Van Der Velde v Ng

Solicitor for the Third Respondent: Mallesons Stephen Jaques

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 405 of 2007

RIBY PTY LTD (ACN 081 153 219) IN LIQUIDATION AS TRUSTEE FOR THE JADE TRUST

THE OFFICIAL TRUSTEE AS TRUSTEE OF THE PROPERTY OF ROSS HASTINGS (A BANKRUPT)

JUDGE: GREENWOOD J DATE OF ORDER: 1 JUNE 2011 WHERE MADE: BRISBANE

1. The first respondent is to pay the costs of the third respondent of and incidental to the proceedings on a solicitor and own client basis. THE COURT DECLARES THAT:
2. The costs the subject of Order 1 are enforcement expenses for the purposes of clause 20 of a mortgage entered into between the first respondent and the third respondent which bears Dealing No. 709600530 assigned to it upon registration in the Queensland Land Registry over land described as Lot 188 on RP 826135 in the County of Stanley, Parish of Yeerongpilly bearing a Title Reference 50176037. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 405 of 2007

RIBY PTY LTD (ACN 081 153 219) IN LIQUIDATION AS TRUSTEE FOR THE JADE TRUST

THE OFFICIAL TRUSTEE AS TRUSTEE OF THE PROPERTY OF ROSS HASTINGS (A BANKRUPT)

JUDGE: GREENWOOD J DATE: 1 JUNE 2011 PLACE: BRISBANE

Background to the litigation 1 On 12 December 2007, Mr Van Der Velde and Mr Stimpson as liquidators of a company called Riby Pty Ltd ("Riby") together with Riby (in liquidation) as trustee for the Jade Trust, commenced proceedings against the first respondent, Ms Ng, and two other respondents, the Official Trustee of the Property of Ross Hastings (a bankrupt) who was, relevantly, the sole shareholder and director of Riby, and the third respondent, Rams Mortgage Corporation Limited ("Rams"). 2 The proceedings concerned land (and a house erected on that land) located at 15 Brookvale Drive, Underwood (the "property"). The liquidators contended that Mr Hastings had caused Riby to make a disposition of the property to Ms Ng (his wife) on 17 May 2006 pursuant to a transfer arrangement made with her on 21 April 2006 at a transfer price of $254,914.16 which was, they contended, approximately $76,000.00 below its true value of $330,000.00. The applicant liquidators contended that the disposition was void pursuant to s 468 of the Corporations Act 2001 (Cth) ("the Corporations Act") as it occurred after the commencement of the windingup by the Supreme Court of Queensland. The windingup application was filed on 24 March 2006 and the order was made by the Supreme Court on 26 April 2006. The applicant liquidators also contended that the instrument of transfer, a document called "Terms of Settlement" relating to consent orders made by the Family Court of Australia on 10 April 2006, and the instruments of registration, represented transactions of the company all rendered voidable by ss 588FE(2), 588FE(3), 588FE(4), 588FE(5), 588FE(6) and 588FE(6A) of the Act. 3 It is not relevant to recite in these reasons the precise content of each of the many contentions on the part of the applicants concerning the grounds upon which the various pleaded transactions were said to be voidable transactions. Those matters are set out in the reasons for judgment in Van Der Velde v Ng (No. 3) [2009] FCA 1563 having regard to the Third Further Amended Statement of Claim framing the various causes of action; the evidence going to those matters; the findings in the primary judgment; and, the reasons of the Full Court in Ng v Van Der Velde [2011] FCAFC 35. 4 Rams is a lender to Ms Ng in relation to the purchase transaction concerning the property. Ms Ng made an application to Rams for finance. She completed a loan application form and entered into a loan agreement and a mortgage with Rams. Rams is the registered mortgagee of the property. In the early versions of the Statement of Claim filed and served by the applicants, a challenge was made to the validity of the mortgagee's title on a number of grounds. Ultimately, the applicants did not seek relief in the proceedings against the mortgagee nor contend that the mortgagee's interest was susceptible of being set aside on any ground. 5 The trial of the proceeding was set down for hearing on 14 December 2009. 6 Ms Ng did not appear at the trial. The procedural matters relating to the obligations the parties were required to discharge leading up to the trial and the events at trial are set out in Van Der Velde v Ng (No. 3) [2009] FCA 1563 and Ng v Van Der Velde [2011] FCAFC 35. 7 On 22 December 2009, judgment was delivered. 8 On that day the Court made a declaration that the transfer by Riby of the property to Ms Ng on 17 May 2006 constituted a disposition of property of the company, other than an exempt disposition, made after the commencement of the windingup and was a void disposition by operation of s 468 of the Corporations Act. The Court made a further declaration that the "Terms of Settlement" document signed between Mr Hastings and Ms Ng on 3 April 2006 attached to orders of the Family Court of Australia made on 10 April 2006 constituted an agreement for the transfer of the property rendered voidable by operation of s 588FE of the Corporations Act. 9 Apart from these declarations, the Court made operative orders that Ms Ng transfer vacant possession of the property to the applicant liquidators by Friday, 22 January 2010 for sale on condition that Rams be paid from the net sale proceeds of the property the full amount then due from Ms Ng to Rams under the terms of the Rams mortgage subject to the resolution of a separate question of construction of particular provisions of that mortgage concerning whether costs incurred by Rams in responding to the proceedings are costs falling within clause 20 of the mortgage as "enforcement expenses". The orders contemplated that the applicant liquidators would take all necessary steps to effect a sale of the property at market value and in the interim take all reasonable steps in order to preserve the property. The orders also contemplated that upon the sale of the property the net sale proceeds would be applied in discharge of the secured debt due to Rams and the balance would be disbursed according to law in the windingup of Riby. 10 Ms Ng was ordered to pay the costs of the applicant liquidators of and incidental to the proceedings. The parties were given liberty to apply. 11 As to the question of construction of the terms of the Rams mortgage, a further order was made pursuant to Order 29, rule 2 of the Federal Court Rules that the questions of fact and law arising out of the claims made by the applicant liquidators in the Third Further Amended Statement of Claim filed 28 October 2009 against Ms Ng concerning the disposition of the property, be decided separately from those questions of fact and law in issue to be decided between the applicant liquidators and Rams in relation to the construction of the terms of the mortgage between Rams and Ms Ng and whether the costs of the these proceedings incurred by Rams fall within the terms of that mortgage. 12 Ms Ng appealed from those orders determinative of the first separate question. 13 On 15 March 2011, the Full Court dismissed the appeal and ordered Ms Ng to pay the costs of the respondents (that is, the applicant liquidators and Riby (in liquidation) as trustee) of the appeal. Ms Ng also moved the Full Court for leave to adduce further evidence. The motion was dismissed with costs. 14 The determination of the separate question of whether the costs incurred by Rams of these proceedings fall within the terms of the mortgage remained reserved pending the determination of the judgment of the Full Court in Ms Ng's appeal for the reason that although the separate further question ultimately turns on a question of construction of the clauses of the mortgage, a successful appeal would have affected the future conduct of the matter generally and the determination of the separate question. 15 It is now appropriate to determine the separate question which was fully argued at the trial. It should also be noted, contextually, that although the separate question was fully argued, it was common ground that the urgent matter to be resolved was the threshold challenge to the transaction by the liquidators. The parties pressed for judgment quickly concerning those claims and agreed that the construction question (and issues relating to it) ought to be determined as a separate matter. The subsequent appeal from the orders of 22 December 2009 consequent upon the trial on 14 December 2009 meant that the resolution of the separate question had to await the outcome of the appeal. 16 This judgment concerns the determination of the separate question.

The history of the pleading against the third respondent 17 The proceeding was commenced by an application filed on 12 December 2007 which relies upon many provisions of the Corporations Act and provisions of the Bankruptcy Act 1966 (Cth) in framing a range of relief against, primarily, the first respondent. The application document is extensive. At para 1.3, the applicants sought a declaration that Rams was involved in contraventions of ss 180(1), 181(1), 181(2), 182(1), 182(2), 183(1), 183(2) and 588G(2) of the Corporations Act, concerning the transactions by which the property was transferred from Riby to Ms Ng in contravention of the Corporations Act rendering the transfer void. The conduct of Rams said to constitute being "involved in [the primary] contravention" was Rams's "[F]inancing the discharge of the previous mortgages over [the property], thus enabling [Ms Ng] to acquire legal title to the land, and/or [P]roceeding to settlement … on 26 April 2006 to finance such discharge, thus enabling [Ms Ng] to acquire legal title to the land" in circumstances where Rams "ought to have been aware that [Riby] was already the subject of a winding up application filed 24 March 2006 and was ordered to be wound up … on 26 April 2006". At para 1.4, the applicants sought an order that Rams, Ms Ng and the trustee of Mr Hastings execute all documents necessary to convey unencumbered title to the land to Riby (in liquidation) and that all respondents pay Riby (in liquidation) damages arising out of their engaging in contraventions of the Corporations Act. 18 At Part IV of the application document, the applicants sought a declaration that the primary transfer was void and a declaration that Ms Ng held the property on trust for Riby. At para 3.1, the applicants sought orders that the respondents including Rams do all things reasonably required of them by the applicants so as to effect a transfer of the land into the name of Riby (in liquidation). At para 5 of the application, the applicants sought an order that the respondents (including Rams) pay the costs of the proceedings on an indemnity basis. 19 The applicants filed a Statement of Claim on 9 January 2008 which traversed the transactions and the chronology of events relied upon in support of the relief claimed in the application. So far as Rams is concerned, the applicants contended that at some time prior to 17 May 2006 Mr Hastings took certain steps to effect the transfer of the property to Ms Ng and that on or about 17 May 2006 a settlement occurred at which Rams at the direction of Ms Ng paid the former trustee of the property, Perpetual Trustees Victoria Limited ("Perpetual"), $254,914.16 in discharge of its secured debt; a release from Perpetual was delivered up and provided to Rams and Rams then lodged with the Queensland Land Titles Office, the release, the transfer document, other documents and a mortgage from Ms Ng securing the amount of its loan to Ms Ng. Those documents were duly lodged. 20 The relief claimed in the application against Rams is reflected, in part, at para 1.3 of Part II of Section C of the Statement of Claim and para 3.1 of Part IV of Section C of the pleading. At para 5 of Part IV, the applicants seek an order that Ms Ng pay the costs of the first and second applicants and the second and third respondents of the proceedings on an indemnity basis and at para 6, the applicants seek an order that "[Rams's] costs of the within proceedings be money due to [Rams] under the RAMS mortgage". 21 On 4 June 2008, the applicants filed an Amended Statement of Claim. In that pleading, the applicants challenge the transfer transaction and related transactions extensively pleaded in the document. At para 4.2, the applicants repeat the pleading of the settlement and the steps taken by Rams pursuant to that settlement. At Section C of the Amended Statement of Claim, the applicants set out the causes of action relied upon said to give rise to the relief claimed in the application. At para 1.3 of Part II of Section C, the applicants seek an order that Ms Ng and Rams do all things and execute all documents necessary for the conveyance of the title of the property to Riby (in liquidation) "subject to the RAMS mortgage". At para 1.3(b), the applicants sought an order that Ms Ng pay the costs of the first and second applicants and the costs of the second respondent (Mr Hastings's trustee) and Rams on an indemnity basis. At para 1.3(c), the applicants sought an order that Rams's costs of the proceedings be monies due to Rams under its mortgage. At para 3.1 of Part IV of Section C, the applicants sought a declaration that Ms Ng and Rams do all things reasonably required of them by the applicants so as to give effect to a transfer of the property into the name of Riby (in liquidation) within 14 days of being ordered to do so. Although the declaration is not qualified by the phrase "subject to the RAMS mortgage", the declaration is crossreferenced to the proposed order (para 1.3, Part II, Section C) which is so qualified. At para 6, the applicants sought an order that Rams's costs of the proceedings be money "due to [Rams] under the "RAMS mortgage" and at para 7 the applicants sought an order that Ms Ng indemnify them for such costs (if any) as paid under Order 6. 22 On 10 March 2009, the applicants filed a Further Amended Statement of Claim which again pleaded the events of on or about 17 May 2006 concerning Rams's participation in the settlement. At para 1.3 of Part II of Section C, the applicants sought an order that Ms Ng and Rams do all things necessary so as to effect a conveyance of title to the property to Riby (in liquidation) subject to the Rams mortgage; that Ms Ng pay the costs of the first and second applicants and the second and third respondents on an indemnity basis; that Rams's costs of the proceedings be money due to Rams under its mortgage; and, to the extent that any costs become payable to Rams by the applicants, Ms Ng indemnify the applicants in respect of those costs. Similarly, at para 3.1 of Part IV, the claim for a general declaration was amended confining it to a declaration that Ms Ng do all things necessary to effect a transfer of the property into the name of Riby (in liquidation) within 14 days of being ordered to do so and by para 5, an order was sought against Ms Ng for the costs of the proceeding as earlier explained. By para 6, a declaration was sought that Rams's costs of the proceedings be money due to it under its mortgage. 23 In the alternative to the suite of orders sought concerning the property, the applicants also sought orders that the property be sold forthwith by auction or public treaty together with orthodox consequential orders which would flow from such an order. 24 On 28 October 2009, the applicants filed a Third Further Amended Statement of Claim. The third further amended pleading recited the engagement of Rams in the settlement transaction and the financing of the purchase of the property by Ms Ng. The further pleading recites the sequence of transactions upon which the liquidators relied in seeking to set aside the transfer. As to the relief based upon the various contentions as to each of the transactions, the applicants sought a declaration that the transfer of the property (and other instruments) were void or voidable; a declaration that Ms Ng held the property on trust for Riby (in liquidation); a declaration that Riby (in liquidation) enjoyed an equitable lien over the property to the extent of the difference between the amount of the loan made pursuant to the terms of the Rams mortgage and the market value of the property; and, alternatively, an order that Ms Ng pay the liquidators a sum fairly representing the benefits she had obtained by reason of the transfer of the property to her (and by reason of other instruments challenged in the proceedings). This relief was claimed by paras 26, 27, 28 and 29 of the third further amended pleading. 25 At para 30(a) of the pleading, the applicants sought an order directing Ms Ng to deliver up vacant possession of the property within 14 days of an order to do so and by para 30(b) an order was sought directing the Registrar to sign all documents and take all steps necessary to sell the property and to pay the proceeds of such sale to the applicants "after payment of all reasonable costs of such sale and discharge of all money due under the RAMS mortgage" [emphasis added]. 26 At para 31, an alternative order was sought that Ms Ng transfer forthwith vacant possession of the property to the liquidators on five conditions. The first is that Rams be paid from the net sale proceeds of the property the full amount then due from Ms Ng to Rams under the mortgage. The second is that the liquidators take all necessary steps to effect a sale of the property. The third is that until the property is sold, the liquidators take all reasonable steps to preserve the property and properly insure it. The fourth is that upon sale of the property the net sale proceeds be applied in discharge of the amount due to Rams under its mortgage and as to the balance, the net proceeds be disbursed according to law in the windingup of Riby. The fifth condition involved an order that the Registrar be authorised to sign documents should Ms Ng fail to do so. 27 By para 32, the applicants sought an order directing Ms Ng to indemnify them and pay the liquidators any sum found to be payable under the terms of the Rams mortgage. 28 By para 34, the applicants sought an order that Ms Ng pay their costs and Rams's costs of the proceedings on either a solicitor/client basis or a party and party basis. 29 It can be seen from the application and the sequence of statements of claim that the liquidators initially framed the relief they claimed in a way which challenged the mortgagee's title as mortgagee. By 9 January 2008, the mortgagee was placed in a position where its entitlement to the mortgage was under challenge. By the version of the Statement of Claim filed on 4 June 2008, the applicants abandoned that challenge and sought relief on the footing that any relief obtained by them derivative of the causes of action they advanced, assumed the validity of the mortgagee's title as mortgagee. That position prevailed under the Statement of Claim filed 10 March 2009 and the version filed on 28 October 2009. 30 Nevertheless, at no stage did the applicants discontinue the proceeding against Rams. Rams remained, at the election of the applicants, a party to the proceeding. That course was, no doubt, adopted by the applicants because the mortgagee had a legitimate interest in the proceedings as all of the relief claimed against Ms Ng on the distributive basis upon which it was pleaded in reliance upon the many and various causes of action arising out of conduct said to be in contravention of the Corporations Act, went to the core of the transaction under challenge as financed by the mortgagee. The mortgage interest of Rams operated as security for all of the obligations reflected in the personal covenants given by Ms Ng to Rams. Rams as a party to the proceeding necessarily had to consider the scope of the factual challenge and the scope of the declarations sought in the proceeding against Ms Ng and the consequences those declarations might have had for Rams, if made, in the context of its own interest. 31 On 28 July 2009, Rams filed a Defence to what it describes as the Second Further Amended Statement of Claim. As to para 30(b) and para 31(a) of the applicants' pleading, both of which address payment of the proceeds of sale to the applicants after "discharge of all money due under the RAMS mortgage", Rams pleaded at para 26(a) that the order sought, if made, ought to make clear that monies due under the Rams mortgage includes "without limitation, any costs of [Rams] of and incidental to the proceedings payable by [Ms Ng]". At para 26(b), Rams also sought the inclusion in any relevant order of an additional sentence to this effect: "For the avoidance of doubt, costs of [Rams] payable by [Ms Ng] are part of the amount owing under the Rams mortgage and the Rams Home Loan". 32 Rams, by its defence at para 27, contended that the exercise of the powers of the Court to make declarations or orders, may affect the interest of Rams not only in the property by reason of its mortgage but also Rams's interest in matters arising out of the Rams loan agreement with Ms Ng, the Rams Insurance Policy in relation to the loan and the Rams Master Insurance Policy. 33 Rams also pleaded at paras 37, 38 and 39 that from 21 April 2006 to 17 May 2006 Ms Ng was the equitable proprietor of the property and Rams was the equitable mortgagee; from 17 May 2006 Ms Ng became the registered proprietor and Rams became the registered mortgagee; and, at all material times the Rams home loan and Rams mortgage have been subject to the Consumer Credit Code adopted as a schedule to the Consumer Credit (Queensland) Act 1994.

The issue between Ms Ng and Rams inter se 34 It can be seen from these pleadings that a question arises and is thus in controversy as between the applicants and Rams as to whether all monies "due under the Rams mortgage" includes "without limitation, any costs of [Rams] of and incidental to the proceedings payable by [Ms Ng]". That matter as between the applicants and Rams was fully argued. However, as Mr Piggott of counsel on behalf of Rams observed, "… this is, after all, a construction of the rights as between my client and Ms Ng": Transcript, p 42, lns 56. There is, however, no interpleading for a declaration or order as between Rams and Ms Ng by which Rams asserts as against its own contracting party, Ms Ng, that all costs incurred by Rams in preserving its title from challenge by the liquidators (or protecting its interest as a necessary party in proceedings in which orders are sought affecting the property), arising out of conduct (that is, breach) by Ms Ng of the personal covenants of the mortgage (relevantly connected with the related loan documents), are "monies due under the RAMS mortgage". The issue joined is one between the applicants and Rams. 35 When Ms Ng elected not to appear at the trial, there were issues alive as between her and the applicants but no issue alive as a matter of formal pleading as between her and Rams as to the construction of the terms of her mortgage (or related agreements) with Rams. 36 It may follow that the resolution of the question of whether the costs and expenses incurred by Rams are monies due under the mortgage, as a matter of construction of the terms of the mortgage, is to be resolved as between the applicants and Rams. In the principal proceeding, the applicants sought orders based upon contended contraventions by Ms Ng (and others) of particular provisions of the Corporations Act said to render the transactions void or voidable. It may also be that the resolution of the question of whether the relevant expenses are monies due under the mortgage is a matter, in the context of the present principal application, that is properly characterised as, in part, an application by the liquidators to the Court for directions "in relation to any particular matter arising under the winding up" for the purposes of s 479(3) of the Corporations Act, the resolution of which binds all parties to the directions so made. 37 The principal application supported by the pleadings was not however expressly framed that way. 38 Whether that is so or not, the separate remaining issue can properly be determined as a matter in controversy between the applicants and Rams for the purpose of determining the monies due under the Rams mortgage so as to determine the monies to be paid to Rams as secured monies upon the sale of the property thus determining the residual sale proceeds to be paid to the liquidators to be disbursed according to law in the liquidation of Riby (having regard to any right of indemnity Riby might enjoy as trustee or former trustee of the relevant trust). 39 As to the costs of the proceeding then, there are three issues. First, Rams seeks an order as against Ms Ng for its costs of the proceedings on the footing that it has been made a party to the proceedings (and brought to trial) at the suit of the liquidators and Riby (in liquidation) by reason solely of Ms Ng's conduct rather than any conduct on its part and thus, as a matter of the exercise of the discretion, it ought to have its costs of the proceedings, as against her. Secondly, Rams argues that those costs ought to be found (determined) to be "enforcement expenses" as a question of construction of the mortgage as between Rams and Ms Ng. Thirdly, Rams says it ought to have those enforcement costs on an indemnity basis.

The issues of fact 40 On 29 October 2005, Ms Ng completed a loan application form in which she answered the questions on that form and thus provided information to Rams relevant to its consideration of her application. In that form Ms Ng answered the following three questions "No": J Applicant's Declaration ● Have you or your spouse ever been declared bankrupt or insolvent, or had your estate assigned for the benefit of creditors? ● Have you or your spouse ever been a shareholder or the officer of a company of which a manager, receiver, and/or liquidator has been appointed? ● Is there any unsatisfied judgment entered in any court against you, your spouse, or any company with which you or your spouse are or were a shareholder or officer? 41 As to those matters, Ms Ng had presented a debtor's petition on 15 July 1997. The bankruptcy commenced on that day and ended on 16 July 2000. The answer to the first question was untrue. 42 As to the second question, Ms Ng was a director and secretary of a company called Shancom Pty Ltd ("Shancom") from 20 January 1984 to 4 November 1997 and a shareholder of Shancom. Her spouse was a director of Shancom from 3 February 1992 to 4 February 1997. An Australian Securities and Investments Commission ("ASIC") search of the historical records relating to Shancom reveals that the company was deregistered on 4 November 1997 having undergone a period of external administration. Shancom was wound up by Court order made in or about October 1994. Ms Ng's answer to the second question was also untrue. 43 As to the third question, on 13 January 2006, Drake Australia Pty Ltd ("Drake") obtained a judgment against Riby in the Magistrates Court of Queensland on a claim filed on 28 November 2005 for $48,609.26. Riby was wound up by order of the Supreme Court of Queensland on 26 April 2006 grounded on the debt to Drake. Ms Ng's spouse was the sole shareholder and sole director of Riby. 44 The loan application form was originally completed by Ms Ng (incorporating the declaration as to the truth of all statements made in it) on 29 October 2005 in support of an application to Rams for a loan of $549,000.00. On 12 January 2006, Ms Ng sent replacement pages for the application to Rams by facsimile so as to amend the application to seek a loan of $256,000.00. The amended application as signed bears the date (and declaration) of 11 January 2006. At either 29 October 2005 or 11 January 2006, the judgment in favour of Drake had not been entered although the debt to Drake subsisted. 45 Rams relied upon the loan application form in accepting the application and making the loan of $256,000.00. On 31 March 2006, Ms Ng entered into a "Rams Low Doc Home Loan Agreement" (the "Loan Agreement") made up of a "Details" document setting out a "Financial Information" table and a table of "Other Information" under eight subheadings, together with a separate document incorporated by reference called "Home Loan Agreement General Terms" dated 1 March 2005. The obligations in the Loan Agreement (and related documents) were to be secured by a "1st priority registered mortgage" over the property. On 1 April 2006, Ms Ng executed the Rams Mortgage Memorandum by which that security was provided by her. 46 On 21 April 2006, Riby settled the transfer to Ms Ng of the property. At settlement, Rams by its lawyers, disbursed funds totalling $256,000.00 at the direction of Ms Ng; took possession of the Form 1 and Form 24 transfer document (which when registered in the Queensland Land Registry was given a Dealing Number 709600528); took possession of the Form 3 release of mortgage document by which Perpetual released its mortgage; and took possession of the Form 2 mortgage granted by Ms Ng on 1 April 2006 (which when registered in the Queensland Land Registry was given Dealing Number 709600530). 47 On 17 May 2006, Rams, by its lawyers, lodged the transfer document, Perpetual's release and the mortgage granted by Ms Ng, with Queensland Land Registry for registration. Between 21 April 2006 and 17 May 2006 Rams was an equitable mortgagee of the property and on 17 May 2006 Ram became the registered mortgagee of the property. At the time of entering into the Loan Agreement with Ms Ng and the mortgage, Rams accepted that Ms Ng was to be the registered owner of the property. Rams did not enter into any loan transactions with the liquidators of Riby or Riby in connection with the property. 48 On 26 April 2006, Mr Van Der Velde and Mr Stimpson were appointed liquidators of Riby by order of the Supreme Court of Queensland. On 21 April 2006, the settlement previously described took place and on 17 May 2006 the registration of the relevant instruments of settlement occurred. On 21 February 2007, Mr Hastings was declared bankrupt and the second respondent was appointed trustee of his estate. On 14 September 2007, the liquidators of Riby lodged for registration a caveat over the property by which an equitable interest in the property was claimed by Riby (in liquidation) arising out of the transactions said to have occurred in contravention of the Corporations Act. The liquidators, on behalf of Riby (in liquidation) asserted that Ms Ng held the property upon a constructive trust for Riby (in liquidation). On 12 December 2007, these proceedings were commenced by which the applicants sought the relief previously described. 49 Notice of the caveat lodged by the liquidators was given to Rams. On 24 September 2007, Rams wrote to Ms Ng in these terms: Dear Ms Ng, Re: Lodgement of a Caveat by Riby Pty Limited (in Liquidation) Borrowers: Kym Hon Yoke Ng Loan Number: 1812460 Property: 15 Brookvale Drive, Underwood QLD We have received notification that a caveat has been lodged on the title of the abovementioned property by [Riby] (in Liquidation) claiming that the caveator is entitled to an equitable share or interest in the above property and that you hold the property under a constructive trust for the caveator. Our prior consent to the lodgement of this caveat was not obtained. We point out that the lodgement of the caveat without our prior consent, and the fact that you have not done everything necessary to have it removed, is an event of default under your mortgage to RAMS and, therefore, under your loan agreement. The effect of the caveat and the caveator's claimed interest is that: 1. We will not allow you to access any available redraw you may have on your account at any time; 2. Any lump sum or additional repayment you make in the future will be treated as a permanent reduction on your loan and will not be available for redraw; and 3. We will not agree to any increase in your loan without the written consent of the Liquidator of Riby Pty Limited (in Liquidation). These provisions will apply until such time as the caveat is withdrawn. You should contact your own solicitor for advice on what you can do regarding withdrawal of the caveat. Please acknowledge receipt of this letter by signing and returning the enclosed copy. … Yours faithfully RAMS Mortgage Corporation Limited

The relevant terms of the mortgage between Rams and Ms Ng 50 The material terms of the mortgage between Rams and Ms Ng are these: What you undertake in this mortgage 1.1 By signing this mortgage you undertake certain obligations as mortgagor. You also give us rights concerning you and the property - for example, if you do not comply with your obligations we may take possession of the property, sell it and sue you for any remaining money you owe us. … 1.5 You declare that: (a) you own the property or are in the process of becoming the owner of it; and (b) you have told us about all rights affecting the property (or are proposed or likely to affect it) (such as easements, leases, the rights of a beneficiary under a trust, securities or plans to compulsorily acquire the property); and (c) you do not breach any law or any obligation to any other person by signing this mortgage; and (d) all the information you have given us, the manager or the originator is correct and not misleading (including any given in connection with an agreement covered by this mortgage); and (e) you have not withheld any information which might have caused us not to enter into this mortgage or an agreement covered by this mortgage; and … 1.6 You must tell us if anything has happened which prevents you from repeating any one or more of the declarations in clause 1.5 before: (a) we provide you with a loan or other financial accommodation under an agreement covered by this mortgage; or (b) you acknowledge that another agreement is to be an agreement covered by this mortgage. 1.7 You must ensure that you are not in default under this mortgage. You must also carry out on time all your obligations under every agreement covered by this mortgage including the obligation to pay any of the amount owing. These obligations and your other obligations under this mortgage (such as under "Enforcement expenses") continue even if we release the property from this mortgage. Caveats 10. You must do everything necessary to remove any caveat placed on the property without our consent. (A caveat is a warning, noted in the official title deeds register, restricting dealings with the property). What can happen if you are in default? When are you in default? 18. You are in default if: (a) you do not pay the amount owing on time; or (b) you do something you agree not to do, or you don't do something you agree to do, under this mortgage or an agreement covered by this mortgage; or (c) you or another person has given us incorrect or misleading information (including through your declarations under clause 1.5) in connection with this mortgage or an agreement covered by this mortgage; or (d) we reasonably believe you or another person has acted fraudulently in connection with this mortgage or an agreement covered by this mortgage; or (e) if you are a company, you become insolvent or steps are taken to make you so, or; (f) you do not, or another person does not, carry out in full an undertaking given in connection with this mortgage or an agreement covered by this mortgage within the period specified, or within seven days if no period is specified. What can happen then? 1.1 If you are in default and we choose to enforce this mortgage, we must give you a notice. (You must have been in default for one day or more before we may do this). The notice must: (a) state that you are in default; and (b) specify a period of grace of at least 31 days. 19.2 The law (including statute law governing the exercise of our power of sale as mortgagee and, if applicable, a Consumer Credit Code) requires us to give you certain information before enforcing this mortgage. We may include that information in the notice under clause 19.1 or another notice. 19.3 During the period of grace given under clause 19.1 you are allowed to correct any default that can be corrected. If you do not correct that default within that period or if there is a default that cannot be corrected, then, to the extent it is not already due for payment, the amount owing becomes immediately due for payment at the end of that period without further notice. In addition, we may then do one or more of the following as well as anything else the law allows us to do as mortgagee: (a) sue you for the amount owing; (b) take possession of the property. (We may remove personal possessions and either abandon them or store them without being liable to you. If we store them and you do not reclaim them within a reasonable time, we may dispose of them and use the proceeds towards paying the amount owing). (c) do anything an owner of the property could do, including selling or leasing it or carrying on any business on it; (d) appoint a receiver to do any of those things and anything else the law allows a receiver to do. Enforcement expenses 20. When we ask, you must pay us the reasonable expenses we reasonably incur in enforcing this mortgage after you are in default (including in preserving and maintaining the property - such as by paying insurance, rates and taxes for the property). This applies to expenses we incur before or after taking action under clause 19. How we may exercise our rights 26.1 We may exercise a right to remedy or give or refuse our consent in any way we consider appropriate including by imposing conditions. 26.2 We may enforce this mortgage before we enforce other rights including under another security. 26.3 If we do not exercise a right or remedy fully or at a given time, we can still exercise it later. … 26.6 Our rights and remedies under this mortgage may be exercised by: (a) any of the manager's directors or company secretaries or any employee of the manager whose job title includes the word "manager"; or (b) any other person we authorise. … Meaning of words 35. agreement covered by this mortgage means: (a) an agreement or other arrangements (including a deed) under which one or more of you incurs or owes obligations to us or under which we have rights against you, including any such agreement or arrangement which all of you acknowledge in writing to be an agreement covered by this mortgage; or (b) each variation of it. Without limiting this definition, it includes an agreement or arrangement which is assigned to us and any agreement or arrangement which you acknowledged to another person to be an agreement covered by this mortgage before the agreement or arrangement was assigned to us. amount owing means, at any time, all money which one or more of you owe us, or will or may owe us in the future, including under this mortgage or an agreement covered by this mortgage. Without limiting this definition, it includes money owing (or which will or may be owing) to us in our capacity as an assignee because we have taken an assignment of our agreement covered by this mortgage or this mortgage itself, and whether or not: ● you were aware of the assignment or consented to it; or ● the assigned obligation was secured before the assignment; or ● the assignment takes place before or after this mortgage is delivered. … 51 By clause 1.5(b), Ms Ng declared that she had told Rams of all rights affecting the property or likely to affect it. By clause 1.5(c), Ms Ng declared that she did not breach any law or obligation to any person by signing the mortgage. By clause 1.5(d), Ms Ng declared that all of the information she had given Rams was correct and by clause 1.5(e), no information had been withheld that might have caused Rams not to enter into the mortgage or the Loan Agreement. By clause 1.6, Ms Ng agreed to tell Rams of anything that occurred that would prevent her from repeating the clause 1.5 declarations before Rams advanced the loan monies to her. By clause 18(c), Ms Ng fell into default by giving Rams incorrect or misleading information in connection with the mortgage or the Loan Agreement or any "agreement covered by this mortgage" as that term is defined. 52 Mr John Graham Martin, the head of credit for Rams, deposes at para 21 of his affidavit sworn 23 November 2009 (Exhibit 8) that Rams has no record of being told by Ms Ng of her bankruptcy; her or her spouse's role as a director and shareholder in Shancom; the judgment debt Drake obtained against Riby; Riby's continuing interest in the property (on any ground) after transfer to Ms Ng; or that a transfer to her might constitute a breach of the Corporations Act; or that a transfer of the property to Ms Ng might be characterised in any of the ways ultimately pleaded by the applicants at paras 18 to 25 of the Third Further Amended Statement of Claim filed 28 October 2009. 53 By clause 10 of the mortgage, Ms Ng was required to do everything necessary to remove the caveat registered over the property by the liquidators on or about 14 September 2007 and by clause 18(b) Ms Ng fell into default by failing to discharge that obligation. 54 I accept all of the evidence of Mr Martin set out in his affidavit of 23 November 2009. I also accept the evidence of Mr Stimpson contained in his affidavit filed 12 December 2007 (together with the relevant exhibits) as to the Drake debt and the windingup of Riby. I accept the evidence of Melissa Frances Graham contained in her affidavit filed 23 November 2009 and the evidence of Kate Maria Middlemiss contained in her affidavit filed 24 November 2009. 55 I find as facts those matters of fact recited at paras [40] to [53] 56 It follows that Ms Ng's declaration under clause 1.5(b) was incorrect as the liquidators and Riby (in liquidation) enjoyed "rights affecting the property" by reason of the disposition of the property to Ms Ng in the circumstances as found: Van Der Velde v Ng (No. 3) [2009] FCA 1563 and Ng v Van Der Velde [2011] FCAFC 35. It also follows that Ms Ng's declaration that she had not contravened the Corporations Act was incorrect. Ms Ng's declaration at 1.5(d) was incorrect by reason of the false answers she gave as to her bankruptcy and Shancom. For the same reasons Ms Ng's declaration at clause 1.5(e) was incorrect. By failing to tell Rams of the caveat of 14 September 2007 and failing to take steps to remove it and assert her absolute title to the property (as she contended in the proceedings later commenced by the applicants), Ms Ng failed to comply with clause 10 of the mortgage. Each of these matters placed Ms Ng in default for the purposes of clauses 18(b) and (c) of the mortgage from the outset of the grant of the mortgage as to the incorrect declarations and in default from the period when Ms Ng ought reasonably to have taken steps to seek to remove the caveat (for example, within one month of notice to her of the caveat). 57 Throughout the proceedings from commencement on 12 December 2007 Ms Ng was in default under clause 18 of the mortgage. 58 As to those proceedings, as previously mentioned, Rams was joined as third respondent and brought to a trial by the applicants. The relief initially claimed against Rams involved a challenge to the validity of the mortgage on a number of grounds. Although that challenge was abandoned by 4 June 2008, the proceeding was not discontinued as against Rams. It remained interested in the relief sought by the applicants as against Ms Ng going to the core transaction Rams had financed. The applicants contend that once they withdrew a challenge to the validity of the mortgage, Rams' interest in the proceeding lay only in respect of any orders it might seek in so far as their costs were concerned. However, Rams retained an interest in any part of the relief that might be obtained against Ms Ng to the extent that it had an affect upon its right, title or interest notwithstanding that the applicants did not seek an order to set aside the mortgage. 59 By para 31 of the final Amended Statement of Claim the applicants sought an order that Ms Ng transfer the property to the liquidators on condition that the property be sold and the proceeds applied (apart from sale and transfer costs) to satisfy the full amount due under the Rams mortgage. A transfer of ownership of the property had the potential to adversely affect Rams as a transfer may have affected the enforceability of covenants contained in the Rams mortgage. Moreover, a transfer for the purpose of sale raised the question of the timing of the sale (should relief be granted), the process of sale and the price which might be obtained thus having a potential affect upon the value of the security. 60 Although the proposed transfer remained subject to the mortgage, Rams was required to consider whether only those covenants which ran with the land would remain within the scope of the security and whether Rams would be unsecured in respect of those covenants (and corresponding obligations) which did not run with the land. If all covenants of the mortgage ran with the land upon transfer, Rams would nevertheless need to consider whether collateral obligations under related documents secured by the mortgage also ran with the land: see the discussion in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81; and also the discussion in Australian Deposit and Mortgage Bank v Lord (1876) 2 VLR 31 at 34 and 35; In Re Burton; Ex parte The Union Bank of Australia Ltd (1901) 27 VLR 437 at 442; Hall v Hubbard [1931] VLR 197 at 200 and 201; McDonald v Gardiner [1933] VLR 129 at 136 and 137; Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423 at 434; English, Scottish and Australia Bank Ltd v Phillips (1937) 57 CLR 302 per Dixon, Evatt and McTiernan JJ at 321 and 322. Thus, upon transfer, Rams' rights in respect of personal covenants not running with the land would be reduced to an in personam interest and to that extent the exercise by Rams of its secured rights under the mortgage would be constrained, prevented or impeded. 61 I am satisfied that Rams had an interest throughout the entirety of the litigation to be protected in addressing the claims of the applicants arising out of the conduct of Ms Ng having regard to the scope of the proceedings and the relief sought. 62 The costs Rams has incurred in responding to the proceedings are costs that ought to be paid by Ms Ng and the Court will so order. 63 The next question that arises is whether those costs are properly understood as costs incurred in enforcing the mortgage for the purposes of clause 20 of the mortgage. 64 Clause 20 provides that when asked by Rams, Ms Ng must pay Rams the reasonable expenses it reasonably incurs in enforcing this mortgage after Ms Ng has made default. The clause provides some examples of those expenses by making reference to such things as paying insurance, rates and taxes as aspects of preserving and maintaining the property. The clause recites that the obligation cast upon Ms Ng to pay Rams its reasonable expenses reasonably incurred in enforcing the mortgage applies to expenses Rams incurs either before or after taking action under clause 19. 65 Clause 18 deals with the question of when Ms Ng is in default. She was in default throughout the entirety of the proceeding. 66 Clause 19 describes "what can happen" upon default. Clauses 19.1 and 19.3 provide that if Ms Ng is in default, and Rams chooses to enforce the mortgage, it must give Ms Ng a notice stating that she is in default and specifying a period of grace of at least 31 days. During the period of grace under a clause 19 notice, Ms Ng would be entitled to "correct any default that can be corrected". If a correctable default is not corrected within the grace period or if a default which is unable to be corrected within the grace period has occurred, then the amount owing becomes, in effect, accelerated or "immediately due for payment at the end of [the grace period] without further notice". 67 Apart from the acceleration effect of clause 19.3, the clause provides that in addition Rams may "do one or more of the following as well as anything else the law allows us to do as mortgagee". Those things are described as: sue Ms Ng for the amount owing; take possession of the property; do anything an owner of the property could do; and, appoint a receiver [emphasis of the clause]. 68 The applicants contend that the expenses (legal expenses) incurred by Rams in responding to the proceedings are not enforcement expenses within clause 20 for these reasons. First, the steps taken by Rams to respond to the proceedings and address the scope of the claims and any perceived constraint upon the full expression of its secured interest under the mortgage is not action taken by Rams to enforce the mortgage. Those steps are responsive steps in preservation of its position rather than affirmative initiating steps by the mortgagee to enforce the mortgage as contemplated by clause 19. 69 Secondly, if those steps properly constitute steps of enforcing the mortgage, Rams failed to give Ms Ng a notice which specified a period of grace of at least 31 days as contemplated by clause 19.1(b) of the mortgage. That failure, it is said, is fatal. The legal expenses incurred by Rams can only be reasonable expenses reasonably incurred in enforcing this mortgage if they are validly incurred. Since Ms Ng was not given the mandatory days of grace by the notice (quoted at [49] of these reasons), the expenses do not fall under the clause. 70 Thirdly, the applicants contend that if Rams' legal costs incurred responsively in the proceedings are properly characterised as enforcement expenses under clause 20, and Rams' failure to give Ms Ng at least 31 days of grace in the notice is not fatal, the "enforcement expenses" ought properly be confined to those costs incurred by Rams up to 4 June 2008 when the applicants formally abandoned any challenge to the validity of the mortgage. 71 As to the last contention, Rams continued to have a necessary interest in the proceedings throughout, as already explained. 72 As to the second contention, clause 19.1 creates a mandatory obligation upon Rams to give Ms Ng a notice that states that she is in default and provide her the period of grace should Ms Ng, firstly, be in default and, secondly, should Rams choose to enforce the mortgage. The notice operates as a condition precedent to the exercise of the clause 19.3 enforcement rights. Rams may do things under clause 19.3 or at law to enforce the mortgage all of which involve Rams taking an active enforcement step consequent upon default. All of those steps require a notice to be given which satisfies the elements of clauses 19.1(a) and (b).

Clause 20 73 Clause 20, however, has an important wider operation. 74 The mortgagee might reasonably incur reasonable expenses in taking defensive steps to protect its position as mortgagee. That step might not involve the things contemplated by clause 19.3. For example, as in this case, the mortgagee may have been mislead into making a loan secured by the mortgage on the basis of entirely false information given by the borrower about the borrower's previous bankruptcy or corporate history. It might find itself in litigation in which its interest is firstly challenged and then relevantly affected and it might choose to retain lawyers, answer the claim, file a defence and generally incur costs in investigating each and every aspect of the factual contentions advanced against it by the applicants. It might also reasonably incur reasonable expenses in investigating the quality of the conduct of the mortgagor otherwise unknown to it. 75 Those reasonably incurred reasonable expenses may well be incurred before the mortgagee chooses to assert a right under clause 19, as described, or after choosing to do so (which would then be preconditioned on a clause 19.1 notice). The final sentence of clause 20 expressly contemplates a wider field of steps than clause 19. It would be an odd construction of clause 20 to conclude, in context, that a mortgagee who acts reasonably and incurs expenses which are properly described as reasonable legal expenses in dealing with the set of circumstances confronting it arising out of conduct of the mortgagor in breach of the mortgage, has not reasonably incurred enforcement expenses because the mortgagee failed to first give the mortgagor a notice setting out all the contended defaults and 31 days of grace to do "something" concerning irremediable defaults before any reasonable expenses are reasonably incurred. Clause 20 recognises that the mortgagee must reasonably deal with the expenses of legal proceedings and the contentions advanced against it. 76 Clause 20 is not predicated upon affirmative initiating steps of enforcement. Clause 20 is wider. It contemplates that the mortgagee might need to defend its position and protect its interest by engaging with the applicants so as to understand the consequences for its security position. These steps fall, for the purposes of clause 20, within the description of steps undertaken in enforcing the mortgage and if they give rise to reasonable expenses reasonably incurred, they are enforcement expenses under that clause and are thus secured expenses.

Why that is so 77 That result flows simply as a question of construction of the clause of the mortgage itself: Elders Trustee & Executor Company Ltd v E G Reeves Pty Ltd (1988) 20 FCR 164 per Sheppard and Foster JJ at 173. Here, as in Elders, the clause also deals with "the matter comprehensively" (at 173 and 174). In Perpetual Trustees Australia Ltd & Ors v Barker [2003] SASC 275 the South Australian Supreme Court considered the operation of clauses 7.1 and 7.2 (somewhat similar to clause 20) of a mortgage in these terms: 7.1 Enforcement expenses may become payable under the Mortgage in the event of default under clause 5; 7.2 You must pay the Mortgagee all reasonable enforcement expenses the Mortgagee reasonably incurs or expends in exercising its rights under the Mortgage. In the case of legal fees and disbursements, these are payable on the higher of a full indemnity basis or a solicitor and own client basis. [emphasis added] 78 At first instance Bleby J concluded that the mortgagee would be entitled to the relevant class of legal costs only when enforcing its rights under the mortgage rather than defending an application by the mortgagor for relief against the enforcement of those rights. Bleby J considered there to be a difference between enforcement expenses incurred in exercising rights under the mortgage and expenses incurred in "defending one's right to be able to exercise those rights" [emphasis added]: at [36]. The Court of Appeal in Perpetual Trustees Australia Ltd & Ors v Barker [2004] SASC 58, Duggan J (Doyle CJ and Anderson J agreeing on the point) at [32] and [33] respectfully disagreed with the views of the primary judge and concluded that there was no proper basis for confining the words of clause 7.2 to expenses incurred in actions or procedures initiated by the mortgagee "in contradistinction to responses by the mortgagee to actions or procedures instituted by the mortgagor to prevent the enforcement of rights by the mortgagee" [emphasis added]. 79 In principle, clause 20 ought not to be confined in its operation to only those expenses reasonably incurred by the mortgagee in taking steps under clause 19. In circumstances where the mortgagee may have been compelled to protect its interests by answering or responding to a challenge to or an adverse affect upon its interests by reason of a claim in proceedings to which it is joined (notwithstanding that the relief may be confined to orders sought by a third party against the mortgagor for transfer of the mortgagor's title subject to the mortgage), its expenses fall within the clause provided they are reasonable. 80 The applicants say that Perpetual Trustees can be distinguished because the clause in that case referred to "exercising rights" whereas clause 20 expressly uses the term "enforcing this mortgage" which, it is said, must be given a narrower construction and does not extend to responsive action by the mortgagee to protect its position. The applicants say that the clause should be construed narrowly as against Rams as the party adopting the clause as part of its mortgage. The principle that a clause ought to be construed contra proferentem is a last resort of construction only to be adopted in the case of real ambiguity: Andar Transport v Brambles (2004) 217 CLR 424 at 438 [29] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. In Liberty Funding Pty Ltd v SteeleSmith [2004] NSWSC 1100, Palmer J in considering the identical clause to clause 20 observed that the clause was in substance the same as the clause considered in Perpetual Trustees. At [21], Palmer J observed that: [E]nforcement of a mortgagee's rights … is not confined to the taking of steps to exercise a power of sale or other right conferred by the mortgage: it encompasses whatever is necessary to protect and preserve the mortgagee's rights when their validity is challenged or their exercise is sought to be prevented or impeded. 81 Since no ambiguity arises having regard to the proper construction of the clause in the light of Perpetual Trustees and Liberty Funding, there is no role for construing the clause against Rams on the basis of the principle of contra proferentem. 82 Accordingly, the costs incurred by Rams and ordered to be paid by Ms Ng constituted enforcement costs under clause 20 of the mortgage. 83 The final question is the basis upon which those costs ought to be paid. Under the clause, Rams is entitled to the reasonable expenses reasonably incurred in taking the relevant steps in connection with the proceedings. The applicants contend that the Court ought to exercise its discretion which, it is said, remains alive notwithstanding clause 20 of the mortgage, to limit Rams' costs to a class of costs other than solicitor and own client costs or indemnity costs. Effect ought to be given to clause 20 of the mortgage unless it is plainly against the public interest to do so: see ANZ Banking Group (NZ) Ltd v Gibson [1981] 2 NZLR 513 per Holland J at 525; ANZ Banking Group (NZ) v Gibson (Court of Appeal) [1986] 1 NZLR 556 per Richardson J and Casey J (Somers J dissenting), as to the principles to be applied; Abigroup Limited v Sandtara Pty Limited [2002] NSWCA 45 per Stein JA at [8] and [9], Giles JA agreeing at [26] and Young CJ (in Eq) at [36]; Citibank Savings Ltd v Nicholson & Ors; Citibank Savings Ltd v Pirrotta & Ors (Full Court, Supreme Court of South Australia) [1998] ANZ ConvR 442, per Williams J, Cox and Mullighan JJ agreeing; Commonwealth Bank of Australia v Aspenview Productions [2001] VSC 499 per McDonald J at [20] to [24]. 84 In Perpetual Trustees, Duggan J (Doyle CJ and Anderson J agreeing on the point) at [19] to [22] observed that while costs remain a discretionary matter, the discretion ought to be exercised to reflect a contractual right to costs where that right exists (citing the English Court of Appeal's decision in Gomba Holdings (UK) Ltd v Monories Finance Ltd [1993] Ch 171 at 194) and a mortgagee should be limited to party and party costs unless the mortgage contract "plainly and unambiguously" provides for taxation on some other basis (citing In re Shanahan (1941) 58 WN (NSW) 132 at 134; In re Adelphi Hotel (Brighton) Ltd [1953] 1 WLR 955 at 961; Elders Trustee & Executor Company Ltd v E G Reeves Pty Ltd (1988) 20 FCR 164). 85 Duggan J also observed at [22] that the effect of such clauses bestowing such rights on mortgagees will depend upon their interpretation in each case and they "will not be given effect so as to place mortgagors in a less favourable position than would otherwise be the case unless they are unambiguously expressed". The question is ultimately one of contractual construction and whether the expenses in the form of legal costs incurred in resisting an attack fall within the provision: Reading Entertainment Australia v Burstone Victoria [2005] VSC 137 per Whelan J at [22] and [23]. 86 In this case, clause 20 expressly provides for a right to request Ms Ng to pay Rams the reasonable expenses Rams has reasonably incurred in enforcing the mortgage (as construed in these reasons) consequent upon Ms Ng's default. Rams became entangled in litigation solely by reason of Ms Ng's conduct. Had Ms Ng truthfully answered the questions in the loan application form, Rams, on the evidence, would not have made the loan. Had Rams been told that Ms Ng's spouse had taken steps to effect a transfer of the property to her at an undervalue and in contravention of the Corporations Act, Rams, on the evidence, would never have made the loan. Ram then found itself a respondent in proceedings commenced by the liquidators and Riby (in liquidation) in which its title was challenged. It later found itself in proceedings at trial in respect of which decisions had to be made as to the affect upon Rams' interests should orders be made in relation to the property as sought by the liquidators. 87 If the costs Rams has incurred are reasonable costs reasonably incurred in these circumstances, why should Rams be out of pocket by reason, in part at least, of Ms Ng's dishonesty? The proper order is that Ms Ng is to pay Rams' reasonable costs of the proceedings reasonably incurred, on a solicitor and own client basis and those costs for the purposes of these proceedings will be declared to be costs falling within clause 20 of the mortgage as enforcement costs. I certify that the preceding eightyseven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.