Van den Heuvel v Perpetual Trustees Victoria Ltd; Registrar General of NSW v Van den Heuvel

CATCHWORDS: Mortgages- Torrens System- husband and wife joint tenants- husband arranges mortgage from both but forges wife's signature- whether mortgage binding on husband (by majority, it is)- mortgagee entitled to possession as against wife- wife entitled to compensation under the Torrens Assurance Fund. Consumer Credit Code- where relief available for a statutory mortgagor- whether implied agreement secured by mortgage is a "credit contract". Torrens System- Assurance Fund- s 129 Real Property Act 1900- joint tenants- loss of aliquot share by mortgage by co-tenant- how compensation calculated.

Consumer Credit (New South Wales) Act 1995, ss 4, 5, 6, 7, 8, 11, 70, 71, Schedule 1 Contracts Review Act 1980 LEGISLATION CITED: Conveyancing Act 1919, s 66G Family Law Act 1975 (Cth) Real Property Act 1900, ss 41, 42, 57, 58, 80A, 129, 132 Uniform Civil Procedure Rules, r36.16(2)

Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570; 83 ALJR 196 Fox v Percy [2003] HCA 22; 214 CLR 118 Frazer v Walker [1967] 1 AC 569 French v Queensland Premier Mines Pty Ltd [2006] VSCA 287 Katsaitis v Commonwealth Bank of Australia (1987) 5 BPR 12,049 Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 Marston v Charles H Griffith & Co Pty Ltd [1982] 3 NSWLR 294 Mestaer v Gillespie (1805) 11 Ves 231; 32 ER 1230 National Commercial Banking Corporation of Australia Ltd v Hedley [1984] 3 BPR 9477 CASES CITED: Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32 Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745 Provident Capital Ltd v Printy [2008] NSWCA 131 Queensland Premier Mines Pty Ltd v French [2007] HCA 53; 235 CLR 81 Small v Tomasetti [2001] NSWSC 1112; 12 BPR 22,253 South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603 Trustees of the Property of Cummins v Cummins (a bankrupt) [2006] HCA 6; 227 CLR 278 Vassos v State Bank of South Australia [1993] 2 VR 316 Wade v Burns [1966] HCA 35; 115 CLR 537

2009/298449: Registrar General of New South Wales (Appellant) Elizabeth Van den Heuvel (Respondent) PARTIES: 2009/298460: Elizabeth Van den Heuvel (Appellant) Perpetual Trustees Victoria Limited (First Respondent) Registrar General of New South Wales (Second Respondent)

2009/298449 P B Walsh (Appellant) G A Rich (Respondent) COUNSEL: 2009/298460: G A Rich (Appellant) A Leopold SC and D F C Thomas (First Respondent) P B Walsh (Second Respondent)

2009/298449: Land and Property Management Authority Legal Services (Appellant) Nelson and Co (Respondent) SOLICITORS: 2009/298460: Nelson and Co (Appellant) Gadens Lawyers (First Respondent) Land and Property Management Authority Legal Services (Second Respondent)

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT DATE OF DECISION: 20/2/09; 4/6/09

LOWER COURT MEDIUM NEUTRAL CITATION: Perpetual Trustees Victoria Limited v Peter Van den Heuvel & Anor [2009] NSWSC 57; Perpetual Trustees Victoria Limited v Peter Van den Heuvel No 2 [2009] NSWSC 483

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 2009/298460 2009/298449

HODGSON JA BASTEN JA YOUNG JA

Friday 23 July 2010 VAN DEN HEUVEL v PERPETUAL TRUSTEES VICTORIA LTD REGISTRAR GENERAL OF NSW v VAN DEN HEUVEL Headnote Mrs Van den Heuvel (herein "the wife") was the registered proprietor with her husband as joint tenants of a home in Queanbeyan. A mortgage was registered over the home in favour of Perpetual Trustees Victoria Ltd. Without the wife's knowledge, her husband forged her signature on a mortgage and a Loan Agreement, both of which purported to be executed by the husband and wife. The mortgage secured payment due under the underlying Loan Agreement. The wife did not receive monies advanced by Perpetual, and the husband defaulted on repayments. Perpetual commenced proceedings against both the wife and her husband seeking possession and repayment of the capital and interest due under the registered mortgage. An order for default judgement against the husband for the amount due under the mortgage was made by the Registrar on October 2008.

In proceedings before Price J, the wife argued, inter alia, that she did not execute or participate in the Loan Agreement and/or mortgage, and cross claimed that the mortgage and Loan Agreement were "unjust credit contracts" within the meaning of the Consumer Credit Code. Alternatively, the wife put that if her interest had been lost by registration of the mortgage, she had a claim under the Real Property Act 1900, s129 for payment out of the Torrens System Assurance Fund against the Registrar General. In defence, the Registrar General argued that the wife had suffered no loss because the Loan Agreement securing monies contemplated that the husband and wife would both execute it, and thus the Loan Agreement and mortgage secured no debt.

Price J found in favour of Perpetual and ordered that it have possession of the home. His Honour considered that s 70 Consumer Credit Code did not apply to the wife because she was not a "mortgagor" under the general law due to the forgery. Further, there was a public interest in the conclusiveness of the Register, particularly where the injustice arose from the registration of the mortgage, rather than the terms of the mortgage. His Honour found for the wife against the Registrar General, and in later judgment held that the wife's damage was the difference between the value of her unencumbered one-half share and the net sum she would receive after the payment of the mortgage.

The wife appealed against the verdict granting Perpetual possession and rejecting her application under the Code. She further appealed against the Registrar General, that as a joint tenant she should be compensated the amount needed to discharge the mortgage plus out of pocket expenses. The Registrar General appealed against liability to the wife on the ground that the wife should not have been held liable to Perpetual. The appeals were consolidated. The four issues on appeal were: (1) Whether, properly construed, the mortgage secured a debt against the husband. (2) Whether the Consumer Credit Code applied to grant the Court power to reopen the mortgage as an "unjust transaction". (3) How compensation from the Torrens System Assurance Fund is to be calculated. (4) Whether an issue estoppel arising from the default judgment against the husband prevented the wife from contesting the husband's liability to Perpetual.

(1) As to whether the mortgage secured a debt: Young JA: On the construction of the documents and in the events which occurred there was a mortgage between Perpetual and the husband.

Hodgson JA: There was an implied agreement for mortgage between Perpetual and the husband. Young JA: Although the authorities speak of "implied agreement" in the circumstances of this case, technically what is meant is that equity considers the husband to be under the same obligations as if he had signed the mortgage.

Basten JA, dissenting: There was no mortgage in existence.

Young JA: Where a wife's signature is absent from a loan agreement that is drafted for both husband and wife to sign, the Court must examine whether the parties intended not be bound unless other parties were bound. In such a case, a court may require those other parties to have signed before the document is operative. The primary judge's finding of fact that this was not contemplated was within his mandate. Perpetual's industry experience meant that it would probably accept that it was commercially appropriate to lend out the money as long as the husband was bound. Further, the use of "I" in the mortgage was not confined to the jointure of husband and wife. A requirement that both parties sign and return the Loan Agreement before drawdown was part of the carrying out of a contract already made, and Perpetual waived its right to insist on that requirement by paying out moneys. Hence, Perpetual and the husband intended the documents to be operative even without the wife's signature. Therefore, the mortgage secured a debt under a secured agreement and caught the wife's interest as part of the land charged.

Mestaer v Gillespie (1805) 11 Ves 231; 32 1230; Katsaitis v Commonwealth Bank of Australia (1987) 5 BPR 12,049, applied; Perpetual Trustees Victoria v English [2010] NSWCA 32, considered; Small v Tomasetti [2001] NSWSC 1112; 12 BPR 22,253 referred to;

Basten JA, dissenting: It could not be inferred that the loan and mortgage were intended to be biding agreements if they were not signed by both borrowers and mortgagors. Rather, it ought to be inferred from the contractual material naming both borrowers expressly and the surrounding circumstances, including the mortgagee's knowledge that the husband and wife were registered joint tenants of the property, and the husband's perception that forging the wife's signature was necessary to secure the mortgagee's agreement, that the mortgagee would not have advanced moneys pursuant to the proposed facility unless both borrowers signed each document.

There was not a legally enforceable contract between Perpetual and the husband and wife, or between Perpetual and the husband under the general law. While the mortgagors were liable to the mortgagee in respect of their land if there was a default, there was no default because there was no amount payable under any express secured agreement. The Torrens Register was not undermined by this conclusion, because the nature of the legal interest was not in question, merely its economic value in securing a debt. The husband was not liable under the mortgage on the basis of an implied agreement for monies secured by the mortgage. An agreement implied by law in circumstances of no contractual arrangement would not be within the terms of the mortgage securing money owing under an "agreement", because it would not be a contractual arrangement entered into by the parties.

Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32 applied; Provident Capital Ltd v Printy [2008] NSWCA 131; National Commercial Banking Corporation of Australia v Hedley[1984] 3 BPR 9477; Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745 considered; Queensland Premier Mines Pty Ltd v French [2007] HCA 53; 235 CLR 81; French v Queensland Premier Mines Pty Ltd [2006] VSCA 287 referred to;

(2) As to application of the Consumer Credit Code: Hodgson JA: the mortgage was within s 8 of the Code because it secured a "credit contract", namely an implied contract between the husband and Perpetual. However, the Code did not apply to the credit contract under s 6 because under the Loan Agreement the Husband declared for the purpose of s 11 that the credit was to be applied wholly or predominantly for business and investment purposes. This issue was properly raised in submissions and on the appeal hearing. It would require a stronger case for deficiency in the conduct of the mortgagee to justify reopening a transaction for which compensation is provided for loss caused by the Real Property Act 1900 under s 129 of that Act.

Basten JA: The word "mortgagor" in s70 extends to a person liable as mortgagor and at risk of losing her interest in land for which the mortgage provided security. The wife's interest in the land does not depend on the existence of her interest under the general law. If the mortgage secures moneys owing to Perpetual she is, in her capacity as mortgagor, liable to lose her land. It is erroneous to deny standing on the basis that the Court has regard to the existence of negotiation or bargaining. Rather, their absence may be grounds for relief.

Perpetual should not be able to rely upon an assumption that the declaration given under clause 5(i) of the Loan Agreement, otherwise ineffective, was nevertheless effective for the purpose of ss 11 and 6 of the Code. (Obiter) A reliance by a credit provider on the statutory protection and compensation for fraud under the Real Property Act 1900, without providing evidence of steps taken to prevent fraud and provide appropriate advice, so as to burden the public purse with the costs of fraud might weigh against the credit provider.

In determining an application, the "public interest" in the conclusiveness of the register ought not be assumed conclusive under s70(2), without the court without the Court weighing other relevant factors and circumstances in the case, and the consequences of an order for an identified "public interest". Here, no person holding a public interest had relied upon the conclusiveness of the register regarding the transaction, and the appellant was entitled to rely on a statutory power which the legislature intended to qualify the effects of registration in appropriate circumstances.

Permanent Trustees Co Ltd v Frazis [1999] NSWSC 319 distinguished; South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603 referred to; Wade v Burns [1966] HCA 35; 115 CLR 537, applied; Vassos v State Bank of South Australia [1993] 2 VR 316 considered.

Young JA: The terms of s70 of the Consumer Credit Code show that the section is only to apply where the mortgagor or his or her predecessor in title enters into a contract of mortgage and does not apply where a person becomes a mortgagor only because of the operation of the Real Property Act 1900.

(3) As to the quantum of compensation against the Registrar General: Hodgson, Young JJA (Basten JA agreeing): Calculation of the appellant's entitlement to compensation for loss or damage suffered as a result of the operation of the Real Property Act 1900 under s 129 of that act, requires comparison of the appellant's position in the event that the mortgage was unregistered, with what her position was as a result of registration. As Perpetual could have enforced an unregistered mortgage by way of an order ultimately authorising sale of the property, the measure of loss or damage is not the amount required to pay out the mortgage. In the absence of evidence, the appellant should be regarded as having a one-half beneficial interest in the property loss, and her loss is the difference between the value of that interest and the sum she will receive after payment of Perpetual's mortgage. It is a matter for the discretion of the judge in any further process whether the appellant should be allowed to lead further evidence that her beneficial interest is greater than one-half.

Trustees of the Property of Cummins v Cummins (a bankrupt) [2006] HCA 6; 227 CLR 278 referred to.

(4) As to issue estoppel: Hodgson, Basten and Young JJA: The wife is entitled to dispute the existence of a binding agreement between Perpetual and the husband, because no one considered the significance of a default judgement for the wife, there was no forensic disadvantage, the point was taken by another party at trial, and the law has subsequently been restated by the Court of Appeal.

Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 referred to.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 2009/298460 2009/298449

HODGSON JA BASTEN JA YOUNG JA

Friday 23 July 2010 VAN DEN HEUVEL v PERPETUAL TRUSTEES VICTORIA LTD REGISTRAR GENERAL OF NSW v VAN DEN HEUVEL Judgment 1 HODGSON JA: Subject to one matter, I agree with Young JA that the appeals should be dismissed. 2 I will briefly express my reasons, to the extent they do not coincide with those of Young JA. In giving my reasons, I will adopt the same terminology as Young JA, and I gratefully adopt his statement of the circumstances and issues. 3 I will consider in turn the three main issues: (1) Did the mortgage secure a debt from the husband? (2) Did the Consumer Credit Code apply? (3) How should compensation from the Fund be calculated?

Did the mortgage secure a debt from the husband? 4 The registered mortgage was expressed to be security for payment to Perpetual of "the Secured Money" (Blue 49H). "Secured Money" was defined to mean all monies payable or contingently owing to Perpetual under a "Secured Agreement" (Blue 48D). "Secured Agreement" was defined (Blue 47V) to mean: Any present or future agreement between me or us, or any one of us, and You, or

The expression "me or us, or any one of us" was apt to refer to the persons named as mortgagors, that is the husband and the wife, or either of them (Blue 47F); and "You" referred to Perpetual. 5 In my opinion, there was an agreement between the husband and Perpetual under which monies were payable by the husband to Perpetual, namely an implied agreement giving effect to the intentions manifested by the conduct of Perpetual and the husband in signing the Loan Agreement document (Blue 26-31) and advancing and accepting money conformably with the terms of that agreement. 6 I note that in Perpetual Trustees Victoria Limited v English [2010] NSWCA 32 at [100], Sackville AJA (Allsop P and Campbell JA agreeing) accepted that there could be an implied agreement of that kind in circumstances such as this. However, such an implied agreement could not have fallen within the terms of the mortgage in that case, because the mortgage in that case secured money owing under an agreement "which I acknowledge in writing to be an agreement secured by the Mortgage": English at [76]. 7 The only possible agreement that Perpetual could in that case have relied on as having been acknowledged to be secured by the Mortgage was such agreement (if any) as may have been constituted by the acceptance of a certain Loan Offer: English at [77]. Since that Loan Offer was expressed to be capable of acceptance only if both the persons to whom this offer was addressed signed the acceptance, and only one of them did so, no such agreement came into effect: English at [78]. 8 Sackville AJA did not in English specifically address the question whether the implied agreement referred to in par [100] in his judgment could have been an agreement within the relevant definition in the Mortgage, because it appears that no such submission was put. However, had he done so, the result would have been the same, because the implied agreement was not acknowledged in writing to be secured by the Mortgage. 9 In the present case, the relevant definition in the mortgage extends to any agreement, not just agreements acknowledged in writing to be secured by the mortgage; and in my opinion there is no reason why the implied agreement cannot fall within the definition in the mortgage, so that the money owing by the husband under that implied agreement is secured by the mortgage. 10 I note that Basten JA has expressed the view that reliance on such an implied agreement should not be permitted, because an implied agreement was not pleaded, no amendment of the pleadings was sought, and no notice of contention was filed seeking to uphold the primary judge's decision on this basis. 11 Questions arise whether such an implied agreement is sufficiently different from what was alleged in the pleadings and what was found by the primary judge to require distinct pleading; and if so, whether in any event the issue concerning such an implied agreement has sufficiently been raised by the way the case was conducted. 12 The implication of an agreement in this case arises from the execution of a written document by the husband and Perpetual, and the advancing and acceptance of money conformably with the terms of that agreement. Thus significant aspects of the implied agreement are the written document, and the execution of it; with the intention to contract in accordance with the terms of the document being further manifested by the advancing and acceptance of the money. The difference from a simple agreement in writing is that, in the case of a simple agreement in writing, the intention to contract is sufficiently manifested by the execution of the agreement, without any need to rely on any other circumstances, such as the payment and acceptance of money. 13 Although it would have been preferable to specifically plead an implied agreement of this kind, in my opinion, having regard to the issues that were raised in the conduct of the case, the failure specifically to plead such an implied agreement or to raise it in a notice of contention should not be considered fatal. The question of this kind of implied agreement was discussed during the hearing of the appeal (appeal transcript pp 38, 44) and no objection was taken on the basis of deficiency of pleadings (appeal transcript pp 70 - 71). Had such a point been taken and considered to be of possible merit, the question of amendments and Suttor v Gundowda issues could have been considered and dealt with. This did not happen.

Did the Consumer Credit Code apply? 14 I do not find it necessary to decide whether the Consumer Credit Code can apply to statutory mortgagees such as the wife. The mortgage itself is a mortgage within the terms of s 8 of the Code, because it secures the husband's obligations under his agreement, which in turn falls within the term "credit contract" (see s 5 set out below). It seems to me arguable that when a mortgage such as this is registered, it is then either entered into, so far as the victim of the forgery is concerned, or else is changed, within the meaning of s 70 of the Code. Having regard to the breadth of remedies provided in s 71, relief appropriate to such a person could be obtained. I would prefer to leave the question of whether the Code can apply to a statutory mortgagee to a case when it needs to be decided. 15 In the present case, the Loan Agreement document signed by the husband contained a term that "You" (that is, the husband and the wife) acknowledge that "the Loan is to be applied by You wholly or predominantly for business or investment purposes (or for both purposes)". 16 Sections 6 and 11 of the Code provide as follows: 6 Provision of credit to which this Code applies

(1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into - (a) the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and

(b) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and

(c) a charge is or may be made for providing the credit; and

(d) the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider.

(2) If not all the debtors under a credit contract ordinarily reside, or are strata corporations formed, in this jurisdiction, this Code applies only if credit is first provided under the contract in this jurisdiction.

(3) If this Code applies to the provision of credit (and to the credit contract and related matters) - (a) this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and

(b) this Code continues to apply even though the debtor ceases to be ordinarily resident in this jurisdiction.

(4) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.

(5) For the purposes of this section, the predominant purpose for which credit is provided is - (a) the purpose for which more than half of the credit is intended to be used; or

(b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.

(1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.

(2) Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes).

(3) However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other relevant person who obtained the declaration from the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. For the purposes of this subsection, a relevant person is a person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained.

(4) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not. 17 There is a definition of "debtor" in Schedule 1, as meaning a person (other than a guarantor) who is liable to pay for (or repay) a credit, and including a prospective debtor. And sections 4(1) and 5 of the Code provide as follows: 4 Meaning of credit and amount of credit

(1) For the purposes of this Code, credit is provided if under a contract - (a) payment of a debt owed by one person (the debtor) to another (the credit provider) is deferred; or

(b) one person (the debtor) incurs a deferred debt to another (the credit provider).

For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies. 18 Here, the relevant credit contract is the implied contract between Perpetual and the husband. The husband is the debtor under that contract. By signing the form of Loan Agreement, the husband (for himself) acknowledged to Perpetual in terms of s 11(2). It was not suggested that this acknowledgment was ineffective because of s 11(4). Accordingly, s 6 does not bring the credit contract with the husband (or related matters) within the operation of the Code; and in my opinion, in these circumstances the mortgage securing this credit contract is not within the operation of the Code. 19 As in the case of the implied agreement referred to earlier, Basten JA has expressed the view that reliance on s 7 of the Consumer Credit Code should not be permitted, as this was not pleaded, no amendment of the pleadings was sought, and no notice of contention relying on it was filed. However, this matter also was argued on appeal, being raised in the wife's submissions on her appeal against Perpetual (Orange 15 - 16). The point was argued at the hearing of the appeal (transcript pp 64 - 65), and again no point was taken that this issue was not properly raised (appeal transcript p 74). 20 I would add that I would not in any event have exercised a discretion under s 70 to re-open the transaction that gave rise to the mortgage. Until registration, the mortgage was not unjust as against the wife: rather it was void as against her. However, when the mortgage was registered, it is arguable that it was then, as regards the wife, entered into or changed within s 70 of the Code, and that it thereby became unjust as against her. 21 However, any such injustice was entirely due to the operation of the Real Property Act 1900; and s 129 of that Act entitled the wife (but not Perpetual) to compensation for any loss suffered by reason of the operation of the Act. In those circumstances, it would in my opinion require a stronger case than this for some deficiency in the conduct of the mortgagee (as opposed to a contractor on behalf of the mortgagee) to justify taking away the rights of the mortgagee in order to compensate the statutory mortgagor for a loss in respect of which the Real Property Act already gave an appropriate remedy.

How should compensation from the Fund be calculated? 22 I note first that s 132(1) and (2) of the Real Property Act provide as follows: 132 Court proceedings for the recovery of compensation

(1) Proceedings before a court for the payment of compensation are to be taken against the Registrar-General as nominal defendant.

(2) Any such court proceedings may only be commenced: (a) if administrative proceedings have been commenced and determined in relation to the compensable loss, or

(b) by leave of the court or with the consent of the Registrar-General. 23 In this case, no point was taken that the proceedings were premature. I would assume or infer that the Registrar-General gave consent; and in any event, leave to commence the proceedings would have been appropriate, because it was necessary that the Registrar-General be bound by resolution of the dispute between the wife and Perpetual. 24 The wife is entitled to compensation for loss or damage suffered "as a result of the operation of" the Real Property Act: s 129(1). As stated by Young JA, this requires comparison of the wife's position in the event that the mortgage was unregistered, with what her position was as a result of registration. 25 I agree with Young JA that the wife's title as joint tenant was in a substantial way subject to affectation by an unregistered mortgage or charge to Perpetual over the husband's title as joint tenant. As Young JA has pointed out, Perpetual could have enforced that mortgage or charge in a way that eventually would have impacted directly on the wife's interest, by way of an order that ultimately would have authorised the sale of the property. Accordingly, the measure of the loss or damage is not the amount required to pay out the mortgage. 26 In the second judgment of the primary judge, the primary judge said ([2009] NSWSC 483 at [18]) that no evidence had been led by the wife that she and her husband contributed to the purchase in unequal shares, and that she was to be regarded as having a one-half beneficial interest in the property. He said at [19] that her loss was the difference between the value of her one-half interest and the sum (if any) she will receive after payment of Perpetual's mortgage. Young JA has in substance accepted this approach. 27 However, I note that the argument before the primary judge was conducted in circumstances where the primary judge was not going to be in a position to make an order quantifying the amount of compensation, unless he accepted the wife's contention that this loss was equal to the amount required to pay out the mortgage. Otherwise, the amount of compensation could be determined only when the amount the wife is to receive after payment of Perpetual's mortgage is determined. 28 In those circumstances, I would not hold that the wife is necessarily altogether prevented now from leading evidence, in whatever further process is to occur, that her beneficial interest is greater than one-half. It would be a matter for the discretion of the judge hearing any further process whether this should be permitted, if it is indeed sought. 29 I should add that I would not regard the loss of the possibility of the wife obtaining an order adjusting property rights under the Family Law Act 1975 (Cth) as being a matter for compensation: in my opinion, such orders could not have taken away rights which Perpetual already had by reason of an equitable mortgage or charge over the husband's interest. 30 My views would make no difference to the actual orders made by the primary judge, but would mean that the assessment of loss will not necessarily be governed by par [19] of the primary judge's second judgment. My views would thus require the wife's appeal against the Registrar-General to be upheld to the extent of saying that, notwithstanding what was said by the primary judge at par [19], it would be within the discretion of the judge hearing any further process to permit the wife to lead evidence to show that her beneficial interest in the property at the time of registration of the mortgage was more than 50 per cent.

Other matters 31 On my view, the question of estoppel does not arise. However, I agree with Young JA that it would not have assisted Perpetual. In particular, I see no reason why the default judgments relied on could not have been set aside under UCPR 36.16(2), if they otherwise would have given rise to an estoppel. 32 I would be allowing the wife's appeal against the Registrar-General only in one very minor respect, in circumstances where there was no evidence or submission that the wife would wish to put on evidence that her interest was greater than one-half. In those circumstances, I do not think this would affect the costs of that appeal, which should be paid by the wife. 33 The Registrar-General's appeal against the wife failed only because the wife's appeal against Perpetual failed. However, because the grounds of the Registrar-General's appeal were the same as those of the wife's appeal against Perpetual, and because the Registrar-General for its own part substantively pursued those grounds, I think it appropriate that costs follow the event in that appeal also. Subject to submissions that the wife or Registrar-General might make, I would be minded to treat these costs as cancelling out costs payable by the wife in respect of her appeal against the Registrar-General, and to make no order as to costs in respect of these two appeals. The wife's appeal against Perpetual would be dismissed with costs. 34 BASTEN JA: In November 2004 Peter van den Heuvel purported to mortgage a property in the joint names of himself and his wife, Elizabeth van den Heuvel, being land in Queanbeyan. On each of a loan agreement and a mortgage dated 16 November 2004, he forged his wife's signature as co-borrower and co-mortgagor respectively. The mortgage, in favour of the credit provider, Perpetual Trustees Victoria Ltd ("Perpetual"), was duly registered under the Real Property Act 1900 (NSW). 35 It appears that the money was borrowed by Mr van de Heuvel for gambling and he defaulted in making repayments to Perpetual. In 2005 Perpetual instituted proceedings for possession of the property, seeking leave to issue a writ of possession, for the purpose of exercising its power of sale. It had, on 4 August 2005, served notices on both Mr and Ms van den Heuvel, pursuant to s 57(2)(b) of the Real Property Act. 36 On 16 May 2007 Ms van den Heuvel issued a cross-claim seeking relief under the Contracts Review Act 1980 (NSW) and under the Consumer Credit (New South Wales) Act 1995 (NSW) ("the Consumer Credit Code"). The relief sought included a declaration that both the loan agreement and the mortgage were void and that she had no liability to Perpetual under them. On 7 August 2008, she filed a second cross-claim against the Registrar-General, seeking an order for compensation pursuant to s 129 of the Real Property Act. 37 In the Common Law Division, Price J gave judgment in favour of Perpetual on its summons: Perpetual Trustees Victoria Ltd v Peter van den Heuvel [2009] NSWSC 57. His Honour dismissed the first cross-claim but gave judgment for Ms van den Heuvel on the second cross-claim. She was thereby entitled to a payment from the Torrens Assurance Fund in respect of her loss, consequent upon the fraud of her husband, pursuant to s 129(1)(e) of the Real Property Act. The amount was not determined: Perpetual Trustees Victoria Ltd v Peter van den Heuvel No 2 [2009] NSWSC 483. 38 The loan agreement signed by Peter van den Heuvel provided for a credit facility in an amount of $185,250, with monthly repayments. It appears from a statement of account that the full amount of available credit was drawn down on 16 November 2004. Two years later, Mr van den Heuvel had paid approximately $50,000 on an account on which more than $80,000 in interest had accrued. 39 That Perpetual had a valid interest in the land by virtue of its registered mortgage, pursuant to s 41 of the Real Property Act, was not in dispute. However, there was an issue as to whether there had been a relevant default, giving rise to an entitlement to proceed against the security. That question potentially involved issues of fact and law. 40 So far as the facts were concerned, there was no dispute but that there had been default in repayments in conformity with the loan agreement. So far as the law was concerned, there was a dispute as to whether the loan agreement was valid and the mortgage was effective to secure repayments required by the loan agreement. That raised the following issues:

(a) was the loan agreement valid, in accordance with its terms, under the general law?

(b) if not valid under the general law, did it nevertheless enjoy indefeasibility under the Real Property Act ?

(c) if not valid under the general law, and not protected by the Real Property Act, did the loan otherwise fall within the agreements for which security was provided by way of the mortgage?

Validity of loan agreement 41 In addressing the first question, it is convenient to start with the terms of the mortgage. Clause 2.2 of the mortgage set out the following primary obligation of the mortgagor (referred to as "I") to Perpetual (referred to as "you"): " 2.2 Pay Secured Money The Mortgage is security for payment to you of the Secured Money and for the performance of all 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." 42 The defined terms, contained in cl 1 of the mortgage were, relevantly, as follows: "Secured Agreement" means: any present or future agreement between me or us, or any one of us, and You, 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 Enforcement Expenses. 43 The reference to amounts which become "due and payable", under "any present or future agreement" should be understood to refer to legal obligations under a legally enforceable contract or "agreement". The reference to a "future agreement" must be a reference to an agreement concluded after the date of the mortgage. It was not suggested that there was such an agreement in the present case, subject to the possibility that there was an implied agreement between Perpetual and Mr van den Heuvel, which arose upon Perpetual providing funds pursuant to the loan facility. (That possibility will be addressed separately below.) 44 The loan agreement identified three parties, namely Perpetual, as "lender", and Peter van den Heuvel and Elizabeth van den Heuvel as "borrower". The names of each of the borrowers was typed on the final page, providing for their signatures. The terms of the loan were largely set out in a schedule and in a document entitled "Loan Terms & Conditions Booklet (Non-Consumer Credit Code Regulated)". The schedule identified a "new security" in the following terms: "Registered First mortgage by Peter Harry van den Heuvel and Elizabeth van den Heuvel over 18 MacIntosh Street, QUEANBEYAN NSW 2620 being the land more particularly described in Certificate of Title 24/12658." 45 The memorandum of mortgage also identified the parties, the names of both mortgagors being typed on the document provided by Perpetual for execution. 46 Senior counsel for Perpetual invited the Court to conclude that the loan and mortgage were intended to be binding agreements, whether or not they were signed by each of the borrowers and mortgagors respectively. In my view, that inference should not be drawn, the preferable inference being that Perpetual would not have advanced the money pursuant to the proposed facility unless both borrowers signed each document. I would draw that inference from the following considerations:

(a) that each document named both parties expressly; (b) Perpetual knew that both were registered owners of the property as joint tenants; (c) it is implausible (and inconsistent with the terms of the loan agreement) that Perpetual would provide financial accommodation to the borrowers without the nominated security; (d) by providing the documents for execution, Perpetual demonstrated its requirement that both joint tenants execute the loan agreement and the mortgage; (e) by taking the trouble to forge his wife's signature and have a friend purport to witness it on both documents, Mr van den Heuvel demonstrated his conviction that Perpetual would not provide financial accommodation unless he took those steps, and (e) by requiring that both joint tenants be borrowers under the loan agreement, Perpetual demonstrated an intention that both registered proprietors should obtain a financial benefit from the facility secured by the mortgage. 47 These inferences are primarily drawn from the contractual material before the Court. (There is little information available as to surrounding circumstances, but in relation to such standard form documentation, that is largely immaterial: Perpetual did not seek to put other relevant contextual material before the Court.) One legal matter is, however, significant: if one mortgagor obtains no financial benefit from the transaction and is, in that sense, a volunteer, there may be real risks as to the effectiveness of the security in relation to that mortgagor, especially where the credit provider had no dealings with her. Accordingly, it is probable that Perpetual intended that the financial arrangement only go ahead if both mortgagors were also identified as borrowers under the loan agreement. 48 In Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32, similar, but not identical, contractual material was in issue. In English, there was before the Court a "loan offer" which was purportedly accepted by Mr English, signing on his own behalf, and by Ms English, whose signature was forged by her husband. The Court held at [78]: "The signature of Mr English alone was not capable of constituting acceptance of the Loan Offer. Perpetual never made an offer to Mr English alone and he never purported to accept any such offer." 49 Although there is no offer document before the Court in this case, the inferences noted above lead to the same result. The loan agreement was therefore not a legally enforceable contract between Perpetual and Mr and Ms van den Heuvel, or between Perpetual and Mr van den Heuvel: cf English at [83]. 50 Nevertheless, Perpetual submitted that, at trial, Ms van den Heuvel had conceded that there was a valid agreement between Perpetual and her husband. However, the Registrar-General did take the point as to the validity of the agreement in the Court below; for the reasons given by Young JA at [157], I would agree that Ms van den Heuvel is not precluded from withdrawing the concession. I would conclude that the loan agreement was not a binding agreement under the general law.

Indefeasibility 51 The second question is whether the loan agreement, despite its invalidity under the general law, obtained the benefit of indefeasibility, because it was secured by a registered mortgage which enjoys that benefit. 52 In English, Sackville AJA (with whom Allsop P and Campbell JA agreed) set out principles, said not to be in dispute, as to the effect of registration of a mortgage over land: at [68]. However, the mortgage in question in English included an element in the definition of "Secured Agreement", not found in the present case, namely a reference to any present or future agreement "which I acknowledge in writing to be an agreement secured by the Mortgage": at [76]. The Court held that there was no such acknowledgment in writing and hence the default under the loan agreement was not secured by the mortgage. 53 In other cases it has been necessary to consider terms in a mortgage of a kind colloquially described as "all monies" mortgages, where the loan secured is less precisely defined. Thus, in Provident Capital Ltd v Printy [2008] NSWCA 131 ("Printy"), the memorandum of mortgage contained a covenant on the part of the mortgagor to repay the secured money, which meant all money owing, amongst other things, under a "related agreement". The case involved a single mortgagor whose land had been mortgaged without his authority by a fraudulent third party. The Court upheld the judgment below, in which Studdert J had accepted that the deed of loan was not binding on the plaintiff because he did not sign it, and the mortgage, which obtained indefeasibility under the Real Property Act, secured money owing by the mortgagor to the mortgagee, which could only in the circumstances had been money owing under the deed and the mortgagor owed no debt under that deed: at [17]. The Court considered in some detail the statutory scheme of the Real Property Act, in identifying the scope of indefeasibility: at [22]-[38]. The Court stated at [26]: "Being a security for payment of money, an essential element of any mortgage is that it will include a covenant on the part of the mortgagor for the payment of the debt secured by the mortgage. A second essential element as a charge which constitutes an interest in land is that the mortgage allows the mortgagee to recover the debt, in the case of default by the mortgagor, by sale of the land. That the Act considers the obligation to repay an essential element of a mortgage is confirmed by the provision for transfer which, in the case of a mortgage, includes 'the right to sue upon any mortgage or other instrument and to recover any debt … and all interest in such debt …': s 52(1). As noted by Dixon and Evatt JJ in Consolidated Trust Company Limited v Naylor [1936] HCA 33; 55 CLR 423 at 434, such language 'is not incapable of including among the rights which pass to the transferee the benefit of the covenant by a surety who joins as a party in the instrument of mortgage'. Nevertheless, their Honours concluded (as did Starke J) that the language did not extend so far. Their Honours continued: 'The statute is concerned with dealings in land and it is because a mortgage involves such a dealing that the statute prescribes how mortgages may be transferred and with what consequences. It is concerned with the mortgage transaction in its entirety as it affects the land, and, therefore, extends to the personal liability of the mortgagor for the mortgage debt because that liability is intimately connected with the rights of property arising out of the mortgage transaction.'" 54 Sections 41 and 42 of the Real Property Act provide that, upon registration, the land becomes charged as security for the debt secured by the mortgage, regardless of any form of invalidity which may afflict the mortgage under the general law: Printy at [30]. Section 41 renders indefeasible the security interest in the land "in manner and subject to the covenants, conditions, and contingencies set forth and specified in" the mortgage. Pursuant to ss 57 and 58, the mortgagee has a statutory right, where "default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage" to exercise the powers conferred by s 58, which include a power of sale and recoupment of "the monies which may then be due or owing to the mortgagee": s 58(3). The question remains, however, whether, where the secured covenant for payment identifies money owing under a separate agreement, the principle of indefeasibility extends to the separate agreement. In Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745, Young CJ in Eq (as his Honour then was), noted the differences between the "old fashioned form of mortgage", which included a statement of the principal sum lent and an acknowledgment that the money had been lent, and the form of mortgage which secured money drawn down under a facility created by a separate agreement: at [20]. His Honour continued at [23]-[24]: "As the secured agreement itself does not bring with it any concept of indefeasibility and as there is an issue between the parties as to whether or not it was ever signed by the appellant or merely signed by a person impersonating the appellant, there is not the material to demonstrate to the required standard that there was a loan to the appellant. If there was no loan to the appellant he could not be in default not repaying the loan and, therefore, the mortgagee was not entitled to possession." 55 In Printy, as in the present case, that which was uncertain in Tsai, namely that there was no loan agreement with the mortgagor, was established by the evidence and accepted by Perpetual. The result followed from a combination of the derivation of the relevant principles by reference to the terms of the Real Property Act and the construction of the mortgage. It is, accordingly, clear that the mortgagors are liable to the mortgagee in respect of their land, if there is default under the mortgage. However, unless there is an amount payable under a secured agreement there will be no default. 56 The scope of the legal incidents of the mortgage are not in doubt: what the mortgagee needed to establish in order to obtain relief in the form sought under s 57 of the Real Property Act was that there had been default because an amount payable under an agreement arising dehors the mortgage, had not been paid. As there was no such amount payable under the loan agreement, the enforceability of the mortgage took the matter no further. 57 This conclusion does not undermine the security of the Register, nor the ability of a transferee of the security to obtain a good title to the mortgage. As explained by Sackville AJA in English at [97]: "It is true that the consequence of the invalidity of antecedent documentation may produce the result that a registered mortgage does not secure a debt. But that is the situation where a mortgagor repays the mortgage debt, yet the mortgage remains undischarged: cf C N and N A Davies Ltd v Laughton [1997] 3 NZLR 705 at 714; J Stoljar, ' Mortgages, Indefeasibility and Personal Covenants to Pay ' (2008) 82 ALJ 28 at 30." 58 It is not the nature or extent of the legal interest of the mortgagee which is in issue, but its economic value at a particular time: whether a mortgage secures a particular debt will depend upon the existence of the debt. Where the mortgage secures a facility, what has been drawn down, what is repayable and what has been repaid will depend upon factors, none of which can be derived from an inspection of registered instruments. The personal obligation to pay, where it is "a debt merely collaterally secured by the mortgage" or arises "pursuant to a transaction external to the mortgage" may not be transferred by assignment of the mortgage: see Queensland Premier Mines Pty Ltd v French [2007] HCA 53; 235 CLR 81, 100-1 at [55] (Kiefel J) and French v Queensland Premier Mines Pty Ltd [2006] VSCA 287, at [39] (Maxwell P). 59 Finally, it is necessary to consider whether the mortgage secured an "implied" agreement between Mr van den Heuvel and Perpetual, manifested, as explained by Hodgson JA, "by the conduct of Perpetual and the husband in signing the loan agreement document … and advancing and accepting money conformably with the terms of that agreement": at [5]. However, as his Honour explained in National Commercial Banking Corporation of Australia Ltd v Hedley [1984] 3 BPR 9477 (Hedley ) at 9483, and as approved in English at [100]: "… the principle rests on two independent bases. First, the courts imply an agreement between the forger and the mortgagee for the forger to mortgage his or her interest as security for the loan provided by the mortgagee. Secondly, an estoppel arises from the representation made by the forger, relied on by the mortgagee, that the spouse's signature is genuine." 60 Hedley was concerned with an unregistered mortgage, the registration being set aside for fraud on the part of the mortgagee. Further, the mortgagee conceded that it was not entitled to pursue a claim with respect to the interest of the wife who had been the victim of the forgery. In any event, because of the registration of the mortgage (without fraud in this case), the question is not whether the mortgage is a valid security: it undoubtedly is. Rather, the question is whether the implied loan agreement, as between Mr van den Heuvel and Perpetual, is one which is secured by the valid mortgage. 61 In this regard, the mortgage expressly picks up an agreement between Perpetual and both, or either of, the mortgagors. That language is apt to catch an "agreement" with Mr van den Heuvel alone. The question is whether the implied agreement between Mr van den Heuvel and Perpetual is an "agreement" for the purposes of the definition of "Secured Agreement" in the mortgage. In English, Sackville AJA referred to this issue in the following terms: "84 Another possibility is that Mr English, in proceedings between himself and Perpetual, might be estopped from denying that an agreement in the terms of the Loan Offer had come into force between them. Perpetual's supplementary written submissions make no reference to estoppel, presumably because it has never pleaded such a case against either Mr English or Ms English. 85 If, however, Perpetual did seek to make out a case of estoppel against Mr English, an issue would arise as to whether any estoppel available against him could avail Perpetual against Ms English. To put the matter another way, it is far from obvious that the expression ' present agreement ' in the definition of ' Secured Agreement ' in cl 1.1 of the Memorandum is apt to embrace, not an agreement in fact entered into, but one which a fraudulent party is estopped from denying in proceedings brought by the defrauded lender. The issue was not argued, but I doubt that the definition of ' Secured Agreement ' should be given such an expansive interpretation. The contra proferentem principle would seem to have particular force when applied to the construction of an instrument not only drawn up by an institutional lender, but the terms of which are sought to be enforced against a party who is neither a party to the instrument nor aware of the circumstances giving rise to the estoppel." 62 There is a difficulty in determining this case on the basis of such an implied agreement: as fairly conceded by senior counsel for Perpetual in the course of the hearing, it was not pleaded. The agreement relied upon in paragraph 4 of the statement of claim was identified as an agreement "dated 16 November 2004 and entitled 'Loan Agreement'" and particularised as "a written document dated 16 November 2004 and incorporates an additional document entitled 'Interstar Loan Terms and Conditions Booklet'". 63 Having conceded that reliance upon an implied agreement, if that were the accurate description of the consequence of the relevant legal principles, was not pleaded, Perpetual did not seek to amend its pleading, nor did it file a notice of contention seeking to support the decision below on a different basis, albeit one not addressed below. 64 I would not allow Perpetual to rely upon this basis of liability. If it were permitted to rely upon an "implied agreement", I would not consider such a legal construct to fall within the concept of "agreement" in the mortgage. It is not a mortgage which secures all monies outstanding on any account or basis as between the mortgagors or either of them and Perpetual: it is limited to monies owing under an agreement. Like the Court in English, I would construe that concept as applying to contractual arrangements entered into by the parties and not to agreements constructed by the law in the circumstances where the contractual arrangement has been held not to exist. 65 For these reasons, there was no debt owing under the mortgage and Perpetual was not entitled to the relief it sought on the basis pleaded by it. 66 There remains for consideration the contention that, because it had a judgment against Mr van den Heuvel, entered into by default, it was entitled to the relief as mortgagee in relation to the land the subject of the mortgage. 67 Significant time was spent in the course of argument debating the effect of the default judgment against Mr Peter van den Heuvel. 68 The judgment was that Mr Peter van den Heuvel pay Perpetual a specified sum, namely $325,035.11. 69 There was no dispute, either at trial, or in this Court, that Perpetual was entitled to a judgment in that amount against Mr van den Heuvel. Accordingly, the only issue is whether, the default judgment having been given in these proceedings, there is an issue estoppel in respect of the basis of that judgment, namely that Mr van den Heuvel's liability arose under the loan agreement. Once the Court permitted the validity of the loan agreement and the scope of the security given under the mortgage to be in issue, in proceedings in which Perpetual sought possession of the property, the issue estoppel was no longer available to Perpetual. It was not sufficient to rely upon the default judgment for the reason noted above, namely that the mortgage did not secure all amounts owing as between the mortgagors or either of them or Perpetual. 70 In reaching this conclusion I agree with the further reasons given by Young JA at [207]-[215] below:

Operation of Consumer Credit Code 71 As noted above, in her first cross-claim, Ms van den Heuvel alleged that the mortgage and the loan agreement were "unjust contracts" or "unjust credit contracts" within the meaning of those terms in the Contracts Review Act and the Consumer Credit Code respectively. Price J rejected the availability of the Contracts Review Act in the circumstances and no challenge was pressed with respect to that conclusion. Ms van den Heuvel did, however, challenge the rejection of her claim that the Court should reopen the transaction pursuant to s 70 of the Code, which reads, in part, as follows: " Court may reopen unjust transactions 70(1) Power to reopen unjust transactions. The Court may, if satisfied on the application of a debtor, mortgagor, or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change." 72 Schedule 1 of the Consumer Credit Code includes the following definitions: " mortgage " includes - any interest in, or power over, property securing obligations of a debtor or guarantor; … " mortgage document " means the document or documents setting out the terms of a mortgage by reference to which the mortgage is created. " mortgagor " includes a prospective mortgage. 73 The primary judge refused relief to Ms van den Heuvel under the Code for two reasons. The first was that s 70(1) required an application by a "mortgagor". Because Ms van den Heuvel's signatures were forged, and she entered into neither the loan agreement nor the mortgage, she was "not a party to the mortgage", nor was she "a mortgagor": at [100]. His Honour further stated that the injustice of which she complained arose "not from the mortgage or a term of a mortgage but from its registration": at [101]. For that reason, his Honour held that relief was not available. 74 It is true that, under the general law, Ms van den Heuvel would not be a mortgagor; however, by statute law, she was. Although there may be other reasons why the Code should not apply to the transaction, there is no reason to treat the word "mortgagor" as excluding a person who is clearly liable as a mortgagor and at risk of losing the whole of her interest in the land for which the mortgage provided security, from the scope of the definition. Her interest in the land and thus in any relief which may be available under Code, does not depend upon whether she would have had an interest under the general law, unaffected by statute, or not. 75 It is true that there is authority for the proposition (not challenged in this Court) that a person who is not a party to a contract, because her or her signature was forged, cannot seek relief under the Contracts Review Act 1980 (NSW). Thus, in Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 at [17], Dunford J noted that "the applicant's [sic] complaint in this case is not that a contract they entered into with the plaintiff was unjust, their case is they never entered into such a contract at all; and I fail to see how parties who deny that they entered into a contract can at the same time argue that such contract was unjust". (It was for that reason that Ms van den Heuvel's claim for relief under that Act failed in the present case.) 76 This reasoning has something of the flavour of the consequences of "nullity": nevertheless, it is not in doubt that a person can appeal from or review a decision which they say was made without jurisdiction and was a nullity (as opposed to being voidable). On one view, a claimant could seek a declaration that the contract did not exist or was not one to which they were party, in the alternative to relief under the legislation. It might be thought a curious result if the Court held that there was a contract, by which they were bound, but that they were not entitled to relief. In any event, Frazis was not the basis of the adverse finding under the Code: there is no language in the Contracts Review Act, equivalent to that relied upon in s 70(1) of the Code. If Ms van den Heuvel were not a mortgagor and bound by the mortgage, she would not have been in court. As it is, assuming that the mortgage secures the monies owing to Perpetual, she is, in her capacity as mortgagor, liable to lose her land. There is no reason to restrict the meaning of "mortgagor" so as to subvert the availability of the Consumer Credit Code to a person who, as a matter of law, falls within its scope as not being entitled to make an application. 77 Perpetual sought to support the reasoning of the primary judge on the basis that at least some of the factors to which a court in considering whether a mortgage were to be held to be unjust was to have regard assumed the existence of negotiation or bargaining between parties. However, that approach tends to subvert the orderly application of the Code. One relevant factor was whether the terms of the agreement were the subject of negotiation. The fact that no negotiation took place may be a ground for relief, rather than a basis for denying standing. This ground for rejecting the application was erroneous. 78 The second reason relied upon by the primary judge was described as a reason "why the relief should not be granted": at [102]. The reason relied upon was the requirement that the Court "have regard to the public interest", in determining whether a term of a mortgage was unjust, the relevant public interest being "the conclusiveness of the register in the Torrens System of registered title": at [102]. 79 There are two grounds for rejecting this reasoning. First, the Court is required "to have regard to the public interest and to all the circumstances of the case" and "may have regard to" a list of some 14 factors together with "any other relevant factor": s 70(2). This provision is clearly intended to be expansive, and cannot be complied with by taking one factor, albeit a potentially significant one, out of context and determining an application without regard to the other factors. In almost every case there will be factors tending in different directions. The function of the court in considering whether and how to exercise its power is to balance and weigh the relevant factors. To assume that it would not grant relief in any circumstances because of an identified "public interest" without weighing the other circumstances would be to commit the error identified in Wade v Burns [1966] HCA 35; 115 CLR 537 at 555. Having determined that a mining warden had exercised a discretion to refuse an application which in truth he did not have, Barwick CJ considered an argument that mandamus would be futile "because the warden in delivering his reasons for the course he took said that had he a general discretion to refuse the application he would do so". His Honour continued: "It is sufficient to say that this statement by the warden as to what he would do if he had a power which, according to his own view, he did not have has no weight, in my opinion, when the court is considering whether a writ of mandamus, which otherwise it is satisfied should issue, would be futile. The magistrate will consider the application according to law when the mandamus is issued and will no doubt then apply his mind to the matters which arise before him. His anticipatory comments are of no present consequence in relation to the granting of a mandamus." 80 The second ground for rejecting the reasoning of the primary judge is, in effect, an illustration of the first. Because his Honour did not undertake the exercise required by the section, he did not have regard to the consequence of an order (none having been formulated) in relation to the public interest identified. For example, even if the mortgage were to be discharged, no person had relied upon the conclusiveness of the register in respect of this transaction, so as to be prejudiced if the mortgage were to be discharged. It was no doubt true that Perpetual may have anticipated that it would obtain indefeasibility by registering the mortgage, but that was not a public interest, but rather a private interest which would no doubt need to be weighed, when seeking to do justice between mortgagor and mortgagee, in all the circumstances of the case. 81 Further, his Honour sought to rely upon comments of Hayne J in Vassos v State Bank of South Australia [1993] 2 VR 316 at 332. In that case Hayne J was considering the effect of the plaintiff's contention that "the fact of lack of assent of the mortgagor gives an in personam right to a discharge" of the mortgage. As his Honour noted if that were so, "every mortgagor whose signature was forged would be entitled to compel the mortgagee to discharge the mortgage on the basis that the mortgagee was not entitled to demand any more than had been agreed". As his Honour fairly noted, the effect of such an approach would be to resurrect the rejected principle of deferred indefeasibility. 82 Reliance on this line of authority (the reasoning in which is entirely orthodox) was not to the point: Ms van den Heuvel was not seeking to rely upon any personal right or equity but was seeking to call in aid a statutory power which was capable of operating to qualify or overcome the effects of registration: cf South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603. If the attention of the legislature is to grant such a power, the court may give effect to its exercise, in appropriate circumstances. (It seems not to have been in dispute in the present case that the powers of the Court under s 70(1), on reopening a transaction, extended to relieving the applicant in part or in whole from her liability under the mortgage.) The second reason relied on by the primary judge should also be rejected. 83 The primary judge noted that reliance had been placed by Perpetual on the "declaration of purpose" and the acknowledgment in clause 5 of the loan agreement that "the Loan is to be applied by [the borrowers] wholly or predominantly for business or investment purposes (or for both purposes)": at [93]. In the light of his rejection of the claim on other bases, his Honour declined to consider that submission: at [105]. Perpetual did not put on a notice of contention seeking to rely upon that acknowledgement, or the underlying arguments. 84 The significance of the submission, not developed either in this Court or in the judgment below, is that the Code is said to apply to the provision of credit if the credit is provided or intended to be provided "wholly or predominantly for personal, domestic or household purposes": s 6(1)(b). The Code further provides that credit is "presumed conclusively" not to be provided for such purposes "if the debtor declares, before entering into the credit contract" in the terms of the declaration noted above. Given that the acknowledgment was contained in clause 5(i) of the loan agreement, there was an unresolved dispute as to whether it was effective for the purposes of the Code, given that the loan agreement itself was otherwise ineffective. 85 In the absence of a notice of contention seeking to rely upon this matter, and in the absence of full argument in this Court, Perpetual should not be able to rely upon an assumption that its position is correct. If, contrary to the conclusion on the first issue, it is necessary to address the operation of the Code, his Honour's rejection of the cross-claim, in so far as it sought to rely upon the Code, should be set aside and the matter remitted for full consideration in the Common Law Division. 86 Given my concern as to the anticipatory comments of the trial judge with respect to the availability of relief, it would inappropriate to discuss the question of unjustness, the issues not having been addressed in a manner which could be dealt with by this Court, if otherwise satisfied that the cross-claim miscarried below. However, I do not necessarily accept the views expressed by Hodgson JA at [20]-[21]. If a credit provider is in fact unconcerned as to whether the proposed mortgagor signed the documents, that is a matter which might well weigh heavily in the balance. If the mortgagee is content to rely upon the statutory protection provided by the Real Property Act, with the knowledge that a registered proprietor ignorant of the whole of affair may claim against the Fund, so as to pass the cost of any fraud or forgery onto the public purse, that might well be a factor which would weigh against the credit provider. If, in such circumstances, the credit provider put on no evidence as to its conduct in seeking to ensure that the registered proprietors did sign the documentation and, where appropriate, obtained independent legal and financial advice, or were at least advised to do so, the inference that the credit provider failed to take appropriate steps, thus bore part of the responsibility for the fraud and hence should bear part of the responsibility for the ensuing loss, might well be available.

Entitlement to compensation under Real Property Act 87 I agree with the reasoning of Young JA in this respect, subject to my agreement with the further comments of Hodgson JA.

Conclusions 88 Elizabeth van den Heuvel seeks orders setting aside orders 1, 2, 3,5 and 6 made in the Court below on 4 June 2009. Order 1 gave judgment for Perpetual as against her for possession of the whole of the land. Order 2 provided that a writ of possession issue after a prescribed period which has long since expired (but is the subject of a stay). Order 3 dismissed the first cross-claim. 89 In my view Ms van den Heuvel is entitled to have each of orders 1-3 set aside. Because the order for possession was based upon the finding that the mortgage secured the amount drawn down under the loan facility, my conclusion in relation to the first issue removes the basis for such an order. In that event, there is no need to remit the matter for reconsideration of the claim under the Consumer Credit Code: she would be entitled to an order discharging the mortgage. 90 In that event, orders 4, 5 and 6, relating to the claim against the Fund, would be otiose. Ms van den Heuvel should, on that basis, have had her costs of the trial, paid by Perpetual. She would, however, presumably have failed on the second cross-claim against the Registrar-General, who would obtain an order for costs against her. However, any costs payable by her to the Registrar-General should be the subject of an order for recoupment from Perpetual. 91 If I am wrong as to the first issue, Perpetual will be entitled to an order for possession, subject to resolution of the cross-claim with respect to the Consumer Credit Code. That issue should be determined in the Common Law Division. It remains appropriate to set aside orders 1-3, pending the outcome of that hearing. 92 In this Court, Ms van den Heuvel would be successful and should have her costs from Perpetual. The Registrar-General would also have succeeded in his primary argument that the mortgage did not secure any monies over the interest of Ms van den Heuvel and accordingly she had no claim against the Fund. While the argument put by the Registrar-General was similar to that put by Ms van den Heuvel, it was, in effect, limited to the question of her interest in the land. There is an argument that the Registrar-General should have his costs of the trial (and in this Court) as against Perpetual in respect of those matters. There is also an argument that Perpetual should not have to pay Ms van den Heuvel and the Registrar-General separately for their costs either at trial or in this Court. 93 In respect of Ms van den Heuvel's appeal against the award of compensation payable from the Fund, limited to her half interest in the property, she has been unsuccessful and should pay the Registrar-General's costs of resisting that claim. 94 Because this is a minority view, it is not necessary to formulate orders when any greater precision. At least in relation to costs, and probably in relation to the orders generally, I would have allowed the parties an opportunity to bring in short minutes, which might have required some further brief submissions in writing, if agreement were not achieved. 95 YOUNG JA: These two appeals, which have been consolidated, arise as a result of the registration of a mortgage over a home at Queanbeyan of which Mrs Van den Heuvel (hereafter for clarity and without meaning any disrespect referred to as "the wife") and her husband are the registered proprietors as joint tenants. 96 Although the mortgage in favour of Perpetual Trustees Victoria Ltd ("Perpetual") purported to be from both the wife and her husband, it is common ground, and the primary judge so held, that the wife's signature was forged by her husband and that she had no inkling of there being any mortgage until she received a note from her husband. She did not receive any of the loan monies advanced by Perpetual. 97 The present proceedings were begun by Perpetual against both the wife and her husband seeking possession and repayment of the capital and interest due under the registered mortgage. Initially, default judgment was signed for possession against both defendants. 98 However, on 30 April 2007, by consent, Grove J ordered that "The default judgment against the second defendant be set aside with costs thrown away by virtue of the judgment being set aside reserved". (The wife was the second defendant). 99 The contested proceedings for possession came on for hearing before Price J on 8 and 9 October 2008. The Registrar General had become a party as the wife claimed that, if her interest in the land had been lost by the registration of the mortgage, she had a claim against the Registrar General as nominal defendant under the Real Property Act 1900 for payment out of the Torrens System Assurance Fund. 100 At the commencement of the proceedings, Perpetual asked the primary judge to give a default judgment against the husband for the amount due under the mortgage. The judge declined to do so, indicating that a Registrar could handle the matter. On 9 October 2008, a Registrar made such an order against the husband. 101 The case then proceeded. Judgment was reserved and delivered on 20 February 2009: Perpetual Trustees Victoria Ltd v Van den Heuvel [2009] NSWSC 57. The primary judge found in favour of Perpetual and ordered that it have possession of the home. He found for the wife against the Registrar General. 102 In a later judgment, delivered on 4 June 2009, Perpetual Trustees Victoria Ltd v Van den Heuvel (No 2) [2009] NSWSC 483, the primary judge laid down guidelines as to how the wife was entitled to be compensated out of the Assurance Fund. 103 The wife has appealed against the verdict in favour of Perpetual giving it possession. The Registrar General has appealed against being found liable to the wife, partly on the grounds that the wife should not have been held liable to Perpetual. The appeals have been consolidated. 104 Sensibly, the parties have permitted the wife to continue to reside in the home pending determination of this appeal, indeed, by consent, we have stayed all final orders in the matter until then. The actual compensation payable by the Registrar General has not yet been calculated. Strictly speaking this means that the appeal on this point is incompetent as the decision is interlocutory. However as this is not the only point in the appeal and as, leave has now been sought orally, and no-one opposes it, we should merely let the appeal proceed as if it were wholly competent. 105 On the appeal Mr G A Rich of counsel appeared for the wife, Mr P Walsh of counsel for the Registrar General and Mr A Leopold SC and Mr D Thomas for Perpetual. 106 The wife's submissions fell into three parts, viz: (1) issues as to the true construction of the mortgage; (2) questions as to the applicability of the Consumer Credit Code, and (3) questions as to the quantum of compensation against the Registrar General. Mr Leopold supplemented these by adding (4) questions of issue estoppel following the default judgments against the husband. Mr Walsh's submissions can be fitted into these headings. 107 I will thus consider the problems raised under the above headings and then add (5) other matters; and (6) The result of the appeals. 108 (1) It is now necessary to consider the terms of the relevant mortgage in some detail. The mortgage itself was fairly innocuous. However, to understand it, one needs to look not only to the mortgage, but also to the memorandum filed by Perpetual's solicitors under s 80A of the Real Property Act 1900 (setting out standard clauses deemed to be included in the mortgage) and the underlying Loan Agreement. 109 This is because, instead of adopting the traditional format of a simple mortgage document dealing with a security given to secure a definite sum lent plus interest, Perpetual elected to use the contemporary computer friendly format of the mortgage referring to monies due under the underlying Loan Agreement. 110 An additional complication is that a so-called "plain English" document was employed. This endeavoured to deal with the situation of a loan to two persons by defining the word "I" as embracing "us"' but forgetting to define "we" and sometimes using "we" instead of "I". If "plain English" is to be employed in a document, great care must be taken to see that precision is not lost as it was in the case of the present mortgage. 111 One more comment must be made before turning to the text of the document. After the primary judge's decision, this Court decided Perpetual Trustees Victoria Limited v English [2010] NSWCA 32; (2010) 14 BPR 27,339. That case was a forged mortgage case on documents very close, but not identical, to those used in the present case. The English case must be considered binding on us (indeed no-one argued to the contrary), and enables answers to be given on some of the questions posed in the present appeal. 112 The mortgage is dated 11 November 2004. It includes the provisions of Memorandum 3161863. 113 Clause 2.2 of the memorandum include the charging clause, viz: "The Mortgage is security for payment to you of the Secured Money…". It also contains the covenant to repay, viz: "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". 114 The mortgage form describes both the wife and her husband as "Mortgagor". The mortgage form states that the "Mortgagor": "mortgages to the mortgagee all the mortgagor's estate and interest in the land specified above …" 115 One then needs to turn to the definitions in clause 1.1 of the Memorandum. 116 "I" is there defined as having the meaning "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" is defined to mean "the person or persons named and described as the Mortgagee in the Mortgage Form and 'your' has a corresponding meaning." "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". "Secured Money" means: "* all amounts which are payable at any time or are contingently owing or payable to you under a Secured Agreement; and * Enforcement Expenses." 117 Clause 1.2 includes as the penultimate bullet point: "a reference to any thing (including without limitation, to the Secured Money or to the Property ) is a reference to the whole or any part of it and a reference to a group of things or persons is a reference to any one or more of them"

I will refer to this as "the Group Clause". 118 Clause 11.7 of the Memorandum is headed "Joint and Several liability" and provides: "If I am [sic] 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." [Presumably the drafter meant to write "I is" rather than "I am" as the word "I" does not mean a person, but an expression, a trap for the "plain English" user!]. 119 It is also vitally necessary to look into the precise terms of the underlying Loan Agreement. This also bears date 16 November 2004. It is said to supersede the preliminary loan approval of 19 October 2004, a document not in evidence. 120 Clause 1 of the Loan Agreement is as follows: LOAN We hereby agree to lend money to you which you agree to borrow and repay. The terms of the Loan are as set forth in this agreement (including the Schedule) and the Terms and Conditions Booklet (Non-Consumer Credit Code) ("Terms and Conditions"). 121 The terms "Borrower" and "You" appear next to the names of "Peter Harry Van Den Heuvel" and "Elizabeth Van Den Heuvel". 122 The schedule to the Loan Agreement provides for the interest rates to be charged and beside the words "New Security" is the following: Registered First Mortgage by Peter Harry Van Den Heuvel and Elizabeth Van Den Heuvel over 18 McIntosh Street QUEANBEYAN NSW 2620 being the land more particularly described in Certificate of Title 24/12658. 123 The Loan Agreement incorporates a booklet of Terms and Conditions. Clause 1.1 of these Terms and Conditions defines "You" to mean "the Borrower or Borrowers", and "your" has a corresponding meaning." 124 Clause 1.2 includes the Group Clause. 125 Clause 3 of the Terms and Conditions includes: "Before a drawdown of your facility can be made:

You must sign and return the Loan Agreement to our solicitors or settlement agent…" 126 Clause 22.3 of the Terms and Conditions is as follows: "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. All of your obligations attach to your successors and permitted assigns." 127 It is useful at this stage to note how the documentation in the present case as abstracted above compares with that in the English case. 128 There is a difference in that in the English case there was a Loan Offer followed by the mortgage documentation. In the instant case, there may have been a loan offer, there was certainly a preliminary Loan Agreement however, neither is before the court. The Loan Agreement, however, fulfils the same role as a Loan Offer accepted by the borrower. 129 Mr Leopold (who also appeared in English) says that for all intents and purposes the documentation was the same in the two cases save that, in the English case, there was a loan offer to two people requiring both to accept, whereas, in the instant case, there was no actual loan offer in evidence. 130 It is useful now to consider the English case and how that decision impacts on the present case. 131 In English, as here, a husband forged his wife's signature to a mortgage to Perpetual which became registered. Default was made under the mortgage and Perpetual sought possession. The wife successfully opposed this. 132 The Court comprised Allsop P, Campbell JA and Sackville AJA, the lastmentioned giving the reasons of the Court. 133 At [11], Sackville AJA noted that, whilst the modern history of cases under the Torrens System where a husband had forged his wife's signature to a mortgage which had become registered might be traced back to the Privy Council's decision in Frazer v Walker [1967] 1 AC 569, no issue was apparently raised in that case as to whether the indefeasibility of the registered mortgagee's title extended to the covenant to repay the amount advanced by the lender to the wife on the faith of a mortgage on which the husband's signature had been forged. 134 His Honour then noted that later authorities in Australia and New Zealand, while acknowledging that registration of a forged mortgage confers an indefeasible title on the registered mortgagee (unless the mortgagee has been guilty of fraud), have pointed out that there is a further question to be answered, at least where the contest is between the innocent registered proprietor and the mortgagee. That question is whether the indefeasibility of the mortgagee's title effectively validates all the terms of what otherwise would be a void instrument and, if not, what is the test for identifying the provisions of the mortgage that can be enforced against the estate or interest of the innocent registered proprietor. 135 Effectively the question is as Campbell J so succinctly put it in Small v Tomasetti [2001] NSWSC 1112; 12 BPR 22,253, 22,254 [9]: "Notwithstanding that registration confers indefeasibility on a mortgagee, there is still a question, 'indefeasibility for what?' " 136 Returning to the English case, Sackville AJA said at [12]: "[12] In order to answer that question, courts have generally proceeded on the basis that it is a question of construction of the mortgage as to whether it grants the mortgagee a security interest that can be enforced against the land (including the interest of the defrauded registered proprietor). This has often involved the courts in a minute analysis of the language of complex mortgage documentation that is unlikely to have been read, let alone understood by a mortgagor. By hypothesis, the innocent registered proprietor in a case of forgery will not have even had a chance to read the documentation on which his or her fate as a proprietor will rest." 137 His Honour then noted that the authorities have not always been entirely consistent in their approach to the enforceability of forged mortgages against the innocent registered proprietor whose signature has been forged, at least where the forger is a joint registered proprietor. He reviewed the Australian and New Zealand authorities and referred to the learned article by J Stoljar, "Mortgages, Indefeasibility and Personal Covenants to Pay" (2008) 82 ALJ 28. 138 The basal facts in English were that Perpetual made a "Loan Offer" to: Niel William English … Kerrie Diane Therese English … which was expressed as follows: "The Lender offers You a Loan on the terms and conditions of this Loan Offer and the additional terms and conditions contained in the Interstar Loan Terms and Conditions Booklet ("Terms and Conditions")". (Emphasis in original.)

Clause 5 of the Loan Offer, under the heading "SECURITY", contained the following statement:

By accepting this Offer You agree that the following new Security is to be provided to the Lender for the Loan: Registered First mortgage by Niel William English and Kerrie Diane Therese English over [the Property]. This was said by Perpetual to constitute the "acknowledgement" required by the Mortgage later signed by Mr English and on which he forged Ms English's signature Clause 10 of the Loan Offer provided as follows: ACCEPTING THE OFFER 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." (Emphasis added.) The Loan Offer was accompanied by the "Interstar Loan Terms and Conditions Booklet" ("Booklet"), referred to in the opening provisions of the Loan Offer. The Booklet (cl 1.1) defined "You" to mean: the person or persons to whom the Offer is made. The Booklet defined Security to mean: any existing or new mortgage or guarantee required by the Loan Offer. The Booklet (cl 1.2) include a clause identical to the Group Clause. Clause 20.3 of the Booklet provided as follows: 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. All of your obligations attach to your successors and permitted assigns. 139 Mr English purported to accept the Loan Offer by signing the document. He forged the signature of Ms English to the document to indicate her acceptance of the Loan Offer. He had no authority to purport to accept the Loan Offer on her behalf. Each signature was said to be witnessed by a solicitor, whose name, signature and stamp appeared on the document. 140 At [68], Sackville AJA helpfully set out the basic principles that govern this type of case as follows: 1. Registration of a mortgage does not transfer the fee simple estate, but the mortgage takes effect as a security over the land: RP Act, s 57(1). Upon registration, the land becomes liable as security in manner and subject to the covenants set forth in the mortgage: RP Act, s 41(1); Provident Capital Ltd v Printy per Basten JA (with whom Tobias and McColl JJA agreed) [2008] NSWCA 131; 13 BPR 25,199.[25]. 2. Registration of a forged mortgage confers an indefeasible title on the mortgagee, provided that the mortgagee has not been party or privy to the fraud and no other exception to indefeasibility applies: Breskvar v Wall [1971] HCA 70: 126 CLR 376; Yazgi v Permanent Custodians [2007] NSWCA 240: 13 BPR 24,567 at [14], per Beazley JA (with whom Ipp and Tobias JJA agreed); Pyramid Building Society (In Liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, at 191, per Hayne JA (with whom Brooking and Tadgell JJA agreed). 3. Registration of the mortgage does not necessarily ensure the validity of every term of the mortgage, irrespective of the relationship between the term and the estate or interest created by the mortgage itself: Travinto Nominees Pty Ltd v Vlattas [1973] HCA 14 ; 129 CLR 1, at 17, per Barwick CJ (with whom McTiernan and Stephen JJ agreed). Hence a personal right created by a covenant in a mortgage, such as a guarantee, is not rendered indefeasible by registration of the mortgage: Mercantile Credits Ltd v Shell Co of Australia Ltd [1976] HCA 9; 136 CLR 326, at 343, per Gibbs J; PT Ltd v Maradona (1992) 27 NSWLR 643. 4. In New South Wales, the view has been taken that a personal covenant in a registered but forged mortgage to pay the amount of the mortgage debt, where the debt exceeds the value of the property, is not protected by the indefeasibility provisions of the RP Act: Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, at 224, per Powell JA (with whom Meagher and Handley JJA agreed); cf Pyramid Building Society v Scorpion Hotels, at 196, where a different view may have been taken. 5. The registration of a forged mortgage validates those terms of the mortgage which delimit or qualify the estate or interest of the mortgagee or are otherwise necessary to assure that estate or interest to the registered proprietor: PT v Maradona, at 679; Yazgi v Permanent Custodians, at [19]-[20]. 6. It is necessary to construe the terms of a mortgage to determine the scope of the estate or interest in respect of which indefeasibility is conferred by registration of the mortgage: Yazgi v Permanent Custodians, at [22]. Thus whether registration of a forged mortgage allows the mortgagee to enforce its security interest in the land in relation to a debt or obligation arising under an agreement separate from the mortgage is a question of construction of the mortgage: Westpac New Zealand Ltd v Clark [2009] NZSC 73, at [43], per Blanchard, Tipping and Wilson JJ. 7. Generally speaking, if the mortgagee specifies a sum of money (plus interest) as the amount secured by the mortgage, the charge created by the mortgage will secure the amount so specified even if the document creating the indebtedness is void under general law principles: Small v Tomasetti. 8. However, if as a matter of construction, the mortgage does not take effect as a security over the land in relation to a claimed debt or obligation, registration of the mortgage will not entitle the mortgagee to exercise remedies, such as the power of sale, to enforce any such claimed debt or obligation: Provident Capital v Printy, at [50]-[52]; Yazgi v Permanent Custodians, at [25]ff. The question of construction may be particularly difficult where the registered mortgage refers to antecedent documentation which is not incorporated in the Torrens register and which may be invalid on general law principles. 141 His Honour then turned to the construction of the documents which, as I have said, were close to, but certainly not identical, to those used in the instant case. 142 At [71]-[73] his Honour considered the Group Clause and held that the word "group" includes two or more persons so that he rejected the argument that "I" meant only the jointure of wife and husband. However he said at [74] that that does not necessarily mean that cl 2.2 should be construed to create a security interest in favour of Perpetual that allows it to exercise a power of sale over Ms English's interest in the property by reason of Mr English's failure to comply with the terms of the Loan Offer. It is necessary to construe cl 2.2 having regard to the terms of the Loan Offer (a document which does not form part of the Torrens System register), including the term prescribing the means by which the offerees could accept the Loan Offer. 143 Sackville AJA continued: " [75] The statement in cl 2.2 that the Mortgage is security for payment to "you" (that is, Perpetual) of the "Secured Money", requires reference to the definition of the latter term. "Secured Money" means, relevantly:

all amounts which are payable at any time or are contingently owing or payable to you under a Secured Agreement . (Emphasis added.)

The definition of " Secured Money " does not itself identify the person or person by whom the monies are payable. [76] The definition of "Secured Money" requires reference to be made, in turn, to the definition of "Secured Agreement". For present purposes, the definition has two cumulative components:

any present … agreement between me or us, or any one of us, and you; and which I acknowledge in writing to be an agreement secured by the Mortgage.

[77] Mr Leopold identified the "present agreement" to be the Loan Offer dated 24 April 2003 which Mr English purported to accept and to which Ms English's signature as acceptor had been forged. It will be recalled that cl 10 of the Loan Offer provides that:

To accept this Offer You and, if there is more than one person all of You, must sign and return … the original copy of this Offer … within 21 days … (Emphasis added.)

The expression "You" is defined in the Booklet to mean "the person or persons to whom the Offer is made". [78] The Loan Offer bore the genuine signature of Mr English purporting to agree to the terms of the Offer and accepting it. It also bore the forged signature of Ms English purporting to accept the Offer. The express statement in the Offer, that it was capable of acceptance only if all the persons to whom the Offer was made signed the acceptance, was plainly never complied with. In these circumstances, no enforceable agreement ever came into force between Perpetual and the husband and wife, or between Perpetual and the husband. The signature of Mr English alone was not capable of constituting acceptance of the Loan Offer. Perpetual never made an offer to Mr English alone and he never purported to accept any such offer. [79] It follows that the first limb of the definition of "Secured Agreement" in the Mortgage was not satisfied. There was no "present agreement" between Perpetual and Mr and Ms English, or between Perpetual and Mr English, at the time Mr English executed the Mortgage. There was no money payable under a Secured Agreement and therefore there were no amounts satisfying the definition of "Secured Monies" in cl 1.1 of the Memorandum. The Mortgage was not security for the payment of any Secured Money since there was nothing that satisfied that definition. In short, the undertaking in cl 2.2 of the Memorandum to pay the Secured Money as and when it became due had nothing to operate on.

[80] It is therefore irrelevant that the word "I" is to be read as a reference to either the husband or wife, or to both of them. In whatever way "I" or the related pronouns are interpreted for the purposes of the Mortgage, it does not alter the fact that there is no Secured Money in respect of which the Mortgage is to be security." 144 Sackville AJA then said at [82] that the Loan Offer, on its face, was made to Mr and Ms English and required acceptance by both of them. The fact that Ms English was unaware of the Loan Offer does not alter the requirements for a valid acceptance. Ms English never accepted the Loan Offer and therefore the requirements of cl 10 of the Loan Offer were never satisfied. 145 The English case then deals with the rights which Perpetual would have against the husband in the relevant circumstances a matter to which I will return. 146 The wife says that, on the same documentation, the same result must follow. There is a registered mortgage, but, on its true construction, no monies are secured by it. The Loan Agreement is a nullity against her as she never signed it. Therefore, Perpetual can have no claim on her interest in the Queanbeyan home. 147 Mr Leopold submits that this result does not follow. He puts a number of propositions which may be summarized as follows:

2. Although Clause 3 of the Loan Agreement in the present case noted that a requirement before drawdown was that "You" must sign and return the Loan Agreement: (a) that was not an act in making a contract, rather part of the carrying out of a contract already made; (b) that term was solely for the benefit of Perpetual which waived it by conduct.

3. The wife's counsel conceded at the trial that there was a binding agreement between her husband and Perpetual and should not be permitted to change tack on appeal. (The present argument, which is now reinforced by the English case was only put below by the Registrar General).

4. There is an operative issue estoppel preventing the wife from denying the validity of the mortgage between the husband and Perpetual. [This submission is considered under head 4 below]. 148 It is vital as between the wife and the Registrar General, and, to a lesser extent between the wife and Perpetual, as to whether the mortgage secured the money lent to the husband. If it did, then, by operation of the indefeasibility principle, the wife's interest in the land can be realized by Perpetual; to recover the money it lent. If it did not, then the wife's interest is protected and she has little or no claim against the Registrar General. 149 As far as the husband is concerned, there is little difference. He either is bound by the mortgage or, if he is not, then, in equity, he will be considered under the same obligations as if he had signed the mortgage. This latter proposition is, in my view, the more technically correct way of stating the proposition that is sometimes put in a shorthand way by saying there is an implied agreement for a mortgage by conduct: Mestaer v Gillespie (1805) 11 Ves 231; 32 ER 1230; Katsaitis v Commonwealth Bank of Australia (1987) 5 BPR 12,049, 12,052, English at [100]. 150 Again, it must be noted that it is always open to a joint tenant to mortgage his or her aliquot share in the land if he or she can find a person willing to lend on that security. Under the Torrens System, such a mortgage, being a mere hypothecation, does not sever the joint tenancy. The security is over the mortgagor's interest alone. If the mortgagor predeceases the other joint tenants, the security ceases to exist over the land: Lyons v Lyons [1967] VR 169. 151 The first two points noted in [147] are in my view correct. As to waiver, Mr Leopold cited the recent High Court decision in Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570; 83 ALJR 196. I do not believe that that case alters the previous law and that is that, once a contract has come into existence, a condition solely for the benefit of one party can be waived by that party by words or conduct. 152 The conduct of Perpetual in paying out the money is clearly a waiver of its rights. "Waiver" is a word which may have different meanings in different contexts. Most often, though not always, waiver may only be held to have occurred when the person who is said to have waived had full knowledge of the operative facts and circumstances. That does not seem to apply where a person is deemed to have waived a contractual provision for his or her sole benefit. If it does, adherence to the course of conduct after the facts are known, suffices. 153 The decision in the English case thus cannot simply be applied to the present case. 154 However, the English case does decide that the Group Clause means that the argument that "I" means only the jointure of wife and husband should not succeed. 155 The English case also dissuades one from saying that just because the husband and Perpetual went to pains to sign up extensive documentation and Perpetual parted with a large sum of money that the court would not find the whole arrangement a solemn farce and that there was no contract at all. 156 However, that factor is one which the court must take into account. 157 Mr Leopold's third point does not trouble me in a situation where the point was taken by another party below and there is a recent restatement of the law by this court after judgment was delivered and Perpetual cannot point to any forensic disadvantage in the concession at trial being withdrawn. 158 Thus I come back to the question as what was secured by the indefeasible mortgage. 159 This leads to the definition of "Secured Money" set out earlier which means monies owing under a "Secured Agreement." "Secured Agreement" is defined as "any present or future agreement between me or us, or any one of us, and You". 160 The only possible "Secured Agreement" is the Loan Agreement. It was not signed by the wife, nor is it binding on her. However, the vital matter is whether, it being binding on the husband, the wife has (by virtue of indefeasibility) mortgaged her interest in the land because "one of us" as named in the mortgage, that is the husband, by the Loan Agreement owes money to Perpetual. 161 It has been argued that because the Loan Agreement is drafted for both husband and wife to sign and only the husband signed it, it never came into effect. This argument is reinforced by reference to the condition in cl 3 of the terms and conditions noted above which required a return of the signed Loan Agreement before the loan was payable. 162 The cases cited to support this proposition are principally those decided in the area of guarantees, where, as a general rule, if a guarantee is to be given by four people and only three sign the documentation, the usual result is that the court will hold that the three signed on condition that the guarantee would, only operate after all had signed; see eg Marston v Charles H Griffith & Co Pty Ltd [1982] 3 NSWLR 294. 163 However, as I said in Katsaitis at 12,051, in each case the court must look at the intention of the parties. If the conclusion is that a person did not intend to take on an obligation unless others were also bound, then the document will not operate until all intended to be bound, have signed. However, this does not always follow. 164 The primary judge held [71] that it was not contemplated that the Loan Agreement was not binding until both Mr and Mrs Van den Heuvel had signed it. He said that there existed between Perpetual and the husband all of the essentials of a binding contract and the monies were advanced to him in accordance with its terms. 165 That finding was within the primary judge's mandate. 166 Moreover, as Mr Leopold submits in the instant case, Perpetual in paying over the money would know from past experience that wives' signatures are sometimes forged and that it would at least have the husband bound by the documentation. On the husband's side, he knew he had forged his wife's signature to the documents and wanted the documents to be operative so as to receive the money he wanted. 167 With respect to Basten JA, I cannot draw the contrary inferences that he considers should be drawn. 168 In my view it follows that the conclusion must be that the parties (Perpetual and the husband) intended the documents to be operative even without the wife's signature. The balance of probabilities is that in the light of past history in the industry, the possibility that the wife's signature was forged or that the loan was unenforceable against the wife would have occurred to Perpetual. It would more likely than not accept that in that situation, so long as the husband was bound, it was commercially appropriate to lend out the money. 169 Thus, the monies were owing under a Secured Agreement and the mortgage catches up the wife's interest as part of the land charged. 170 Thus, the primary judge's view on this part of the case must be affirmed. 171 (2) Section 70 of the Consumer Credit Code confers rights on a mortgagor to have the court reopen a mortgage if a court is satisfied that in the circumstances in which it was entered, the mortgage was unjust. 172 There are a number of difficulties in applying that section to a case of a mortgage by two people, the signature of one of whom was forged and which had attained registration. 173 There is a further difficulty in the instant case in that there was little evidence led before the primary judge as to the circumstances in which the mortgage was given, what enquiries the mortgagee made to ensure that the wife knew what was happening and like matters. There was evidence as to a reckless certification of proper enquiries, and that acknowledgements had not been obtained and that the wife was never contacted by the mortgagee, Brad Donaldson or any associated party seeking to identify her as the borrower and guarantor, see [76]-[81]. However, the primary judge never made a finding as to unjustness, despite accepting some of this evidence. 174 The sole reason for seeking to say the mortgage was unjust appears to be that the wife never knew about the transaction and her signature to the mortgage was forged. 175 "Mortgagor" is not defined by the Code, though Clause 8 limits the term to natural persons. 176 The basal question is whether the term "mortgagor" includes not only people who willingly execute a mortgage, but also those who, by virtue of the operation of the Torrens System become in law mortgagors. The term "statutory mortgagor" was used in argument to describe this class of people and I will continue to use it. 177 The primary judge said that he was not convinced that the section applied to a mortgage other than a contractual mortgage and he was also not convinced that the wife had standing to seek reopening. 178 Mr Leopold, who seeks to uphold that ruling, says that s 70 focuses on the time that the mortgage was "entered into". A statutory mortgagor never "enters into" a mortgage. This is true, but it must be observed that so long as the mortgage is entered into by somebody the current mortgagor may seek to reopen. Thus if an elderly mother entered into the mortgage and then died, her executor could ask for the mortgage to be reopened. 179 However, Mr Leopold's point is reinforced by s 70(2) which focuses on the relative bargaining power of the parties when the mortgage was entered into, whether it was practicable for the mortgagor in negotiation to reject terms and whether the mortgagor understood the transaction and whether he or she was subjected to undue pressure to enter into it. 180 All these matters point to the section not applying to statutory mortgagors. 181 In addition, there is the powerful argument that the public interest in preserving the integrity of the Torrens Register tells against it, despite the competing public interest in preventing exploitation of the vulnerable. 182 The point does not seem to be considered in the authorities. The point has arisen with the Contracts Review Act 1980, but that is not a statute in pari materia. 183 However, as Bransgove and M Young, Essential Guide to Mortgage Law in New South Wales (LexisNexis Butterworths, Sydney, 2008) point out in [1.34] indefeasibility is no reason why a mortgage should not be reopened where the registered proprietor of the mortgage is the original mortgagee. 184 Whilst this thought has its dangers in reintroducing in part the discarded doctrine of deferred indefeasibility, it is logically correct in that the Real Property Act does not affect in personam rights against the registered proprietor and a statutory right to reopen comes within the concept of an in personam right. 185 Thus, I am attracted to the idea that indefeasibility prevails and that a transaction cannot be reopened under s 70 of the Code unless the original mortgagee remains the mortgagee. 186 Mr Leopold also argued that it was impossible now to reopen the transaction as the wife merely contributed her interest in the land and there was no material to show how the transaction could commercially be set aside. I do not agree: court orders can be made to do as much justice to a vulnerable person as is possible in the relevant circumstances. 187 However, in my view, the terms of s 70 show that the section is only to apply where the mortgagor or his or her predecessor in title enters into a contract of mortgage and does not apply where a person becomes a mortgagor only because of the operation of the Real Property Act. 188 I thus reject the appellant's case based on the Consumer Credit Code. 189 (3) The question of quantum of compensation is accordingly a live one between the Registrar General and the wife. 190 The wife says that because of the registration of the mortgage, her position has changed from being the holder of an aliquot share in the whole fee simple, unencumbered, to a person whose property is liable to be sold by a mortgagee with only the possibility of half the surplus being returned to her. Furthermore, she has lost any right she might have had under the Family Law Act 1975 (Cth) to be awarded more than a moiety of the fee simple. 191 The wife thus says that the proper compensation is the amount needed to discharge the mortgage plus out of pocket expenses. 192 The Registrar General says that the compensation is the diminution of the value of the half share in the land held by the wife immediately prior to registration of the mortgage. 193 The wife's riposte to this is that the wife did not have a "half share" in the home as would be the case with a tenancy in common. As a joint tenant she held an aliquot share in the whole, per my et per tout. 194 The primary judge in his supplementary judgment Perpetual Trustees Victoria Ltd v Van den Heuvel (No 2) [2009] NSWSC 483 held that the damage was the difference between the value of her unencumbered one-half share and the net sum she will receive after the payment of the mortgage. 195 The right to compensation is conferred by s 129 of the Real Property Act 1900 which provides that a person who suffers loss or damage as a result of the operation of the Real Property Act in respect of any land where the loss or damage arises from (inter alia) the registration of some other person as proprietor of an interest in land is entitled to compensation from the Torrens Assurance Fund. 196 Under s 132 of the Act, if the claim is not dealt with administratively, the Court is to award the appropriate compensation against the Registrar General as nominal defendant. 197 The Registrar General relied on the High Court's decision in Trustees of the Property of Cummins v Cummins (a bankrupt) [2006] HCA 6; 227 CLR 278 that ordinarily where property was held as joint tenants by husband and wife, it can be presumed that in equity they hold equal one-half interests. 198 Whilst the primary judge distinguished Cummins on the basis that there the husband's bankruptcy had effected a severance, whilst there was no severance in the instant case by the mere fact of the husband's mortgage (following Lyons v Lyons) he held that the order for possession against the husband meant that as a consequence of the order a severance must occur. Thus, he considered that the wife was only entitled to compensation for the effect on her half share. 199 It is odd that the present point does not seem to have been covered in the authorities. However, the solution seems simple. 200 What must be considered is what was lost when the "other person" mentioned in s 129 obtained his or her interest in the land by registration. This means looking at the situation immediately before and immediately after registration. 201 Immediately before registration, on the construction of the documents, the wife held an unencumbered aliquot share in fee simple as joint tenant with her husband. The husband held the same save that his interest was encumbered with the mortgage debt owing to Perpetual. 202 This meant that if the husband defaulted, Perpetual eventually could have forced the sale of the husband's interest or could have forced appointment of trustees for sale under s 66G of the Conveyancing Act 1919. 203 The eventual result of that process would be that the wife would have received one half of the value of the home or one half the net proceeds of sale by the trustees: I will call this $X. 204 After registration of the mortgage, the wife will receive at least half the mortgagee's surplus. Indeed, she probably has a case for the whole of the surplus up to the value of half the unencumbered fee simple. I will call this $Y. 205 The wife's loss is thus $(X-Y) plus out of pocket expenses. That is the amount of her compensation. 206 I agree with Hodgson JA at [30] that it is appropriate to make it clear that it would be within the discretion of the judge hearing any further process to permit the wife to lead evidence to show that her beneficial interest in the property at the time of registration of the mortgage exceeded 50%. 207 (4) The argument is that there was a default judgment for possession against both husband and wife. The judgment against the wife was set aside by consent. The judgment against the husband stands. The wife was a party to the proceedings in which the default judgment was made. The judgment is based on the husband being liable to give possession of at least his interest in the home to Perpetual. Thus there is an issue estoppel which binds the wife who cannot now contest that the husband has no legal liability to give possession. 208 It should be noted that the husband being an equitable mortgagor only would not entitle Perpetual to possession of the property on default. Thus, the issue estoppel must operate with respect to the husband having a liability at law. 209 Furthermore, the money judgment against the husband is in similar plight as it would only be justified if there was a legal obligation on the husband which could only arise from the Loan Agreement to pay perpetual money. 210 Mr Leopold reminds us that a default judgment may bring about an issue estoppel, see Spencer Bower, Turner and Handley, Res Judicata, 3rd ed (Butterworths, London 1996) at [188]. 211 Whilst that proposition cannot be gainsaid, indeed it is supported inter alia by the decision of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, 1010 care must be taken in its application. 212 First, although issue estoppel operates at law rather than equity, where equity would, on grounds of conscience grant a perpetual, absolute and unconditional injunction against a person relying on his or her legal right, a court at law may short circuit the process and not enforce the legal right. 213 Although I know of no case where this principle has applied to prevent reliance on an estoppel, I do not see why the principle does not apply. 214 However, it is not necessary to go this far. In the Kok Hoong case at 1010, Viscount Radcliffe giving the reasons of the Board said of a default judgment: "There is obvious and, indeed, grave danger in permitting such a judgment to preclude the parties from ever reopening before the court on another occasion, perhaps of very different significance, whatever issues can be discerned as having been involved in the judgment so obtained by default." 215 In my view in the instant case where it is clear that no-one turned their mind to the significance of the default judgment and the case on the merits was argued at trial at least by the Registrar General, the Court should not allow the fact that there may be an estoppel to affect the result. At the very worst, the court should now set aside the default judgment as having been obtained under a misapprehension as to its effect on the other parties to the litigation. 216 Of course, in the instant case, for reasons given above, whether there is or is not an estoppel has no bearing on the result of the appeal. 217 (5) There are outstanding issues. The amount of compensation in 2009/298449 is still to be determined and in 2009/298460 the effect of an order for possession against one joint tenant alone may need to be amplified. This is not made any easier by the fact that there was originally an order for possession against both and then the order against the wife was set aside without any further adjustment to the order. 218 The order for possession against the wife in 2009/298460 also probably needs adjustment to set a new possession date. 219 (6) It follows that basically each appeal should be dismissed with costs. 220 The stays ordered by consent in 2009/298460 at the hearing of the appeal should be extended until final orders are made on the appeal to enable these matters to be considered. 221 Both appeals should stand over for short minutes to be brought in. I would expect either an agreed set of each party's proposals to be in the hands of the Associate to each of the Judges within 14 days. If there is no agreement, a further day will be set to hear submissions and to pronounce final orders. 222 As noted by Hodgson JA, the wife's appeal against the Registrar General should be allowed to the extent of declaring that it would be within the discretion of the judge hearing any further process to permit the wife to lead evidence to show that her beneficial interest in the property at the time of registration of the mortgage exceed 50%. 223 As to costs, I should note my provisional view is that what Hodgson JA in 2009/298449 has outlined in [33] is appropriate. 224 Thus I would propose that in due course:

(1) The appeal in 2009/298449 be dismissed with costs.

(2) The appeal in 2009/298460 be allowed in part with the declaration referred to in [222] and amendment of the date for possession.

(3) Costs in 2009/298460 be further considered. 225 The only order that need be made at this time is to stand the further hearing over for short minutes to be brought in within 14 days and to continue the stay ordered at the commencement of the hearing until the formal orders are made. ************************

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