10 There are two contending candidates for the date at which the mortgage debt became due. One is the mother's date of death. The sale by the plaintiff to an outside purchaser is not a candidate, since it succeeded the death. The transfer by the husband and the plaintiff to the plaintiff alone, however, preceded the death and is the other candidate. The question arises whether that transfer constituted "the sale of the mortgaged land" within cl 4.1 of the mortgage. Two questions arise as to the meaning of "sale" in this context.
11 The first question is whether the word "sale" refers to the transfer of the land, or to the pre-existing contract or arrangement under which the transfer was effected. In most contexts the "sale" of land is taken as referring to the date of contract rather than the date of completion or transfer. However, in the context of this document, the purpose of which appears on its face to be to ensure the return to the mother of the money lent by her for her to provide herself with other accommodation, it seems to me that, looked at objectively, what was in the contemplation of the parties was the time at which funds would become available from the transaction. I take "sale" in this context to refer to the transfer of the property rather than the entry into of an obligation to transfer it. Neither of the parties to these proceedings contended, or contended with any force, to the contrary.
12 The second question is whether what was in effect the transfer by the husband to the plaintiff of his half share in the property as joint tenant in consideration of the entry into and implementation of a binding property settlement under the Family Law Act 1975 (Cth) for a consideration which included no more than $30,000 in money, constituted a sale within the meaning of cl 4.1. Mr Kolomyjec, of counsel for the plaintiff, contended that it did. Miss Ottesen for the executor/defendant emphasised that the defendant was contesting the proceedings because of his view of his executorial duties in relation to an estate of which there are infant beneficiaries. Her primary contention was that there was no sale of the property within the meaning of cl 4.1 until the sale by the plaintiff alone to the outside purchaser, so that the date upon which the mortgage debt fell due was the date of the mother's death. Her secondary submission was that the transfer might be regarded as a sale, although this was not her preferred view as a matter of law.
13 There was debate during the hearing as to the extent to which the circumstances of the parties and the negotiations which occurred, leading up to the purchase of the property and the lending by the mother on mortgage for the purposes of that purchase, might be taken into account in the interpretation of the relevant clauses of the mortgage. A convenient starting point for the modern law in relation to these matters is in the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1383 - 1385 and Riordan Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995 - 996. The situation was authoritatively dealt with by the High Court of Australia in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 - 353 per Mason J (as he then was). A most useful and compendious statement of the law to date is contained in the judgment of Powell JA in the Court of Appeal in Darin Nominees Pty Ltd v Franklin's Self Serve Pty Ltd [1999] NSWCA 209 at [35]. Considerations outside the document may only be resorted to where there is some lack of clarity in the terms of the document itself. That requirement, in my view, is met in this case, because, as I have already indicated, there is uncertainty as to the meaning of "sale", both as to whether the reference is to completion of a pre-existing contract or arrangement, and as to whether only an arm's length sale of the entire interest on commercial terms will suffice, or whether such a transaction as a transfer in pursuance of a family law settlement may suffice. I should say in relation to the transfer that, although the transaction may be regarded in effect as a transfer of a half interest from husband to wife, both in form and in legal substance the transaction was a transfer of the whole of the fee simple in the property from two joint tenants to one of them alone. It is, therefore, clearly a transaction that deals with the whole of the property, but the question remains whether the transfer in the circumstances in which it came into existence is a "sale" within the meaning of cl 4.1. Insofar as the negotiations between the husband, the plaintiff and the mother which preceded the purchase of the property and the borrowing in respect of it on mortgage are in evidence, I have not taken the content of the negotiations into account in construing the mortgage. In my view, it is not permissible so to do upon the authorities as referred to above. However, there being a lack of clarity, I have examined "the matrix of facts", as Lord Wilberforce referred to it ([1971] 1 WLR at 1384), in which the transactions were made for the purpose of construing the instrument. It is clear from those facts, as set out in [2] above, that the purpose of the transaction that led to the mortgage was to provide accommodation for the mother and to make arrangements, if circumstances so changed that the availability of that accommodation was lost or endangered, for the mother to be able to recover her funds for the purpose of providing herself with accommodation elsewhere. This is one of the considerations that has led me to the conclusion that "sale" should in this document be regarded as referring to completion or transfer, rather than contract. Taking into account the words of cl 4.1 in the context of all the terms of the mortgage and bearing in mind the factual considerations to which I have referred, I am of the view that a broader rather than a narrower construction should be given to the word "sale" in cl 4.1. In my view, the transfer falls within the meaning of "sale" as used in that clause. Question (1) will be answered accordingly. It follows that the mortgage debt fell due on 25 March 1999.
Question (2) - Was the AHL valuation a determination of value for the purposes of cl 1.2 of the mortgage?
14 In relation to the relevant provision in cl 1.2 of the mortgage as to the determination of value, I should say at once that it is a provision of the mortgage which, in my view, is quite clear in its meaning on the face of the document. It refers to "the value of the mortgaged land as determined by a registered valuer appointed by the mortgagee" as being a factor in the determination of the amount of the mortgage debt when it fell due. It is quite clear to me that what is required is a valuation then or thereafter commissioned by the mortgagee at the mortgagor's expense and procured for the purpose of the clause. It seems to me that the appropriate value to be determined is the fair market value as at the relevant date. In making such a valuation it would certainly not fall for the valuer to bear in mind the different considerations which a valuer would properly bear in mind when valuing for the purposes of a prospective lender or mortgagee. Although Miss Ottesen pressed upon me the AHL valuation as operative for the purposes of cl 1.2 as being a valuation made close to the relevant time and establishing the market value of the property, in my view it is not a determination of value within cl 1.2. It was not obtained from a registered valuer appointed by the mortgagee, nor was it obtained for the purposes of cl 1.2 from a valuer aware that he or she was carrying out the exercise for the purposes of that clause. Question (2) must be answered accordingly.
15 I do not think it was put to me that the R&W valuation of $245,000 could qualify as a valuation for the purposes of cl 1.2. In any event, it equally clearly could not qualify. However, a different submission was put to me in relation to that valuation, to which I shall turn in considering the answer to Question (3).
Question (3) - Is the defendant in any way bound by any action on her behalf under the power of attorney?
16 Submissions were put to me by Mr Kolomyjec on behalf of the plaintiff, that the mother and her estate were in various ways bound by actions on her behalf under the power of attorney. The principal submission was to the effect that by the 1997 letter, whilst the R&W valuation did not qualify as a determination of value within the meaning of cl 1.2 of the mortgage, the husband must be taken to have bound the mother to that valuation. This involves the propositions that the husband must have had a discussion with his brother and sister as co-donees of the power of attorney and have been acting not only on his own behalf but with the concurrence of one or other of them to bind the mother to a valuation of $245,000 for the purposes of the transaction embodied in the varying order and carried out by the execution of the transfer in the succeeding year. On the evidence, in my view, no such conclusion can be drawn. There are at least two reasons why this is so. The husband did not purport to act in that letter, or in any other way shown upon the evidence, as his mother's attorney in anything that he said or did. Equally, whilst there is some reference to discussion with the co-donees of the power of attorney in the 1997 letter, there is certainly no indication in that letter, or anywhere else in the evidence, that either his brother or his sister joined with him in acting in this regard, or in any regard, under the power of attorney. The answer to Question (3), therefore, is that on the evidence no conclusion can be reached that the mother was, and the defendant is, in any way bound by anything done on behalf of the mother under the power of attorney.
17 Whilst it flows from what I have said that on the evidence there is not at present any determination of value for the purposes of cl 1.2 of the mortgage, there is nothing in that clause, or elsewhere in the mortgage, to limit the time at which or within which the mortgagee is entitled or required to appoint a registered valuer for the purposes of that clause. It seems to me, therefore, that there is no reason why her executor cannot remedy the matter by doing so now.
18 Short minutes of order should be brought in to give effect to my decisions stated in these reasons for judgment and to determine what further steps should be taken in the proceedings in consequence of the answers to the questions I have determined.
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