Reported Decision: (2007) NSW Conv R 56 - 195(2007) ANZ Conv R 566 New South Wales Court of Appeal CITATION: Sabah Yazgi v Permanent Custodians Limited [2007] NSWCA 240 HEARING DATE(S): 13 August 2007, 5 September 2007 JUDGMENT DATE: 12 September 2007 JUDGMENT OF: Beazley JA at 1; Ipp JA at 40; Tobias JA at 41 DECISION: See para [39]. CATCHWORDS: MORTGAGE – estate and interest of mortgagor and mortgagee – registered proprietors of land were joint tenants – registered mortgage document and housing loan contract forged by one joint tenant – registration of mortgage gave indefeasible title in respect of mortgaged interest - whether any moneys owing under the loan contract or registered mortgage were secured upon innocent party's interest in property - WORDS AND PHRASES – "means and includes" LEGISLATION CITED: Conveyancing Act 1919 (NSW) s 66G Real Property Act 1900 (NSW) s 42 Breskvar v Wall (1971) 126 CLR 376; [1971] HCA 70 Chandra v Perpetual Trustees Victoria Ltd & Ors [2007] NSWSC 694 Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1 Lillyman v Pinkerton (No 2) (1982) 71 FLR 135 Mayer v Coe [1968] 2 NSWR 747 CASES CITED: Perpetual Trustees Victoria Limited & Anor v Tsai (2004) 12 BPR 22,281; [2004] NSWSC 745 Printy v Provident Capital Ltd (2007) NSW ConvR 56-180; [2007] NSWSC 287 PT Ltd & Anor v Maradona Pty Ltd & Ors (1992) 25 NSWLR 643 Small v Tomassetti (2001) 12 BPR 22,253; [2001] NSWSC 1112 Travinto Nominees Pty Limited v Vlattas & Anor (1973) 129 CLR 1; [1973] HCA 14 Vero Insurance v Baycorp Advantage (2005) 23 ACLC 199; [2004] NSWCA 390 G Williams, "Joint Obligations" (1949), London, Butterworths & Co (Publishers) Ltd PARTIES: Sabah Yazgi (Appellant) Permanent Custodians Limited (Respondent) FILE NUMBER(S): CA 40232/07 COUNSEL: PM Lane; E Elbourne (Appellant) RG Forster SC; BJ Burke (Respondent) SOLICITORS: La Rosa Izzo & Co (Appellant) Hicksons (Respondent) LOWER COURT JURISDICTION: Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S): SC 11886/2004 LOWER COURT JUDICIAL OFFICER: Harrison AsJ LOWER COURT DATE OF DECISION: 30 March 2007 LOWER COURT MEDIUM NEUTRAL CITATION: Permanent Custodians v Yazgi & Anor [2007] NSWSC 279 - 17 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40232/07 BEAZLEY JA IPP JA TOBIAS JA 12 September 2007 Sabah Yazgi v Permanent Custodians Limited Headnote The appellant, Sabah Yazgi, was the registered proprietor, jointly with her husband, Yasin Yazgi, of property at 5 Myall Street, Punchbowl. On about 6 February 2004, a mortgage was registered over that property with the mortgage specifying Yasin Yazgi and Sabah Yazgi as the mortgagors and the respondent, Permanent Custodians Limited, as the mortgagee. Sabah Yazgi's signature was forged by Yasin Yazgi both on the mortgage and a housing loan contract that the mortgage was intended to secure. There was no dispute that the registration of the mortgage gave Permanent Custodians Limited an indefeasible title in respect of the mortgaged interests. There was also no dispute that Yasin Yazgi was liable for the indebtedness under the housing loan contract and that that indebtedness was secured by the mortgage over his interest in the property. The question raised on the appeal was whether any moneys owing under the housing loan contract or the mortgage were secured upon Sabah Yazgi's interest in the property. The answer to that question depended upon the construction of the mortgage and the housing loan contract. Held per BEAZLEY JA (IPP and TOBIAS JJA agreeing): (1) It was necessary to look at the terms of the particular mortgage to determine the scope of the estate or interest in the land in respect of which indefeasibility was claimed by the registration of that mortgage: [22] Travinto Nominees Pty Limited v Vlattas & Anor (1973) 129 CLR 1; [1973] HCA 14; PT Ltd & Anor v Maradona Pty Ltd & Ors (1992) 25 NSWLR 643; Small v Tomassetti (2001) 12 BPR 22,253; [2001] NSWSC 1112; Perpetual Trustees Victoria Limited & Anor v Tsai (2004) 12 BPR 22,281; [2004] NSWSC 745 (considered); Printy v Provident Capital Ltd (2007) NSW ConvR 56-180; [2007] NSWSC 287; Chandra v Perpetual Trustees Victoria Ltd & Ors [2007] NSWSC 694 (cited) (2) The effect and operation of the phrase " means and includes " within cl 6 of the schedule to the mortgage was that the clause provided that the items specified in cls 6(a)-(d) were the only items that constituted " Mortgage Debt " for the purposes of the mortgage: [31] Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1 (cited) (3) Even if the phrase " means and includes " properly construed incorporated the meaning of " Mortgage Debt " from the mortgage memorandum into the schedule to the mortgage, thereby enlarging the meaning of " Mortgage Debt ", it was apparent that the definition of " Mortgage Debt " in the memorandum was inconsistent with the schedule to the mortgage so that pursuant to cl 3 of the schedule, the terms of the mortgage applied: [32]-[35] (4) As a result, the total amount secured by the mortgage in respect of Sabah Yazgi's interest in the property was nil. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40232/07 BEAZLEY JA IPP JA TOBIAS JA 12 September 2007 Sabah Yazgi v Permanent Custodians Limited Judgment 1 BEAZLEY JA: The appellant, Sabah Yazgi, is the registered proprietor, jointly with her former husband, Yasin Yazgi, of property comprised in Certificate of Title Folio Identifier C/338681 (the property). On about 6 February 2004, a mortgage was registered over that property and allocated dealing number AA438750J (the mortgage), specifying Yasin Yazgi and Sabah Yazgi as the mortgagors and the respondent, Permanent Custodians Limited (Permanent Custodians), as the mortgagee. 2 Sabah Yazgi's signature on the mortgage was forged, as was her signature on a housing loan contract (the loan contract) that the mortgage was intended to secure. There is no dispute in the proceedings that Yasin Yazgi signed both the mortgage and the loan contract and that he is liable for the indebtedness under the loan contract. There is also no dispute that that indebtedness is secured by the mortgage over his interest in the property. The question raised on the appeal is whether any moneys owing under the loan contract or the mortgage are secured upon Sabah Yazgi's interest in the property. 3 The answer to this question depends upon the construction of the terms of the mortgage. The terms of the loan contract are also relevant. The mortgage 4 Pursuant to the terms of the mortgage, Yasin Yazgi and Sabah Yazgi mortgaged "… to the mortgagee all the mortgagor's estate and interest in the land specified above, and covenant[ed] with the mortgagee that the provisions set out in annexure /memorandum No. 2584554 filed at Land and Property Information New South Wales are incorporated in this mortgage." Although there was a blank space after the word " annexure ", it was common ground between the parties that the reference to the annexure was a reference to the schedule to the mortgage (the schedule). 5 The schedule provided, as did the opening clause of the mortgage itself, that the provisions of memorandum No 2584554 (the memorandum) were incorporated in the mortgage: cl 1. Clause 2 provided an acknowledgment that the mortgage had been given for valuable consideration. The consideration was not specified. The terms of cls 3, 4, 5 and 6 are central to the question of construction which is raised for determination on this appeal and need to be considered in full. They provided: "3. If any of the terms of this schedule is inconsistent with the memorandum, this schedule prevails. 4. 'The Borrower' means Yasin Yazgi and Sabah Yazgi. 5. 'Housing Loan Contract' means the Residential Housing Loan Contract dated the [blank] day of [blank] 2003 between the Borrower and the Mortgagee. 6. 'Mortgage Debt' means and includes: (a) all moneys actually or contingently owing or payable from time to time under the Housing Loan Contract by the Borrower to the Mortgagee. (b) accrued interest on any such moneys; and (c) all payments made by or on behalf of the Mortgagee and all costs, charges and expenses (including costs as between solicitor and own client) incurred by or on account of the Mortgagee, in the exercise or execution or attempted exercise or execution of all or any of the powers, authorities and discretions conferred under, pursuant to or exercisable by virtue of this Mortgage or the Housing Loan Contract; and (d) all other costs, charges and expenses which the Mortgagee may incur or become liable for or in connection with the Housing Loan Contract or this Mortgage." 6 The memorandum provided a series of definitions in cl 1.1 for words in the mortgage with special meanings. Those definitions included the following: " 'Mortgage Debt' means all money which any one or more of you: (a) owe us now; (b) owe us at any time in the future; or (c) may come to owe us if a particular event occurs or a particular circumstance comes to exist, in each case, under this Mortgage or any Secured Agreement. … 'Secured Agreement' means any agreement which you and we agree in writing is a Secured Agreement. … 'you' means the Mortgagor under this Mortgage. If there is more than one person specified as the Mortgagor, 'you' means those persons separately and all of them as a group . 'Your' and similar parts of speech have corresponding meanings." (Emphases added) The loan contract 7 The loan contract was contained in a document stating that an offer of a loan contract was being made "… on the terms and conditions set out in this Loan Agreement and the additional terms and conditions contained in the document titled 'Terms and Conditions' …" Clause 4 of the loan contract specified the " Borrower(s) " as " Yasin Yazgi and Sabah Yazgi ". 8 The Terms and Conditions of the loan contract contained an interpretation clause of 'Words with Special Meanings': cl 1.1; and a 'General Interpretation' clause: cl 1.2. Clause 1.2(a) provided that in the contract, "the singular includes the plural and vice versa". Other definitions were found in the clauses that followed. Relevantly, cl 2, which bore the heading 'MORTGAGE', provided that the loan contract was a "Secured Agreement for the purposes of the Mortgage …". 9 There was no dispute that the consequence of Sabah Yazgi's signature having been forged on the loan contract was that cl 5 of the mortgage did not refer to the loan contract, because Sabah Yazgi was not legally a party to that contract. Issue on the appeal: proper construction of cl 6 of the schedule 10 Sabah Yazgi alleged that the reference in cl 4 of the schedule to 'the Borrower' as meaning Yasin Yazgi and Sabah Yazgi was a reference to them as joint borrowers: see G Williams, "Joint Obligations" (1949) London, Butterworths & Co (Publishers) Ltd at 35, § 2, where the author states: "… a promise is joint when a single promise is made by two or more persons without words indicating that each is to be bound individually as well as jointly. If there are such words, the contract is joint and several. The presumption is that a contract made by two or more persons is joint, express words being necessary to make it joint and several." See also Vero Insurance v Baycorp Advantage (2005) 23 ACLC 199; [2004] NSWCA 390. Permanent Custodians did not contend otherwise. 11 Having regard to the foregoing, the question for determination on the appeal became: what was secured by the mortgage? The determination of that question depended upon what was encompassed in and by cl 6 of the schedule. Permanent Custodians' case was that Sabah Yazgi's interest in the property was secured by the mortgage, having regard to the definition of "Mortgage Debt" in the memorandum, which was to be read into cl 6 of the schedule. Sabah Yazgi's case was that the extended meaning of "Mortgage Debt" in the memorandum was not incorporated into cl 6 and that cl 6 had to be construed as relating only to items (a)-(d) that were specified in the clause. 12 As the matter was finally argued on appeal, there was common ground between the parties in respect of certain basic principles (additional to those already mentioned) and no dispute as to the operation of certain aspects of cl 6. It will be convenient, therefore, in the first instance, to briefly state those matters about which there was no dispute. 13 It was common ground that because of the forgery, the personal covenant contained in the mortgage was not enforceable: see Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 224 per Powell JA (Meagher and Handley JJA agreeing); Perpetual Trustees Victoria Limited & Anor v Tsai (2004) 12 BPR 22,281; [2004] NSWSC 745 at [16]. 14 Both parties also recognised that the registration of the mortgage gave Permanent Custodians an indefeasible title in respect of the mortgaged interests, notwithstanding that Sabah Yazgi's signature was forged: Breskvar v Wall (1971) 126 CLR 376; [1971] HCA 70; Mayer v Coe [1968] 2 NSWR 747. 15 Further, and importantly for the resolution of the issue on the appeal, it was accepted that the effect of registration does not give to the registered title holder an indefeasible title in general terms. Rather, it is necessary to ascertain the extent of the registered title holder's interest. 16 It was at that point that the parties adopted different positions. Sabah Yazgi said that Permanent Custodians' indefeasible title created by its registered mortgage was limited to Yasin Yazgi's interest in the property and did not extend to her interest in the property. Permanent Custodians contended that their indefeasible title extended to the whole of the property. 17 The need to identify the extent of indefeasibility conferred by the registration of an instrument was examined by the High Court in Travinto Nominees Pty Limited v Vlattas & Anor (1973) 129 CLR 1; [1973] HCA 14. There, the Court was concerned with the extent of the indefeasibility obtained on registration of a lease. In particular, the question was whether the indefeasibility obtained on registration of the lease extended to the option for renewal of the lease. 18 Barwick CJ (McTiernan and Stephen JJ agreeing on this point) stated at 17: "Though as a term 'indefeasibility' is convenient enough, it must always be remembered that it is the title to and possession of the land or of the interest in the land of which there is a registered proprietor which is rendered secure by the registration. In the case of a leasehold it may be and frequently is the case that the extent of the leasehold interest is not merely described by reference to a term of years but must of necessity be determined by reference to the operation and effect of those terms and conditions of the lease which affect or qualify the interest in the land which the lease purports to create … registration of the memorandum of lease does not ensure the validity of every term and condition of the lease or indeed of the enforceability of every covenant it contains. In my opinion, it must depend on the nature of the covenant and its relation to the limitation of the interest created in the land by the memorandum of lease itself." His Honour held that the option to renew did not mark out the extent of the term created by the lease, but rather was merely an agreement to grant a new lease which was contingent upon the exercise of the option and, according to its terms, the observance of the covenants of the lease. 19 The extent to which a registered mortgage gave to the mortgagee an indefeasible interest in property was considered in PT Ltd & Anor v Maradona Pty Ltd & Ors (1992) 25 NSWLR 643 where Giles J (as his Honour then was) said at 679: "That which is attained by registration is, in the words of s 42 [of the Real Property Act 1900 (NSW)], an estate or interest in the land. Registration does not validate all the terms and conditions of the instrument which is registered. It validates those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor." (Emphasis added) 20 In that case a guarantee was held to be void because of the lack of capacity of the purported guarantor. As it was not apparent on the face of the registered mortgage what the extent of the estate or interest of the mortgagee was, it was necessary to have reference to other documents that were not registered. Giles J held that whilst the mortgagee had an indefeasible title conferred by the mortgage, as the guarantee did not create any obligation on the part of the guarantor, the mortgage in fact secured nothing. 21 In Small v Tomassetti (2001) 12 BPR 22,253; [2001] NSWSC 1112 Campbell J (as his Honour then was) observed at [9]: "Notwithstanding that registration confers indefeasibility on a mortgagee, there is still a question 'indefeasibility for what?'" 22 At [12], his Honour observed that PT Ltd v Maradona Pty Ltd illustrates that it is necessary to look at the terms of the particular mortgage subject of the litigation to determine the scope of the estate or interest in the land in respect of which indefeasibility was claimed by the registration of that mortgage: see also Printy v Provident Capital Ltd (2007) NSW ConvR 56-180; [2007] NSWSC 287 per Studdert J, especially at [14]; Chandra v Perpetual Trustees Victoria Ltd & Ors [2007] NSWSC 694. 23 In Perpetual Trustees Victoria Limited & Anor v Tsai, Young CJ in Eq was dealing with an appeal from a Master who had entered summary judgment for a mortgagee against a mortgagor. In the course of determining whether summary judgment should have been entered, his Honour reviewed the authorities dealing with the effect of a forged mortgage. His Honour at [13] referred first to the undoubted principle that by virtue of s 42 of the Real Property Act 1900 (NSW) a forged mortgage, when registered without fraud on the part of the mortgagee, conferred an indefeasible title on the mortgagee in respect of the interest in land described in the mortgage. 24 His Honour then dealt with the question of the extent of that indefeasibility, adopting the question posed by Campbell J in Small v Tomassetti: "indefeasibility for what?" Young CJ in Eq pointed out that the answer to that question depended upon the wording of the covenants in the particular mortgage. He said that under the "old fashioned form of mortgage" there was a statement of the sum that had been lent and an acknowledgment that the moneys had been so lent. Thus, when those matters were stated in the body of the mortgage document, the production of the mortgage document itself constituted prima facie evidence of the existence of the debt. However, where there was no statement of the amount lent in the mortgage, proof of the indebtedness and that the indebtedness was secured by the mortgage had to be established in some other way. 25 Senior counsel for Permanent Custodians conceded that, having regard to the above principles, the "Mortgage Debt" referred to in cls 6(a) and (b) did not operate to secure to it an indefeasible title over Sabah Yazgi's interest in the property. It submitted, however, that it had an indefeasible title in respect of the whole of the mortgage debt as against the whole of the property, including Sabah Yazgi's interest, by virtue of the definition of "Mortgage Debt" contained within the memorandum. (This submission did not (and was not intended) to engage with the operation of cls 6(c) and (d)). 26 The argument so advanced was simply this: the effect of the definition of "Mortgage Debt" in the memorandum was that the mortgage secured any moneys presently owing, or owing in the future, or contingently owing by the mortgagors, either jointly or severally, under the mortgage or any "Secured Agreement". The loan contract was, as already explained, a "Secured Agreement". It followed on this argument that the "Mortgage Debt" that was secured by the mortgage included Yasin Yazgi's several liability under the loan contract, so that the "Mortgage Debt" extended to the whole of the amount of the loan. It was then said that the mortgage secured Yasin Yazgi's indebtedness over the whole of the property. 27 The correctness of this submission depends upon the meaning of the phrase "means and includes" in cl 6 (emphasis added). It was submitted that the word "includes" extended the meaning of "Mortgage Debt" in cl 6 beyond the terms specified, relevantly, in cls 6(a) and (b), so as to incorporate indebtedness that fell within the meaning of "Mortgage Debt" in the memorandum. 28 Counsel for Sabah Yazgi contended that there were two answers to this argument. First, she submitted that the word "includes" did not enlarge the category of debts that were encompassed by the phrase "Mortgage Debt" in cl 6. Secondly, she submitted that, in any event, the definition of "Mortgage Debt" in the memorandum was inconsistent with the definition of "Mortgage Debt" in cls 6(a) and (b), so that, pursuant to cl 3 of the schedule to the mortgage, the terms of the schedule prevailed. 29 The meaning of the phrase "means and includes" was considered by Gummow J (as his Honour then was) in Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1 at 21 in the following terms: "As a general proposition, the use of the expression 'means and includes' indicates an exhaustive explanation of the meaning which for the purposes of the statute must be attached to the term the subject of the definition, and conveys both the idea of enlargement and exclusion: Dilworth v Commissioner of Stamps [1899] AC 99 at 105-6; YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395 at 398-9, 401-2, 405." 30 His Honour added that in a given context the use of the word "includes" may not extend the ordinary meaning of the defined term so much as to specify that particular matters will fall within the definition that might otherwise have been in doubt: see Lillyman v Pinkerton (No 2) (1982) 71 FLR 135 at 138. 31 I am of the opinion that the effect and operation of the phrase "means and includes" in cl 6 is that the clause provides that the items specified in cls 6(a)-(d) are the items that constitute the "Mortgage Debt" for the purposes of the mortgage. The items specified in (a) and (b), that is, the moneys owing under the loan contract and interest thereon would, as a matter of normal parlance, fall within the ordinary meaning of "Mortgage Debt". However, cls 6(c) and (d) include other items, such as costs involved in the recovery process. Whilst the matters included in 6(c) and (d) are typically recoverable under a mortgage, I am of the opinion that they would not ordinarily fall within the meaning of "Mortgage Debt" unless that was specifically stated, as it is in cl 6. The effect and operation of the word "includes" is to enlarge the concept of "Mortgage Debt" as ordinarily understood so as to bring within its operation not only the matters specified in cls 6(a) and (b), which typically answer the description of "Mortgage Debt", but also cls 6(c) and (d), which do not. 32 However, even if the phrase "means and includes" in the schedule, properly construed, incorporates the meaning of "Mortgage Debt" as contained within the memorandum, the question still arises as to whether the term "Mortgage Debt" in the memorandum is inconsistent with cl 6, so that, pursuant to cl 3, the terms of the schedule prevail. It is thus necessary to return to the meaning of "Mortgage Debt" in cl 6(a) of the schedule and the definition in the memorandum. 33 The "Mortgage Debt" referred to in the schedule was a joint borrowing by Yasin Yazgi and Sabah Yazgi under the loan contract. The interest on that debt would likewise give rise to a joint indebtedness. By contrast, the "Mortgage Debt" specified in the memorandum refers both to a joint and several borrowing, either under the mortgage, or under any "Secured Agreement". It was common ground that there were no moneys owed by Sabah Yazgi under cls 6(a) and (b) of the mortgage. As there is no specification within the mortgage document of any amount owed under the mortgage, it is necessary to refer to the memorandum to ascertain what indebtedness is secured: see Perpetual Trustees Victoria Limited & Anor v Tsai. 34 Under the memorandum, "Mortgage Debt" included moneys owing, jointly or separately, under any "Secured Agreement". The only "Secured Agreement" in this case is the loan contract. Senior counsel for Permanent Custodians submitted that in accordance with the terms of the memorandum, there was a joint and separate liability of Yasin Yazgi and Sabah Yazgi under the loan contract. (I pause only to observe that the reference to "separate liability" is a modern uptake of the traditional concept of "several liability".) 35 However, as under the terms of the schedule the liability of the parties under the loan contract was joint, a borrowing under the same loan contract which is said to be joint and several by virtue of the terms of the memorandum, must give rise to an inconsistency. Senior counsel for Permanent Custodians submitted that the inconsistency did not operate because cl 3 of the schedule was intended to operate upon the specific terms of the clauses in the respective documents, whereas the analysis just undertaken had the effect of looking to the outcome or the operation of the individual clauses. In my opinion, that distinction is a false one – the terms of the respective clauses give rise to their respective operations – but, in any event, once it is apparent that the "Secured Agreement" referred to in the definition of "Mortgage Debt" in the memorandum is the loan contract, the inconsistency is apparent on the face of the documents. 36 It follows that the Orders made by Harrison AsJ, insofar as they related to Sabah Yazgi's interest in the property, should be set aside. 37 In its oral argument on the appeal Permanent Custodians submitted that regardless of whether the term "Mortgage Debt" in the schedule had the same width of meaning as that term had in the memorandum, the "Mortgage Debt" in the schedule also included the items specified in cls 6(c) and (d) and that any moneys that fell within the reach of those clauses was secured by Sabah Yazgi's interest in the property. Senior counsel for Permanent Custodians informed the Court that it claimed that it had incurred costs and other expenses in an amount of approximately $270,000 that fell within the ambit of those clauses. There was no evidence as to the nature of the expenditure or how that amount was calculated. Permanent Custodians conceded that this claim had not been made at trial. It was seemingly withdrawn by senior counsel for Permanent Custodians in oral argument on the appeal and was expressly withdrawn at a further mention of this matter on 5 September 2007. Orders that should be made 38 The parties agree that if the appeal succeeds, trustees for sale should be appointed. Sabah Yazgi has also agreed with Permanent Custodians that the amount of $54,562.15 plus interest should be deducted from her share of the proceeds of sale. The amount of $54,562.15 refers to one half of the mortgage debt that had been owed to the previous mortgagee, who had been paid out by Permanent Custodians as part of the loan and mortgage transaction. It is noted that it has not been established that Sabah Yazgi is legally liable to pay that amount. The parties have agreed that simple interest is to be computed on the sum of $54,562.15 from 6 February 2004. This has been agreed between the parties in the sum of $14,516.10 to 5 September 2007, and to be calculated thereafter at the rate of 8.32 per cent per annum. 39 Accordingly, I propose the following Orders: 1. The appeal be allowed; 2. The Orders made by Harrison AsJ on 30 March 2007 and 1 August 2007 be set aside; 3. Declare that in respect of the interest of Sabah Yazgi in the land described in Folio Identifier C/338681 and located at 5 Myall Street, Punchbowl, New South Wales 2196, the total amount secured by registered Mortgage AA438750J is nil; 4. Declare that Sabah Yazgi is entitled to a discharge of that mortgage insofar as it affects her interest in the land described in Folio Identifier C/338681 and located at 5 Myall Street, Punchbowl, New South Wales 2196; 5. Order that Permanent Custodians Limited execute a discharge of the Mortgage AA438750J insofar as it affects the interest of Sabah Yazgi in the land described in Folio Identifier C/338681 and located at 5 Myall Street, Punchbowl, New South Wales 2196, and do all things necessary to register the discharge of the mortgage; 6. Declare that registered Mortgage AA438750J has full force and effect as against the interest of Yasin Yazgi in the land described in Folio Identifier C/338681 and located at 5 Myall Street, Punchbowl, New South Wales 2196, and that further interest, charges and costs will accrue and be payable under that mortgage by Yasin Yazgi alone; 7. Order that there be judgment for Permanent Custodians Limited against Yasin Yazgi in an amount to be assessed; 8. Declare that Permanent Custodians Limited is entitled to an order pursuant to s 66G of the Conveyancing Act 1919 (NSW) in respect of the appointment of trustees for sale of the land at 5 Myall St, Punchbowl, New South Wales 2196; 9. Order that the matter be remitted to Harrison AsJ for the appointment of trustees for sale and for the assessment of the amount of the judgment debt as against Yasin Yazgi; 10. Direct that Permanent Custodians Limited take all such steps as may be necessary for the appointment of trustees for sale as expeditiously as possible; 11. Order that the net proceeds of sale of the land comprised in Folio Identifier C/338681 known as 5 Myall Street, Punchbowl, New South Wales 2196 be distributed as to half thereof to Sabah Yazgi and the balance thereof to Permanent Custodians Limited, but note the agreement between the parties that an amount of $54,562.15 plus interest is to be deducted from Sabah Yazgi's share and paid to Permanent Custodians Limited in accordance with the agreement of the parties referred to in [38] of the judgment; 12. Order that Permanent Custodians Limited pay Sabah Yazgi's costs of the appeal and to have a certificate under the Suitors' Fund Act 1951 (NSW) if so entitled; 13. Costs of the trial are reserved; 14. Direct Permanent Custodians Limited to file written submissions in respect of the costs of the trial strictly within seven days of today's date. Direct Sabah Yazgi to file any submissions in response within seven days thereafter. 40 IPP JA: I agree with Beazley JA. 41 TOBIAS JA: I agree with Beazley JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.