on demand' was not

thereby vitiated, inasmuch as the altcration did not

change the legal effect of the instrument, but only expressed the legal effect of the note as originally framed, After considering a series of authorities beginning with_Pigot's case, the Court concluded its judgment by saying at page 579: 'We think we are not bound by the doctrine in Pigot's case, or the authority cited for it; and not being bound, we are certainly not disposed to lay it down as a rule of law that the addition of words wnich cannot possibly prejudice anyone, destroys the validity of the note.' "

The facts in this case are, if anything, even stronger than those that existed in the above decision. Here there is no evidence that the respondent or anyone authorized by her has made any dterations to the instrument of mortgage and the applicant has not seriously suggested that such evidence is available. Accordingly even on the strictest reading of the ruling in Pigot's Case (supra)

For the applicant it was argued that the attachment of the deed of settlement made the consideration for the mortgage certain, whereas otherwise the consideration may

have been declared uncertain and the contract of mortgage

a nullity. But the terms of the mortgage were never uncertain, The fact that the extent of the mortgagor's obligations had

to be ascertained by reference to another document referred

to therein did not create uncertainty. The terms of the mortgage itself imposed obligations the extent of which could only be ascertained by reference to the deed to which the terms of

the mortgage inevitably pointed. Stapling the deed to the mortgage did nothing to affect the obligations of any party to the mortgage. Clause 16 of the deed provided that the applicant should deliver a registrable mortgage which the respondent was entitled to register upon default uncer the deed. Accordingly it authorised the respondent to do what

was reasonably required to comply with the conditions of registration. It did not authorise any interference with the deed which might have affected the applicant's obligation

The second issue involved in the proposed new ground of appeal alleges damage suffered by reason of the lodging of caveats. But the lodging of the caveats was quite proper. Im addition all events by which the alleged damage was suffered occurred a considerable period before the acts said to have avoided the mortgage were performed, There is no contention to the

contrary. The damage alleged to have been suffered by the applicant was suffered before the date of the alleged alteration of the mortgage. The authorities referred to in Halsbury's

Laws of Englend(4th Edition)Vol. 12 page 552 paragraph 1378

make it plain that when a deed is avoided by material alter-

ation, that alteration only has such an effect in futuro.

It appears to me therefore to be manifestly clear that the applicant has no prospect of success on the ground now sought to be added on either of the contentions made in support of it. Accordingly the summons should be dismissed