This Act applies to an action on a cause of action founded on a mortgage registered under the Real Property Act 1900 to recover from any person any debt damages or other money payable under the mortgage, but otherwise, except to the extent that this Act is taken into consideration for the purposes of a possessory application under Part 6A of that Act, this Act does not affect the right title or remedies under a mortgage so registered of a registered proprietor under that Act of the mortgage or of the mortgaged land.
88 Mr Warren's point is that the Limitation Act "does not affect the right title or remedies under a mortgage so registered of a registered proprietor under that Act of the mortgage or of the mortgaged land."
89 A registered mortgage may create a contractual entitlement of the mortgagee to possession against the mortgagor to which the general provisions of the Limitation Act would apply. But a mortgagee is also entitled to remedies conferred by the Real Property Act 1900 (NSW) itself and these remedies are preserved by the words of the Limitation Act s 40: see Gleeson v Gleeson [2002] NSWSC 418 at [38] and [39] per Bryson J. Such Real Property Act remedies include the power to "sell the land mortgaged or charged" and to apply the proceeds of such sale "in payment of the moneys which may then be due or owing to the mortgagee": Real Property Act s 58(1) and (3). Real Property Act s 60(c) confers power to bring proceedings for possession. "Upon default in payment of the principal sum or any part thereof, or any interest…". Upon default a mortgagee may also apply to the Registrar General for a foreclosure order: Real Property Act s 61.
90 The combined effect of Limitation Act s 40 on the operation of Limitation Act Part 2, Division 4 and Real Property Act Part 7, Division 3 is that any claims to recover debt or damages or other money under the mortgage instrument itself, being claims to which the opening words of Limitation Act s 40 applies, are barred in respect of principal after twelve years by Limitation Act s 42 (1)(a) and in respect of interest after six years by Limitation Act s 43 (1)(a). But the mortgagee can still exercise the rights conferred by the Real Property Act "without limitation as to time" Gleeson v Gleeson [2002] NSWSC 418 at [39] per Bryson J. Thus, here Mr Graziano Golotta is entitled to rely upon his remedies under Real Property Act s 58 and s 60.
91 Mr Warren further submits that the Verducis' claim for discharge of the mortgage is a claim in the nature of a redemption action and that the price of the grant of equitable relief on such an action is that the mortgagor must do equity by paying to the mortgagee all areas of interest from the date of the mortgage not merely the interest due and owing within the applicable limitation period: Commonwealth of Australia v Mewett (1997) 191 CLR 471 per Gummow and Kirby JJ at 535.
92 In response to Mr Warren's submission Ms Peden submits that the defect in Mr Warren's argument is that as at 17 January 2008 when the limitation period for enforcing the loan and any right to possession under the unregistered mortgage expired, the mortgage was unregistered and did not have the benefit of the Real Property Act and the causes of action under the unregistered instrument were extinguished then and were not revived by subsequent registration. She cites Butt on Land Law:
"Professor Peter Butt in Land Law , 6 th ed, 2010, explains at [18 85.4]: "Where the mortgage is over Torrens title land and is unregistered, … the expiry of the 12-year limitation period for payment of outstanding principal extinguishes the mortgagee's interest in the land: Limitation Act 1969 (NSW), s63,65."
93 Ms Peden submits that as there was nothing that could be secured by a mortgage and that therefore the situation is analogous to Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745 at [21] per Young CJ in Eq and Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 per Young CJ in Eq at [309] - [317].
94 In my opinion Mr Warren's final answer to Mr Peden's argument is decisive on this issue. The form of this mortgage was unlike the form of "all monies" clauses in Vella and Tsai. It did itself specify the secured sum and the interest payable. This is the instrument that was registered. In a system of "title by registration", by registration it confers title to the estate specified within it: see Breskvar v Wall (1971) 126 CLR 376 at 381.
95 In a system of title by registration even a forged mortgage that specifies the secured loan is an effective security for that sum, notwithstanding that the mortgage was forged and the money never received: Small v Tomassetti [2001] NSWSC 1112 and Frazer v Walker [1967] 1 AC 569. Even if the mortgagee's causes of action on the subject mortgage were extinguished at the time of registration it still creates a title in its terms. Once registration is achieved, as it was, Limitation Act s 40 has the effect that the Limitation Act "does not affect the right title or remedies under the mortgage so registered". Mr Graziano Golotta is entitled to exercise his rights under Real Property Act ss 58 and 60.
The Amount Outstanding
96 Calculation of the amount outstanding in this matter requires determination of two matters that were in close contest between the parties. The first matter is whether Mr Graziano Golotta made any further advances to Mr and Mrs Verduci after the principal advance in February 1988. The second matter is whether Mr and Mrs Verduci made any repayments of their obligations in excess of those recorded by Mr Ross Golotta in his loan account ledger.
Further Advances
97 I accept Mr Golotta's evidence that there were further advances to Mr and Mrs Verduci under the loan. I reach this conclusion for several reasons.
98 Although Mr Verduci says that he did not receive any further advances and was quite contemptuous of the amounts of money involved, his credibility about matters of detail is so heavily impaired by his suspicious outlook that I am not prepared to accept his denial as correct.
99 Second, although the amounts of the further advances were small, the inherent probabilities support their being made. Mr and Mrs Verduci had a history of coming back after an initial advance and seeking smaller subsequent advances. That after all, is what they did with the Pizzutos.
100 Third, a documentary obstacle to acceptance of Mr Verduci's evidence that he did not receive further advances are the three documents recording those advances that he signed with Mr Ross Golotta dated respectively 6 February 1995, 3 July 1995 and 16 January 1996. Mr Verduci did sign the receipts for those three supplementary advances. I accept Mr Ross Golotta's evidence that the handwriting on the receipts is his own. It is difficult to see how the documents could have come into their existence in their present form without Mr Ross Golotta meeting Mr Peter Verduci to agree upon making further advances. The documents are not shams. Indeed, the third receipt, containing as it does the term in relation to the capitalisation of interest, is just the kind of subject that is likely to have been discussed between borrower and lender when the borrower was returning for a third small advance in circumstances when interest had not been paid for a long time.
The Amounts Paid off the Loan
101 There are two related issues in this topic: what payments were made off the outstanding loan amount and were the payments made on interest or capital account?
102 Mr Verduci's evidence was that he had repaid more than Mr Ross Golotta's ledger documents recorded. Mr Verduci's recollection though was poor and he was not able to identify any precise amount paid on any particular occasion. On the other hand, Mr Ross Golotta's ledger was not well kept. The evidence was unsatisfactory on both sides but it can be resolved.
103 I do not accept that Mr and Mrs Verduci made any more payments than are recorded in Mr Ross Golotta's ledger. Mr Verduci's evidence is insufficiently reliable about such matters of detail for me to infer in his favour that any amount was paid other than what is objectively demonstrated to have been paid through Mr Ross Golotta's ledger.