Supreme Court New South Wales Medium Neutral Citation: Dixon & ors v Barton & ors [2011] NSWSC 1525 Hearing dates: 17 November 2011 Decision date: 12 December 2011 Jurisdiction: Equity Division Before: Ward J Decision: First defendant obliged to re-execute mortgages discharged by mistake of plaintiffs' solicitor. Orders made for restoration of plaintiffs' position as holders of registered mortgage security vis a vis second to fourth defendants as holders of unregistered equitable mortgages. Catchwords: TORRENS SYSTEM - indefeasibility of title - mortgages - discharge in approved form - registration of discharge by mistake of mortgagees' solicitor - whether mistaken discharge falls within personal equity exception to indefeasibility of title - consideration of unconscionability - whether mortgagor has been unjustly enriched by mistaken discharge and restitution should be granted to mortgagees - HELD - mortgages mistakenly discharged in circumstances giving rise to personal equity exception to indefeasibility of title - mortgagees entitled to be restored to their position prior to discharge - unconscionable for mortgagor to benefit from mistaken discharge - CONTRACT - construction - whether terms of deed entered into between mortgagees and mortgagor released mortgagees from prior security interests and any covenants contained in mortgage agreements - HELD - terms of deed did not operate to release mortgagor from covenants contained in mortgage agreements - REAL PROPERTY - whether, if deed operates to release prior security interests, equitable mortgage arises due to permitted retention of certificate of title by mortgagees - HELD - had deed operated to release prior security interests, equitable mortgage arose by reason of implicit acknowledgement that certificate of title and discharge of mortgage not to be delivered until payment of debt under terms of deed - SUBROGATION - if deed did operate to release earlier debts and security interests, whether mortgagees can be subrogated to the rights of first and second mortgagees under discharged mortgages due to notional payment out of earlier debt - HELD - no entitlement to subrogation - LIENS - whether mortgagees have possessory lien over certificate of title - HELD - no possessory lien in circumstances where equitable mortgage by retention of certificate of title established - SPECIFIC PERFORMANCE - whether mortgagor should be obliged specifically to perform its payment obligations under deed - HELD - specific performance not appropriate as damages an adequate remedy Legislation Cited: Contracts Review Act 1980 (NSW) Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth) Duties Act 1997 (NSW) Farm Debt Mediation Act 1994 (NSW) Real Property Act 1900 (NSW) Cases Cited: Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 Bank of New South Wales v O'Connor (1889) 14 AC 273 Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221; [1998] 1 All ER 737 Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 Barton v Atlantic 3 Financial (Aust) Pty Limited (deregistered) & Anor [2010] QCA 223 Barton v Atlantic 3 Financial (Aust) Pty Ltd (in liq) [2004] QSC 376; (2004) 212 ALR 348 Bellissimo v JCL Investments Pty Limited [2009] NSWSC 1260 Black v S Freedman & Company [1910] HCA 58; (1910) 12 CLR 105 Boral Recycling Pty Ltd v Wake [2009] NSWSC 712 Boscawen and others v Bajwa and another; Abbey National plc v Boscawen and others [1995] 4 All ER 769 Brunker v Perpetual Trustee Company Ltd (1937) 57 CLR 555 Burston Finance Ltd v Speirway Ltd [1974] 3 All ER 735 CH Giles & Company Ltd v Morris [1972] 1 All ER 960; 1 WLR 307 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072; (2003) 12 BPR 22,257 Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291 Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550; 141 ALR 667 Clark v Raymor (Brisbane) Pty Ltd [1982] Qd R 790 Cochrane v Cochrane (1985) 3 NSWLR 403 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 Cowper v Green (1841) 7 M & W 633; 151 ER 920 Dashwood v Dashwood (1927) 71 Sol Jo 911 Diamond Hill Mining Pty Limited v Huang Jin Mining Pty Limited [2011] VSC 288; (2011) 84 ACSR 616 Double Bay Newspapers Pty Limited v AW Holdings Pty Limited (1996) 42 NSWLR 409 Duke Finance Ltd (in liq) v Commonwealth Bank of Australia (1990) 22 NSWLR 236 Elder's Trustee and Executor Company Limited v Bagot's Executor and Trustee Company Limited [1964] SASR 306 Elderly Citizens Homes of South Australia Inc v Balnaves (1998) 72 SASR 210 Ex parte Langston (1810) 17 Ves 227; 34 ER 88 Farah Constructions Pty Limited v Say-Dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89 FNCB-Waltons Finance Limited v Crest Realty Pty Limited (1977) 10 NSWLR 621 GE Commercial Corporation (Australia) Pty Limited v L&B Enterprises Pty Limited [2009] NSWSC 770 Ghana Commercial Bank v Chandiram [1960] AC 732 Grundy v Ley [1984] 2 NSWLR 467 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 Hammonds v Barclay (1802) 2 East 227 Heid v Reliance Finance Corporation Pty Limited [1983] HCA 30; (1983) 154 CLR 326 Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 76 NSWLR 230 Hewett v Court [1983] HCA 7; (1983) 149 CLR 639 Lapin v Abigail (1930) 44 CLR 166 Latec Investments Ltd v Hotel Terrigal Pty Limited (in liq) (1965) 113 CLR 265 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548; [1992] 4 All ER 512 Majeau Carrying Company Pty Ltd v Coastal Rutile Ltd (1973) 129 CLR 48 Mercantile Credits Ltd v Jarden Morgan Australia Ltd [1991] 1 Qd R 407 Minister for Education and Training v Canham [2004] NSWSC 274; (2004) NSW ConvR 56-080 Moffett v Dillon [1999] 2 VR 480 MPS Constructions Pty Ltd (in liq) v Rural Bank of New South Wales (1980) 4 ACLR 835 Nathanial Kelburn Dunbar Barton v Atlantic 3 Financial (Australia) Pty Limited & ors (unreported 28 October 2009) Nearhaze Pty Ltd v The Official Trustee [1999] NSWSC 959 Paul v Speirway Ltd [1976] 2 All ER 587 PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615 Performance Capital Mortgage Pty Ltd v Motive Finance & Leasing Pty Limited [2010] NSWSC 429 Peters v Lithgow Forge Pty Limited & Ors [2010] NSWSC 283 Pratt v Vizard (1833) 5 B & Ad 808; 110 ER 989 Protean Enterprises (Newmarket) Pty Ltd v Randall [1975] VR 327 Queensland Premier Mines Pty Ltd v French [2007] HCA 53; (2007) 235 CLR 81 Re St George Bank - A Division of Westpac Banking Corporation [2011] NSWSC 730 Registrar General v Gill (unreported, NSWCA, 16 August 1994) Saffron Sun Pty Ltd v Perma-Fit Finance Pty Ltd (in liq) [2005] NSWSC 1317; (2005) 65 NSWLR 603 Scallan v Registrar-General (1988) 12 NSWLR 514 Schultz v Corwill Properties Pty Ltd (1969) 90 WN (NSW) 529 Shawyer v Amberday Pty Limited (In Liq) [2001] NSWSC 399 Shiloh Spinners Ltd v Harding [1973] AC 691 State Bank of New South Wales v Berowra Waters Holdings Pty Limited & Ors (1986) 4 NSWLR 398 State Bank of New South Wales v Geeport Developments Ltd (1991) 5 BPR 11,947 State Bank of South Australia v Rothschild Australia Ltd (1990) 8 ACLC 925 Stein v Blake [1996] AC 243; [1995] 2 All ER 961 Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 Swiss Bank Corporation v Lloyds Bank Limited & Ors [1982] AC 584 Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422 Tresize v Bilato Nominees Pty Ltd & Northern Gold NL (1986) 83 FLR 44 Turner v Bladin (1951) 82 CLR 463 Tutt v Doyle (1997) 42 NSWLR 10 UTC Ltd (in liq) v NZI Securities Australia Ltd (1991) 4 WAR 349 Re Wallis & Simmonds (Builders) Ltd [1974] 1 All ER 561; [1974] 1 WLR 391 Webster v Southwark London Borough Council [1983] QB 698; 2 WLR 217 Whiteley v Delaney [1914] AC 132 Wilkie v Gordian Runoff Limited [2005] HCA 17; (2005) 221 CLR 522 Young v Matthew Hall Mechanical & Electrical Engineers Pty Ltd (1988) 13 ACLR 399 Texts Cited: Butt, Land Law (3rd edn) Carter, Carter on Contract (online edn) Halsbury's Laws of Australia (online edn) Meagher, Gummow & Lehane, Equity: Doctrines and Remedies (4th edn) Morgan et al, Fisher & Lightwood's Law of Mortgage (2nd Australian edn) Young, Croft & Smith, On Equity (2009) Category: Principal judgment Parties: John Dixon as Trustee for the Seingensund Unit Trust, Yalbell Pty Ltd, Christopher Mark Hookham and Sharon Hookham as Trustees for the Kayak Superannuation Fund, Christopher Mark Hookham as Trustee of the Gilder Unit Trust, Peter Clark and Lyn Clark as Trustees for the Brigadoon Unit Trust, Penelope Wickham, Geoffrey Robert Chadwick and Heather Quenthlyn Chadwick, Laragh Investments Pty Ltd, James Shaw and Cynthia Fisher as Trustees of the Blunt Family Trust (First Plaintiffs) Ian Richard Lewis and Moya Anne Lewis (Second Plaintiffs) Nathanial Kelburn Dunbar Barton (First Defendant) Roberts Fund Pty Ltd (Second Defendant) Kerrie Lardner-Smith and Trent Lardner-Smith (Third Defendant) Malcolm Nelson Johns as executor of the estate of the late Edith Pearl Welsh (Fourth Defendant) Representation: Counsel M Einfeld QC with J Horowitz (Plaintiffs) N A Cotman SC with E Hyde (Defendants) Solicitors Osbornes Lawyers (Plaintiffs) Malcolm Johns & Company (Defendants) File Number(s): 11/353160 Judgment 1HER HONOUR : Before me for hearing on 17 November 2011 was an application by the plaintiffs (two separate groups of investors) for relief following on from the discharge of mortgages in which they had earlier acquired an interest (by way of separate assignments of the respective mortgages). The mortgages secured loan advances (totalling some $420,000) made to the first defendant (Mr Barton) quite some time ago. The mortgages had been registered on the title of land owned by Mr Barton at Wellington, New South Wales. They were discharged following the lodgement (in the mistaken belief on the part of the plaintiffs' solicitor that this was required in advance of payment of an amount agreed between the parties to resolve their disputes Mr Barton) of executed discharges of mortgage in registrable form with the Land and Property Information office and the consequential registration of those forms. 2The plaintiffs contend that (notwithstanding the registration of the respective Discharge of Mortgage forms) they retain an equitable mortgage interest in the said land and/or have a possessory lien over the certificate of title to the land. They seek relief, in essence, by way of the reinstatement of their first and second ranking security over the property (ahead of other equitable mortgages in respect of which caveats have been lodged on the title) as well as specific performance of the obligation of Mr Barton to pay the sum of $450,000 under the Settlement Deed dated 27 May 2011 by which he and the plaintiffs had settled earlier proceedings in this Court in relation to the plaintiffs' claim for moneys that had been secured by the respective mortgages. 3The second to fourth defendants to these proceedings have each lodged one or more caveats on the title, claiming equitable interests in the Wellington property. Those equitable interests post-date the initial registration of the plaintiffs' mortgages on the title but pre-date the discharge of those mortgages. (I refer to those defendants as the 'mortgagee defendants' and to the plaintiffs as the 'Investors'). 4There is a lengthy and complicated history to the present dispute, as set out in the judgment in October 2009 of Macready AsJ ( Nathanial Kelburn Dunbar Barton v Atlantic 3 Financial (Australia) Pty Limited & ors , unreported 28 October 2009) in proceedings which had been commenced in this court in 2000. I will canvass that history only as necessary for the purposes of the present proceedings. 5The defendants deny that there is an entitlement to any of the relief sought by the Investors. Mr Barton does not deny that he owes the money for which provision was made in the 2011 Deed ($450,000), he having failed to pay that sum on the Settlement Date as required under the 2011 Deed, but he does deny that this debt is secured. A consent judgment has now been signed by the parties in relation to that debt (although only recently and I do not understand it to have been filed in this Court; hence no judgment as such has been entered). It is contended for Mr Barton that there is no call for an order for specific performance of the payment obligation under the Deed; rather, that it is open to the Investors to enforce the consent judgment as judgment creditors in the ordinary course (though if unsecured they will rank after the mortgagee defendants and pari passu with other unsecured creditors). 6In summary, the defendants contend that the 2011 Deed released all claims against Mr Barton, including claims to or debts in respect of any money owing under the mortgages, and all covenants contained therein, preserving only the right to payment under the 2011 Deed itself and that, with effect from the execution of the 2011 Deed, the Investors ceased to have any entitlement to assert an interest (equitable or otherwise) in the Wellington land. On the basis that the mortgages thus secured no debt when the Discharges of Mortgage were lodged and registered, it is said that there was no impediment to the discharge of the mortgages (and it is not unconscionable for Mr Barton to assert a title unencumbered by those mortgages). 7The defendants contend that the registration of the Discharges of Mortgage operated to discharge the mortgages both at law and in equity. It is submitted that the discharges of mortgage were not mistaken (on the basis that they were intentionally lodged, though due to a misunderstanding as to the operation of the 2011 Deed); that the purported reliance by the Investors on the terms of the mortgage(s) is reliance on an agreement or covenant itself released by the 2011 Deed; that possession of the certificate of title may create an equitable charge but, if so, it post-dates the other mortgagee defendants' interests; that in any event any equitable interest created by the 2011 Deed is not a caveatable interest by reason of the 2011 Deed not having been stamped; that no debt becomes due and owing for the purposes of any claimed security until the judgment debt comes into existence (or until the so-called "default" debt arises after the time due for payment under the 2011 Deed); and that any interest of the Investors thus post-dates the interests of the mortgagee defendants. 8The matter came before the duty judge on 11 November 2011 on an interlocutory application by the Investors for an extension of caveats that they had lodged on the title to the Wellington property (after Mr Barton failed to honour his obligations to pay the sum of $450,000 on the Settlement Date) claiming an interest in the property as equitable mortgagees. The matter was on that day fixed for an urgent final hearing, which took place before me on 17 November 2011. At the conclusion of that hearing, I extended the operation of the caveats until further order pending the delivery of my judgment. I now publish my reasons for judgment. Issues 9The following issues emerged during the course of argument: (i) Were the mortgages mistakenly discharged in circumstances which would fall within the personal equity exception to indefeasibility of title so as to warrant relief by way of reinstatement of the Investors' mortgage interests? (Related to this issue is the claim for restitution of the mortgages on the basis of unjust enrichment.) (ii) On the proper construction of the release contained in clause 6.3 of the 2011 Deed, did the Investors, upon execution of that deed, release their security interest in the Wellington land and any covenants under the mortgages or underlying loans so as to preclude any reliance on those agreements as giving rise to an equitable mortgage? (iii) If the 2011 Deed did operate to release the Investors' earlier claim (or debt), as well as contractual rights under the underlying Deeds of Loan and mortgages, are the Investors nevertheless entitled to be subrogated to the rights of first and second mortgagees under the discharged mortgages by reference to a notional payment out of the earlier secured debt? (iv) If the discharge of the mortgages operated to release any equitable mortgage arising under the provisions of the first Deed of Loan, was an equitable mortgage created by retention of the certificate of title giving Investors priority over unsecured creditors? (v) Do the Investors have a possessory lien over the certificate of title (so as to permit them to resist a call for its production by Mr Barton)? (vi) Should there be an order for specific performance by Mr Barton of his obligation to make payment under the 2011 Deed? Summary 10For the reasons set out below, I am of the view that: (i) the mortgages were discharged in circumstances giving rise to the personal equity exception to indefeasibility of title and relief should be granted to restore the Investors to the position in which they were prior to the discharges of mortgage being registered (on the basis that Mr Barton would otherwise be unjustly enriched and that it is unconscionable for him in the circumstances to assert as against the Investors an unencumbered title); (ii) the release contained in clause 6.3 of the 2011 Deed did not, on its proper construction, operate to release Mr Barton from the covenants contained in the respective mortgages that were not required to be discharged until after payment of the sum due on the Settlement Date; (iii) on the findings above, this question does not arise; had it arisen, I would have held that the Investors were not entitled to be subrogated to rights under the mortgages that were discharged by mistake; (iv) again, this question does not arise in light of the earlier findings; had it arisen I would have held that even if the 2011 Deed operated to release the covenants contained in the existing mortgages and Deeds of Loan, fresh equitable mortgages were created by the acknowledgement (implicit in the 2011 Deed) that the Investors could retain the certificate of title to the Wellington Land and were not obliged to provide discharges of mortgage until settlement and conditional upon payment of the settlement sum; those rights, having arisen in the circumstances of the 2011 Deed, post-date the earlier equitable mortgages of the mortgagee defendants and as unregistered interests would thus rank in priority after them but ahead of unsecured creditors; (v) again this question does not arise; had it arisen I would have found that there was no possessory lien in circumstances where an equitable mortgage by permitted retention of title deeds had arisen; and (vi) finally, I am not satisfied that there should be an order for specific performance of the obligation to pay the sum of $450,000. Background Facts 11The defendants do not take issue with much of the factual background asserted in the Points of Claim served by the Investors in these proceedings (accepting the matters stated in paragraphs [1] to [9], [11], [13], [14] to 117(111)], [17(v)], [19] to [24], [26] and [27]), though contending that those facts need to be considered in conjunction with other matters (and, in particular, the judgments of Moynihan J in Barton v Atlantic 3 Financial (Australia) Pty Limited [2004] QSC 376 ; (2004) 212 ALR 348; of Macready AJ in the 2000 proceedings to which I have referred above; and of the Court of Appeal in the Supreme Court of Queensland in Barton v Atlantic 3 Financial (Aust) Pty Limited (deregistered) & Anor [2010] QCA 223). 12As noted, Mr Barton is the registered proprietor of the Wellington property. As at 1999, the Wellington property was subject to a registered mortgage dated 9 January 1997 in favour of I & L Securities Pty Ltd (the first mortgage). That mortgage secured a loan in the amount of $200,000 under an agreement made by Deed of Loan of that date. The mortgage expressly incorporated the terms of the Deed of Loan, which was annexed thereto, and, relevantly, the terms of a registered Memorandum of Mortgage (X004943). 13Under the registered Memorandum of Mortgage, the term "Moneys Hereby Secured" was defined in (i) as including, among other things: (ii) all moneys owing or remaining unpaid to the Mortgagee in any manner or on any account whatsoever by the Mortgagor whether alone or jointly with any other person and whether as principal or surety; ... (iv) all moneys and amounts which may become owing to or for which the Mortgagee may become liable by reason (wholly or partly) of past events involving the Mortgagor ... or which may reasonably foreseeably become owing on any account or in any manner whatsoever by reason of the relation of banker and customer or by operation of law or equity or otherwise by reason of anything done by the Mortgagee with the consent or at the express or implied request of the Mortgagor ; (my emphasis) 14Pursuant to clause 11.1 of the registered Memorandum of Mortgage the mortgage was: a continuing security and shall not be wholly or partially discharged (even if all of the Moneys hereby Secured that are presently owing are paid) as long as any of the Moneys Hereby Secured are owing, contingently owing or may, in the opinion of the Mortgagee, become owing and payable. 15Clause 26.4 provided that the mortgage and the liability of the mortgagor thereunder were not affected or discharged by, inter alia, the mortgagee "failing or neglecting to recover any of the Moneys Hereby Secured by the realisation of any collateral or other security or otherwise" (26.4(b)); any other laches, acquiescence, delay, acts, omissions or mistakes on the part of the Mortgagee or any other person (26.4(c)); or "any other act, matter or thing which but for this provision might discharge the Mortgagor from his liabilities under this Mortgage" (26.4(f)). 16It is not disputed that the sum advanced under the first Deed of Loan and secured by this mortgage remains outstanding. 17The Investors are all of the persons and entities who invested money in an unregistered managed investment scheme (known as the Barton Scheme) which was managed by Atlantic 3 Financial (Aust) Pty Limited (to which I will refer as Atlantic Financial, to distinguish it from a later Atlantic entity). 18In 1999, in consideration for monies advanced by Atlantic Financial to I & L Securities on Mr Barton's behalf, the I & L mortgage was transferred to Atlantic. Also in 1999, Mr Barton granted Atlantic Financial a second registered mortgage (dated 21 October 1999) over the Wellington property, to secure moneys advanced by Atlantic Financial to a company known as Loawave Pty Ltd pursuant to a Deed of Loan dated 20 September 1999 (to which Deed of Loan Mr Barton was a party in his capacity as third party mortgagor). That loan facility was for an amount up to $250,000. The mortgage incorporated the provisions of a different memorandum of mortgage from that to which the first mortgage was subject. This memorandum of mortgage did, however, include a clause (clause 10) which provided that the mortgagee shall, so long as any moneys remain owing on this security, have and retain possession of the certificate of title for the mortgaged land. Mr Barton guaranteed the liability of Loawave in relation to those advances. 19On 29 November 2000, Mr Barton commenced proceedings in this Court (the 2000 proceedings) seeking relief against Atlantic Financial (and other entities) in respect of both mortgages, including orders that the registered mortgage over the Wellington property be set aside or varied and, further or in the alternative, for damages against Atlantic Financial and a declaration that the mortgages were unenforceable. The claims were made both under the Contracts Review Act 1980 (NSW) and the Farm Debt Mediation Act 1994 (NSW). In those proceedings, Atlantic Financial brought a cross-claim against Mr Barton seeking possession of the Wellington property and for the amount then said to be due under the mortgages ($460,052.86 inclusive of interest to 1 April 2002 on the first Deed of Loan and $165,083.49 on the second Deed of Loan). By Amended First Cross-Claim filed on 6 August 2002, Atlantic Financial sought judgment against Mr Barton in relation to the loans secured by the respective mortgages in amounts totalling some $580,052,86 plus interest. 20On 21 May 2003, Mr Barton served an Offer of Compromise on Atlantic Financial in accordance with Part 22 of the then Supreme Court Rules. That offer (to compromise "this action" as against Atlantic Financial on payment by Mr Barton of the sum of $420,000, with consent to the dismissal of the proceedings as against Atlantic Financial on the basis that there be no order as to costs) was formally accepted by Atlantic Financial by Notice of Acceptance dated 6 June 2003. 21(The application subsequently brought in September 2009 in this Court, which led to the judgment of Macready AsJ to which I have referred, was an application by the Investors seeking entry of judgment against Mr Barton in favour of the Investors in the sum of $420,000 (plus interest from 6 June 2003 at the rates set out in the applicable Court rules) on the basis that there was a concluded agreement to settle the matter in 2003 and that the order was necessary to enable the agreement to be perfected. I outline in due course the reasons for the unsuccessful outcome of that application.) 22Resuming the chronology of events, on 25 November 2003 orders were made that Atlantic Financial be wound up and for the appointment of liquidators (though the operation of those orders was stayed until 2 January 2004). At [14] of Macready AsJ's judgment, his Honour notes that the winding up was because Atlantic Financial was running what transpired to be an unregistered investment scheme by lending money and taking security on behalf of the Investors. At this stage, Atlantic Financial had the benefit of the accepted offer of compromise but no moneys had yet been paid by Mr Barton in satisfaction of that agreement. 23By Deed of Assignment of Remainder Schemes dated 9 January 2004, Atlantic Financial (as Court Appointed Liquidator of the Remainder Scheme identified in the Deed) assigned to Atlantic 3 Funds Management Pty Limited (the other Atlantic entity foreshadowed above, to which I will refer as Atlantic Funds) "all its right title and interest in the assets of the scheme specified in the Schedule". (The condition precedent to the operation of the Deed of Assignment was the making of an order by the Supreme Court of Queensland, which was in due course made, vacating earlier orders of that Court in relation to the Barton Scheme.) The Schedule to the Deed of Assignment (in which the assets of the scheme were said to be specified) listed the following under the heading "Securities": the two mortgages, "Right of action in [the 2000 proceedings]" and "The benefit of the Deed entered into between the assignor and Nathanial Barton in settlement of the above proceedings". 24Senior Counsel for the defendants (Mr Cotman SC) takes issue with the description, in the Investors' submissions, of the subject matter of this assignment (and the later corresponding assignment by Atlantic Funds) as including the benefit of Atlantic Financial's settlement with Mr Barton), referring to what was said in [15], [18] and [19] of Macready AJ's judgment, in which his Honour noted that, while the 9 January 2004 deed included the assignment of the benefit of a deed entered into between Atlantic and Barton in settlement of the 2000 proceedings, this deed appeared not to exist. (The intent of the Deed of Assignment, nevertheless, appears clearly enough to have been to assign to the assignee the benefit of whatever settlement that had been reached with Mr Barton in the 2000 proceedings, namely that which was comprised by Mr Barton's acceptance of the offer of compromise.) 25In that regard, in proceedings in the Supreme Court of Queensland in 2004 ( Barton v Atlantic 3 Financial (Aust) Pty Ltd (in liq) (2004) 212 ALR 348), on 3 November 2004 Moynihan J held that the first deed of assignment (from Atlantic Financial to Atlantic Funds) was, relevantly, effective only to assign to Atlantic Funds any balance due by Mr Barton after taking into account any amounts due from Atlantic Financial to Mr Barton and setting-off the amounts so due to Mr Barton against the amounts due by him in respect of the assigned choses in action. Thus, the relevant declaration ultimately made in those proceedings was: (1) A declaration that the assignment, pursuant to a deed dated 9 January 2004, by [Atlantic Financial] to [Atlantic Funds] of [Atlantic Financial's] choses in action as regards [Mr Barton] was only effective to assign to [Atlantic Funds] any balance due by [Mr Barton] in respect of such choses in action after: (a) the taking into account of the amount(s) due from [Atlantic Financial] to [Mr Barton], both in his own right and as assignee (the amount(s) so due including any amount(s) that may, in this proceeding, be determined as payable by [Atlantic Financial] to Mr Barton for damages, interest or costs); and (b) the setting-off of the amount(s) so due from [Atlantic Financial] to Mr Barton against the amount(s) due by Mr Barton in respect of such choses in action. 26Moynihan J explained the circumstances in which the set-off arose as follows (there referring to Atlantic Financial as A3 and Atlantic Funds as A3FM): The plaintiff (Barton) owed a debt to the defendant (A3), but had cross-claims which could be used to reduce that liability. On 25 November 2003, A3 was ordered to be wound up under s 461(1)(k) of the Corporations Act 2001 (Cth) (the Act), but the commencement of the winding up was stayed until 12 January 2004. On 9 January 2004, A3 assigned to another company (A3FM) its choses in action as regards Barton (including the debt), leaving A3 with insufficient funds to meet Barton's cross-claims. Barton applied to the Supreme Court of Queensland for a declaration that s 553C of the Act operated to apply a set off between the debt and cross-claims before the assignment to A3FM. 27His Honour accepted that Atlantic Funds was the assignee of rights that were the subject of the 2003 compromise but that the set-off claimed by Mr Barton as arising under s 553C operated automatically at the time the winding up was ordered, and therefore before the assignment to Atlantic Funds (applying Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609; Stein v Blake [1996] AC 243; [1995] 2 All ER 961; and Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550; 141 ALR 667). 28On 4 November 2007, Atlantic Financial was deregistered. It was thus no longer in existence as at 18 May 2009 when Atlantic Funds entered into a deed of assignment to assign to the Investors the mortgages and other rights the subject of the earlier assignment by Atlantic Financial to it. (I note that the assets described in the schedule to that deed include "The benefit of any agreement reached between Atlantic and Barton in settlement of the [2000] proceedings", not referring in this instance to any deed as such.) However, as noted at [19] of Macready AsJ's judgment, Atlantic Financial had failed, before its deregistration, to transfer the legal interest in the mortgages over the Wellington property to Atlantic Funds. 29As a result, an application was required in due course to be made to ASIC under s 601AF of the Corporations Act 2001 (Cth) for it to execute the relevant Transfers of Mortgage in order to transfer legal title under the respective mortgages to Atlantic Funds (and thus permit the further transfer of the legal interest in the mortgages to the Investors pursuant to the 2009 assignment). This, ASIC was not initially persuaded to do. 30However, the Investors were, from the date of the May 2009 deed of assignment (as they still remain), in possession of the original certificate of title to the Wellington land even though the mortgages remained registered on the title in the name of Atlantic Funds (until the events in 2011 to which I will shortly come). 31On 4 September 2009, the Investors were joined (on their own motion) as defendants to the 2000 proceedings. They sought the entry of judgment against Mr Barton in the sum of $420,000 plus interest from 5 July 2003 and otherwise the dismissal of the proceedings. On 28 October 2009, Macready AsJ refused the application for consent judgment. His Honour noted the finding by Moynihan J that what had been assigned to Atlantic Funds in the first deed of assignment was any balance due by Mr Barton after taking into account, and setting off, claims in the Queensland proceedings and hence that the question whether there was anything to set-off (against the $420,000 figure the subject of the accepted offer of compromise) depended on the outcome of the Queensland proceedings. His Honour accepted that this Court had no jurisdiction within the application before him to settle that net balance (and thus that it was necessary for the Queensland proceedings to be reinstated and prosecuted to finality). (This may be of some significance in the present context, as Mr Cotman notes that there was no concluded 'debt' as such in relation to the $420,000 but, rather, a sum against which an off-setting claim had yet to be determined, and points to the giving up by Mr Barton in the Settlement Deed of May 2011 of the Queensland claim as valuable consideration for what he contends to have been the giving up by the Investors of the security they held over the Wellington property.) 32In the course of 2010-2011, various caveats were lodged on the title to the Wellington property by the respective mortgagee defendants (each claiming an interest in the land pursuant to equitable mortgages granted on various occasions from as early as May 2010 to as late as April 2011). The second defendant lodged two caveats (AF522180 and AF722079), which were recorded on the title on 28 May 2010 and 30 August 2010 respectively, claiming an interest in the land pursuant to equitable mortgages granted in May and August 2010; the third defendant lodged a caveat (AG252837), recorded on title on 24 May 2011, claiming an interest in the land pursuant to an equitable mortgage granted in April 2011; and the fourth defendant lodged a caveat (AG435707) recorded on the title on 16 August 2011, claiming an interest in the land pursuant to equitable mortgages granted in November and December 2010. Only one of those caveats was lodged after the discharge of the Investors' mortgages (and even then it was in respect of an interest that had apparently arisen before the discharge of the mortgages). 33On 9 May 2011, ASIC (having earlier not been prepared to grant such relief) acted pursuant to s 601AE(2) of the Corporations Act 2001 (Cth) to execute transfers of the mortgages from Atlantic Funds to the respective Investors (the first mortgage being transferred to the first plaintiff in these proceedings and the second mortgage to the second plaintiff). 34This brings me to the events that have directly led to the current situation. On 27 May 2011, Mr Barton and the Investors entered into a deed entitled Deed of Terms of Settlement (to which I will refer as the 2011 Deed) in relation to the settlement both of the Claim in the 2000 proceedings and of the proceedings between Mr Barton and Atlantic Funds in the Supreme Court of Queensland. The Claim in the 2000 proceedings was defined as "the Investors' claim against Barton in the NSW Proceedings, which is a claim by way of Notice of Motion for judgment in the amount of $420,000 plus interest and costs". 35Pursuant to the 2011 Deed, Mr Barton agreed (in clause 2.1) to pay to the Investors the sum of $450,000 on the Settlement Date. The Settlement Date was defined in clause 3.1 as the date 28 days from the date that the Investors notified Mr Barton that the Transfer of Mortgage (contained in Schedule 5, namely the transfers the subject of the application to ASIC) had been registered and, relevantly, that the Investors had "executed" the Discharge of Mortgage (defined as meaning the form of discharge of mortgage in Schedule 2, that schedule including forms for the discharge of both mortgages). 36Clause 4.1 then provided that: On the Settlement Date, provided that the Payment [by Mr Barton to the Investors of the sum of $450,000] is made in full , the Investors will cause: (a) the Certificate of Title [to the Wellington property] and the duly executed Discharge of Mortgage in registrable form to be delivered to Barton; and (b) the Consent Orders in Schedule 3 [providing for the dismissal of the 2000 proceedings] to be filed with the Supreme Court of New South Wales; and (c) the Consent Judgment in Schedule 4 [for entry of judgment against Mr Barton in favour of the Investors in the principal amount of $450,000 plus interest at 10% per annum for the period from the date of the deed to the date of entry of judgment] to be destroyed by Osbornes Lawyers [the solicitors acting for the Investors]. (my emphasis) 37Hence, the obligation to deliver the Discharge(s) of Mortgage and the Certificate of Title to the property on the Settlement Date, under clause 4.1, was clearly made subject to payment of the settlement sum in full. 38Pursuant to clause 5.1: In the event that Barton fails to make the Payment on the Settlement Date then: (a) The sum of $450,000 will become immediately due and payable by Barton, plus interest on that amount at the rate of 10% per annum, calculated from the date of this Deed until the date that judgment is entered; and (b) The Investors will immediately be entitled to enter judgment in the NSW Proceedings [the 2000 Proceedings] in the sum of $450,000, plus interest as calculated above, by filing the signed Consent Judgment in Schedule 4 and Barton will not oppose the filing of that Consent Judgment; and (c) Interest on the total amount of the Consent Judgment (that is, $450,000 plus interest as calculated above) will be payable by Barton to the Investors pursuant to Rule 36.7(1) of the Uniform Civil Procedure Rules 39Mr Cotman points to clause 5.1 as providing for what was to happen in the event (as subsequently transpired) that Mr Barton failed to pay the settlement sum in full and as, in effect, pointing against any intention that the sum of $450,000 was to be secured by the mortgages. (I am not persuaded that the fact that provision was made for entry of the judgment on non-payment of the sum, without reference to the judgment debt being secured, indicates an intention that the debt was to be unsecured.) 40Of particular relevance to the issues in these proceedings will be the construction of the release clauses contained in the Settlement Deed. Clause 6 was headed "Releases". Clauses 6.1 and 6.2 contained releases by Mr Barton in favour of the Investors and the Atlantic entities respectively. Relevantly, at clause 6.3, the Investors gave a release to Mr Barton in the following terms (which mirrored the terms of the release given to them by Mr Barton in clause 6.1): The Investors hereby release Barton from all actions, debts, sums of money, accounts, contracts, agreements, covenants, actions, suits, causes of action, claims and demands of whatsoever kind or nature either at law or in equity or otherwise which the Investors may have or have or ever had or might have had or could have had against Barton on account of any matter whatsoever (other than the right to sue upon this Deed). 41Under clauses 6.4 and 6.5, each of Mr Barton and then the Investors covenanted in favour of the other not to bring or pursue (or procure a third party to do so or provide financial support for or otherwise assist) any claim, dispute, demand or proceeding in any court or tribunal in respect of any matter that is the subject of a release under clause 6 and indemnified the other from any breach of that covenant. 42The Investors contend that their interests as Mortgagees were not released by the provisions of the 2011 Deed and nor were they discharged by the subsequent registration of the Discharges of Mortgage. 43Clause 7.1 of the 2011 Deed contained an approval and authorisation by each party for the signing by the party's legal representative of the Consent Orders and Consent Judgment. Further, Clause 7.2 obliged Mr Barton to cause the Consent Orders and Consent Judgment in the 2000 proceedings to be signed on his behalf at or before the time that the 2011 Deed was executed. The parties agreed under clause 7.3 that the Consent Orders were to be held in escrow by the Investors' solicitors "until such time as the Investors are obliged to file the Consent Orders" in accordance with the deed (and clause 7.4 similarly provided for the Consent Judgment to be held in escrow by the said solicitors until the Investors were required to destroy it pursuant to the deed). 44Mr Barton did not, at or before the time the 2011 Deed was executed, cause signed consent orders or a signed consent judgment to be delivered to the Investors' solicitors, although I understand that the latter has now occurred. In submissions it was contended that Mr Barton was at all times, ready, willing and able to produce the consent judgment to the Investors' solicitors but that no request was made of him or his solicitors for him to do so. Insofar as this be relevant (and I do not consider that it is) I note that a request was clearly made in the letter of 6 July 2011 sent by the Investors' solicitors to Mr Barton's solicitor for the execution of the consent judgment enclosed with that letter. Further, it seems to me that there must have been an implied obligation on Mr Barton to deliver or cause to be delivered to the Investors' solicitors the documents that he was obliged under the 2011 Deed to sign at or before the execution of the deed, having regard to the agreement that those were to be held by the solicitors in escrow. Hence, any suggestion that Mr Barton was not obliged to deliver those documents until after a demand was made therefore would not in my opinion be compelling. 45Clause 11.1 of the 2011 Deed obliged each of the parties to do all things, produce all documents and execute all deeds, instruments, transfers or other documents as may be necessary or desirable "to give full effect to the provisions of this Deed and the transactions contemplated by it". (This is relied upon by Mr Einfeld in support of his claim for relief by way of the re-execution and reinstatement of the discharged mortgages.) 46Clause 12.1 provided that the 2011 Deed may be pleaded and entered by any party as an absolute bar and defence to any proceedings brought or made by another party in breach of the terms of the deed. 47What has led to the present problem is that, after the Investors had executed the relevant Discharges of Mortgage and delivered them to their solicitors (those forms not being required, under the terms of the 2011 Deed, to be delivered to Mr Barton until the Settlement Date and, even then, not until payment of the settlement sum), the Discharge of Mortgage forms were lodged with the offices of Land and Property Information at the same time as the Certificate of Title and the Transfers of Mortgage to Atlantic Funds were lodged. The plaintiffs' solicitor, Mr Valmas, has given evidence, by affidavit sworn on 4 November 2011, that on 30 May 2011 he caused the original certificate of title to be lodged together with not only the transfers (from Atlantic Financial to Atlantic Funds) that had been executed by ASIC but also the discharges of mortgages executed by the Investors. At [21] of his affidavit, Mr Valmas deposes that: I mistakenly believed that the Deed of Settlement required both the transfers of the Mortgages and the discharges of the Mortgages to be registered prior to the Settlement Date. At the time, I was anxious to ensure that everything be done quickly in order to bring about the Settlement Date. In my haste, I believe that I misread the Deed of Settlement. (emphasis as per Mr Valmas' affidavit) 48Mr Valmas was not cross-examined on his affidavit and his explanation as to the circumstances in which the Discharge of Mortgage forms were lodged for registration is therefore not in issue. It is clear from his affidavit that the mistake was not that the documents had been inadvertently included in the bundle of material provided to the Registrar-General. Rather, the mistake is that Mr Valmas forwarded the documents for registration in the belief that this was required by the clause. It is not suggested that the clause imposes any such obligation. Therefore, accepting that Mr Valmas lodged the documents with the LPI believing that there was an obligation to do so, he clearly did so under a mistake as to the construction of the relevant clause. 49If it were necessary to characterise the mistake as one of fact or of law, it is clear that this would be a mistake of law (namely, as to the construction of the 2011 Deed). I note this because there was an issue raised by Mr Cotman as to whether, if so, this was a mistake of the necessary quality in any event to give rise to the relief sought by the Investors; an issue that I consider later in these reasons. 50By letter dated 6 July 2011, Mr Valmas notified Mr Barton's solicitor that the Transfers of Mortgage and the Discharges of Mortgage had been lodged with the LPI (which I suspect would have come as a matter of some surprise to Mr Barton's solicitor since, on whatever view is taken as to the effect of the release clause on the subsistence of a debt secured by the mortgage, the lodgement of the Discharge of Mortgage at that stage placed the Investors at a practical disadvantage in that it arguably removed an immediate incentive for Mr Barton to honour his contractual obligations). (In this regard, although it seemed in argument to be suggested by Mr Cotman that the existence on the title of the mortgages was not of such import as to provide an incentive to pay the settlement sum - because after the 2011 Deed was executed the mortgage secured no debt and hence could no longer have been relied upon in any event and Mr Barton could have called for the production of an unencumbered certificate of title - it surely cannot be the case that the registration of the discharge in advance of the settlement was something that was anticipated as likely to occur. Nevertheless the position of Mr Barton, as I understand it, is that this is not a case where opportunistic advantage has been sought to be taken of an error on the part of the Investors' solicitor.) 51Mr Valmas, in his letter of 6 July 2011, in effect reminded his counterpart (Mr Johns) that settlement would be due within 28 days of receipt of advice that he had received the Certificate of Title and asked Mr Johns to advise if his client could be ready within that time. He also enclosed "in anticipation of settlement" the Consent Order and Consent Judgment (although, as noted earlier, the 2011 Deed contemplated that those would be signed by the time of execution of the deed). There was no evidence given by Mr Johns on the hearing before me. I can only assume that he acted in accordance with his duty as a solicitor and communicated the above matters to his client within a reasonable time. Whether or not he in fact did so, at the very least his knowledge as to the fact of lodgement of the discharge forms would be imputed to his client. Mr Valmas received no reply to that letter and there has been no explanation for the absence of a response to the request for advice as to Mr Barton's readiness for settlement within the period foreshadowed. 52The 6 July letter contains no statement expressly drawing to the attention of the reader that the Discharge of Mortgage had been lodged under an assumption or belief that there was an obligation so to do. However, it seems to me that the fact that it had been lodged in advance of the time when it was required to be provided by the Investors (and without satisfaction of the condition to which the provision of the Discharge had expressly been made subject) was sufficient to put Mr Johns (and through him Mr Barton) on notice that the lodgement might well have been mistakenly effected - particularly when the history of the matter (and the attempts of the Investors to recoup the moneys outstanding under the mortgages) is taken into account. Any suggestion that the Investors would have chosen voluntarily to present Mr Barton with clear title to the property before receipt of the funds which had been sought (and seemingly resisted) for quite some time seems to me to be fanciful. 53The Transfers and Discharges were in due course registered by the LPI (a step that Senior Counsel for the Investors (Mr Einfeld QC) contends only had the effect of discharging the security represented by the mortgages at law, not in equity). They were recorded on the title as at 13 July 2011. 54By letter dated 14 July 2011, Mr Valmas notified Mr Johns that the Certificate of Title had been received and nominated the settlement date as being Friday, 12 August 2011. He requested that Mr Johns telephone him to discuss arrangements for settlement. The letter is consistent with Mr Valmas having no appreciation at this stage that registration of the discharge might not have been required before settlement. Again, that letter seems not to have been met with the courtesy of a response. There was no suggestion conveyed to Mr Valmas at that stage (at least on the evidence before me) that Mr Barton did not intend, or was unable, to pay the money due on the settlement date. (Nor did Mr Johns question Mr Valmas as to whether the discharge of the mortgages prior to the Settlement Date was intentional; indeed, the lack of any response to Mr Valmas' correspondence might suggest that Mr Barton had chosen to let sleeping dogs lie at that point. Whatever be the case in that regard, and there is no need for a finding as to this, the result seems to have been that Mr Valmas had no occasion by that stage to realise the mistake he had made - or to take any action prior to registration of the discharges to rectify that error.) 55On 28 July 2011, orders were made by consent in the Supreme Court of Queensland for the dismissal of those proceedings and of an appeal that had been lodged in those proceedings, on the basis that each party was to bear its own costs of both proceedings. 56Mr Valmas has deposed that he contacted Mr Johns to enquire about settlement on 9 and 11 August 2011, on both of which occasions Mr Johns' response was that he did not have instructions. However, by 12 August 2011, whether or not Mr Barton had given instructions of any kind, it must have become apparent that Mr Barton was either not prepared or not able to make the payment required under clause 2.1 since no such payment was made. There is no dispute that the whole of this sum still remains outstanding. 57On 16 August 2011, as noted earlier, the fourth defendant (for whom Mr Johns also acts) proceeded to lodge its caveat in respect of an equitable mortgage dating back to December 2010 (the delay in so doing not being explained but the coincidence of the timing of its ultimate lodgement on the title and the discharge of the registered mortgages might suggest that it was appreciated that there might by then be some advantage in so doing that had not been perceived at an earlier time - again, it is not necessary to make any finding as to this). 58On 1 September 2011, the Investors caused caveats to be lodged over the title to the Wellington property claiming an equitable interest in the land, Mr Valmas presumably by then realising the mistake he had made as to the construction of the 2011 Deed. As to the first of those caveats (that being lodged by the parties who had held the legal interest as assignees of the benefit of the first mortgage), the instruments pursuant to which that interest was claimed were described in an annexure to the caveat as the 1997 mortgage, the transfer in 1999 to Atlantic Financial and the transfer in 2011 to the Investors. As to the second of the caveats (lodged by the assignees of the interest in the second mortgage), the instruments noted in the caveat were the second mortgage and the 2011 transfer of mortgage to the caveators. 59In each caveat the interest claimed was in the same terms: The caveators' equitable interest arises pursuant to a mortgage over the property held by the caveators as mortgagees, which mortgage was removed from the title as a result of the caveators' solicitor mistakenly lodging with the Registrar-General a Discharge of Mortgage. 60By letter dated 19 September 2011, Mr Johns wrote to the Investors' solicitors in his capacity as Mr Barton's solicitor asserting that the Investors had no equitable interest in Mr Barton's property and were "at best" unsecured creditors of his. (If, by the words "at best", it was intended to assert that Mr Barton was not indebted to the Investors for the amount that he had agreed in the Deed to pay, then Mr Johns did not identify the basis for such an assertion nor is it apparent that there would have been any such basis.) The letter went on to describe Mr Johns' 'astonishment' that Mr Valmas had sworn statutory declarations as to the existence of good and valid claims by the caveators to the estate or interest claimed in the caveats and (somewhat disingenuously in my view) said: ... the Caveats admit that the mortgages had been discharged. It was only ever a matter of contract that your clients would hand over registrable discharges; they were quite entitled to themselves register [sic] those discharges as they did. 61By letter dated 4 October 2011, the Investors' solicitors responded to Mr Johns, in his capacity as the solicitor for Mr Barton, stating that the discharges had been registered in error and maintaining that, although the registration of the discharges had effected the discharge of the legal title to the mortgages, the mortgages continued to have effect whilst the moneys secured by the mortgages were outstanding. The Investors' claim that they held an equitable mortgage over the property was maintained and demand was made for the execution of identical mortgages by Mr Barton (reserving the right to rely on the power of attorney clause contained in the first mortgage in order to execute a new first mortgage - although I interpose to note that there is no suggestion that the Investors have done so). 62By separate letters on that date, the Investors' solicitors wrote to Mr Johns in each case in his capacity as the solicitor for the particular mortgagee defendant in respect of that defendant's caveat, seeking consent to the registration of new mortgages in favour of the Investors on the basis that the equitable interests held through the respective (by then discharged) mortgages "predate the interest asserted by the caveator and therefore have priority over the equitable interest asserted by the caveator", and noting that by virtue of the registration of the mortgages the respective mortgagee defendant had notice of the equitable interest held by the Investors at the time of creation of the interest asserted by the caveator. (I accept that the mortgagee defendants would, by the registration on title of the mortgages, have been on notice of the legal mortgage interest and of the relevant provisions contained in the Memoranda of Mortgages. They would thereby have been on notice of the possibility that further moneys might have become secured by the mortgages. It is not immediately apparent that they would be on notice of an equitable mortgage over and beyond the mortgage interest as registered.) 63By letter dated 17 October 2011, seemingly waiving legal professional privilege in the advice (though it does not seem any issue was taken as to this), Mr Johns responded to each of the 4 October 2011 letters conveying the substance of advice said to have been received (though it is not apparent when it was received) from Senior Counsel to the effect that: ... by reason of the provisions of clause 6.3 of the Deed, ...upon execution of the Deed, your clients ceased to have any entitlement to assert an interest (equitable or otherwise) in the property owned by our client ... As clause 6.3 of the Deed states, your clients' rights are limited to being able to sue upon the Deed. Your clients' position is not improved by the Discharges of mortgage irrespective of the circumstances in which they were lodged; these circumstances are solely a matter between your firm and the clients in question. 64When a demand for the removal of the caveats was not complied with, lapsing notices were served on 24 October 2011 under cover of a letter that informed the Investors' solicitors that an indicative amount to pay out the caveat lenders "with priority" over the Investors was $750,000 and that there was an unsecured creditor of which they were aware (namely another law firm) in the sum of $400,000. The letter further noted that if the net sale proceeds of the property after payment out of the caveat lenders and costs of sale were less than the total amount owing by Mr Barton to the Investors and other unsecured creditors "then Mr Barton's Estate will no doubt need to be administered in accordance with the provisions of the Bankruptcy Act 1966". 65These proceedings were then commenced by the Investors, seeking an extension of the operation of the caveats that had been lodged on the title. Issues for determination (i) Circumstances in which mortgages were discharged 66As Mr Cotman notes, the Register is conclusive as to the nature and order of the interests in the land (reference being made to the recognition by the High Court in Farah Constructions Pty Limited v Say-Dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89 that ss 41 and 42 of the Real Property Act 1900 (NSW) are central to the concept of indefeasibility of title), subject of course to the statutory exceptions to indefeasibility. Thus it is not necessarily the case that the Register is a complete answer to a claim of personal equities affecting a proprietary interest (relegating the Investors, as Mr Cotman suggests it does, to a claim against their solicitors for damages and/or Mr Barton in debt). 67Whatever the position in relation to the construction of the release clause contained in the 2011 Deed (which I consider later in these reasons), Mr Cotman submits that the registration of the discharge of the first and second mortgages (even if that has resulted from a mistake or inadvertence on the part of the registered mortgagee), destroys the charge previously binding on the land, relying upon State Bank of New South Wales v Berowra Waters Holdings Pty Limited & Ors (1986) 4 NSWLR 398. 68It is not disputed by the Investors that upon proper registration of a discharge of mortgage over Torrens system land (as these mortgages were) the land ceases to be charged with the moneys secured by the mortgage and a new indefeasible title arises (irrespective of the fact, if it be the case, that the discharge was forged: Schultz v Corwill Properties Pty Ltd (1969) 90 WN (NSW) 529; Grundy v Ley [1984] 2 NSWLR 467; or that the discharge was registered by mistake or through an inadvertence on the part of the registered mortgagee: Berowra Waters; ( Fisher & Lightwood's Law of Mortgage (2 nd Australian edn) at [32.54]). 69In Berowra Waters , where the document which was registered incorrectly stated that the mortgagee had received "all moneys in full satisfaction and discharge of the ... mortgage" and the mortgagee had sought a declaration that the discharge of the mortgage was invalid and of no effect and that the record of the discharge by the Registrar-General was made in error, Needham J, as his Honour then was, (at 402) concluded as follows, dismissing the application: 1. The registration of the dealing (even assuming it was "invalid" or "ineffective") destroyed the charge previously binding on the land. Such a conclusion was reached both by Connolly J, in Associated Securities Ltd v Perry [1978] Qd R 13 and by Kearney J in Grundy v Ley [1984] 2 NSWLR 467, and is, in my opinion, required by the reasons given in Frazer v Walker . 2. The second defendant, therefore, held the land free of the mortgage unless the plaintiff could establish that it came within one of the exceptions to indefeasibility in s 42(1) or s 124. 3. The plaintiff does not come within any of those exceptions. So far as s 124(a) is concerned, registration of the dealing destroyed the charge and so that paragraph became inapplicable to the plaintiff. 4. These proceedings are proceedings for the recovery of land, and so the Court has no power to give directions to the Registrar-General to cancel the recording, because such proceedings are expressly barred (by s 124). 70His Honour went on to say (of the claim by the mortgagee that there was a personal equity in its favour against the mortgagor): Those conclusions debar the Court from making the orders sought by the plaintiff unless the plaintiff can enforce against the second defendant a "personal equity", or unless the Registrar-General has power to correct the "error", and the Court, in view of his refusal to do so without an order of the Court, can make a declaration setting out the facts from which he could draw the conclusion that he should exercise his power of correction. The plaintiff submitted that a personal equity arose in its favour against the second defendant. The equity was said to be a personal right arising out of the mortgage against the mortgagor that the mortgage should not be discharged unless the debt had been paid. I have some doubt as to whether this submission is correct. The right to payment is a legal right; the act of submitting the discharge for registration was the act of the plaintiff - the second defendant had no power in it. If a personal equity arose in this case, then, it would seem, it would arise in every case where a mortgage is discharged without the whole of the sum due having been paid. But, assuming the existence of a personal equity against the second defendant arising out of the mortgage and its discharge, the reasons given in Frazer v Walker show that no action on a personal equity which falls within the prohibitions of ss 42 and 124 may be maintained (see at 585). See also Scallan v Registrar-General (1988) 12 NSWLR 514 per Young J (as his Honour then was). 71Black J considered this issue in Re St George Bank - A Division of Westpac Banking Corporation [2011] NSWSC 730 and said (at [22]): ... In my view, that decision is not authority that a mortgagee cannot bring a personal claim in equity against a mortgagor where a mortgage is discharged by mistake - indeed, Needham J expressly left open the possibility of alternative claims in observing that "[n]o questions arose of any other action open to the plaintiff, and, accordingly, I make no comment on the matter" (at 404). 72There, St George had argued that it could establish an entitlement to surplus funds on sale of the formerly secured property by reason of an in personam right against the registered proprietor on the basis that any attempt on her part to assert a right to those funds would take unconscionable advantage of errors of the bank. Relevantly, in the context of the mistake made in the present case, the errors were put in two ways: first, that the certificate of title, mortgage and discharge of mortgage over the property had been handed over by mistake, notwithstanding that the loans then secured by the mortgage had not been repaid and, second, that further moneys had then been advanced to the registered proprietor without obtaining a further mortgage over the property under a mistaken belief that the bank already had such a mortgage. 73It was accepted in that case that where the mistake is properly characterised as a unilateral mistake (as is the case on the present circumstances), it is necessary to establish that the other party knew or had reason to know of the mistake in order to ground a claim for relief on that basis (by reference to Taylor v Johnson [1983] HCA 5 ; (1983) 151 CLR 422 and Tutt v Doyle (1997) 42 NSWLR 10). His Honour found that the registered proprietor knew or had reason to know of the bank's mistakes at least by the time she registered the subsequent mortgage over the property and considered that it would be unconscionable for her to assert unencumbered title to the property in circumstances where she knew or had reason to know of the bank's mistakes. 74In Tutt v Doyle , Handley JA considered a claim as to the existence of a personal equity based on unilateral mistake. His Honour said: The Doyles' cause of action falls within the principles established in Taylor v Johnson (1983) 151 CLR 422, although the facts in this case are significantly different. There was no mistake in relation to the terms or effect of the contract of sale of 3 April 1989. The Doyles' mistake related to the effect of the transfer delivered on settlement as a result of their earlier mistake in signing the plan of subdivision which enlarged lot 3063 to 2.76 hectares. The majority judgment in Taylor v Johnson included (at 432-433) the following principle: "The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake ... about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake ...." However the majority also endorsed wider principles which entitle a court of equity to grant relief for unilateral mistake in cases not covered by this principle. They approved (at 431) the statement by James LJ in Torrance v Bolton (1872) LR 8 Ch App 118 at 124, that the power to set aside a contract for unilateral mistake was based on the ordinary jurisdiction of equity "to deal with" any instrument or other transaction "in which the court is of the opinion that it is unconscientious for a person to avail himself of the legal advantage which he has obtained" . They also approved the decisions in Riverlate Properties Ltd v Paul [1975] Ch 133 at 145 and Thomas Bates & Son Ltd v Wyndham's (Lingerie) Ltd [1981] 1 WLR 505 at 514-516; [1981] 1 All ER 1077 at 1085-1086, where rectification, and not rescission, was granted on this ground. They noted (at 432) that in the United States and Canada: "... the rule that relief from contractual obligations on the ground of unilateral mistake will be granted where enforcement of the contract would be unconscionable is well established." In those jurisdictions relief is available where one party "knows that the other party ... might well be mistaken" or "had reason to know of" the other's mistake (at 432). The Doyles' claim was "a mere equity" and not an equitable estate or interest in the land: see Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) (1965) 113 CLR 265 at 277-278, per Kitto J. Accordingly they bore the onus of establishing that the Tutts knew, or had reason to know, that the Doyles were, or might well be, mistaken. The Tutts were not required to establish that they were bona fide purchasers for value without notice of the Doyles' mistake. The relief sought by the Doyles therefore required close attention to be given to the situation immediately before and at settlement of the purchase which took place on 23 October 1989. The Doyles had no personal equity against the Tutts unless the latter knew or had reason to know of the mistake prior to completion . On completion, the Tutts received a registrable transfer, and s 43A of the Real Property Act 1900 protected them against notice received thereafter before the transfer was registered. (my emphasis) 75In Minister for Education and Training v Canham [2004] NSWSC 274; (2004) NSW ConvR 56-080 by Pearlman AJ summarised the applicable principles as follows (at [44] and [47]): ... It is well established that a registered proprietor has an indefeasible title to the land in respect of which he or she is registered, subject only to the exceptions set out in s 42 of the Real Property Act 1900 ("the RP Act") and subject only to an in personam claim against the registered proprietor: Frazer v Walker and Ors (1967) 1 AC 569 at 585; Breskvar v Wall (1971) 126 CLR 376 at 384-385. ... The relevant principles guiding the court in its determination are as follows: 1. A personal equity arises where there is a known legal or equitable cause of action enforceable against the registered proprietor: Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222; 2. The personal equity includes the equity to order rectification or retransfer for mistake. Relief will be available where the registered proprietor knew, or had reason to know, that the other party was, or might well be, mistaken: Tutt and Anor v Doyle and Anor (1997) 42 NSWLR 10 per Handley JA at 14-15; 3. Unconscionability is the test - is it unconscionable for one party knowingly to take advantage of another party's mistake? per Meagher JA in Tutt v Doyle at 12. The court is able ... "exercising its jurisdiction in personam to insist upon proper conduct in accordance with the conscience which all men should obey:" per Lord Russell of Killowen delivering the judgment of the Privy Council in Oh Hiam v Tham Kong (1980) 2 BPR 97130 at 9454; 4. The personal equity may arise from the conduct of the registered proprietor both before and after registration : Bahr and Anor v Nicolay and Ors (1988) 164 CLR 604 at 638. (my emphasis) 5. And the conduct in question may be that of a person for whom the registered proprietor is responsible, such as his agent: Grgic v ANZ Bank at 223. 76Mr Cotman submits that the present case can be distinguished from those (including St George and Tutt v Doyle ) where relief based on knowledge of the existence of a mistake has been granted because here there are third parties whose interests will be affected by the grant of the relief sought by the Investors (namely, the loss of the improved priority they gained with the discharge of the prior registered mortgages). I consider the position of the mortgagee defendants below. 77In PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615, Mahoney JA said (at p 625): In a practical sense there are, perhaps, two approaches which may be made to a claim for equitable relief against a suggested injustice. The first is for the court to consider whether the end result of all that has happened between the parties is such that the judicial conscience finds it unacceptable; the court then looks to the remedies which, in equity, are available to relieve against that injustice. The conscience is, of course, one which is moulded by what has been done in the past by "the great equity judges" and by how they justified what they did: Chapman v Chapman [1954] AC 429 at 444; cf United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 at 924. The second approach is to go to the individual doctrines or principles established by the law, for example, the principles as to penalties, to apply those doctrines or principles to the facts, and to give the resulting relief to the plaintiff, whether or not the end result of the transaction would otherwise have been unconscionable. In the case of the application of the common law and, perhaps, the equitable principles as to penalties, this is the practical result. ... For traditional reasons equity has seen land often as in a special position. ... It has been reiterated that equity is no mender of bad bargains: Shiloh Spinners Ltd v Harding [1973] AC 691 at 723 and Stern v McArthur (at 514) per Brennan J. This, if it is to mean anything, must mean that equity does not intervene merely because the result of what the parties have bargained for is a loss, even a substantial loss, to one of the parties . Equity does not, I think, prevent parties agreeing that things may be done which may involve the risk of loss to one or other of them, depending upon how the risk eventuates. It does not, I think, require that they must provide, by detailed provisions, for each of the possible outcomes of such risks and in a way which will prevent either party from bearing the burden of that outcome. It is not, alone, the fact that the burden from the risk falls on one party or the other which leads to intervention. There must, I think, be something, for example, in the nature of the provisions, the circumstances of their negotiations, or the way in which the parties have acted in the exercise of their rights which warrants the conclusion that for the plaintiff to bear the burden of the outcome of the risk is inequitable or unconscionable. To hold otherwise would be, to adapt the language of Mason CJ in Stern v McArthur (at 503) "to eviscerate unconscionability of its meaning": see, also, (at 514) per Brennan J; cf per Gaudron J (at 540-541). In Stern v McArthur , Deane J and Dawson J emphasised the necessity, for equitable intervention of this kind, that there be not merely the benefit to one party or the other, but the taking advantage of "another special vulnerability or misadventure for the unjust enrichment of himself". (my emphasis) 78Mahoney JA also extracted the passage from Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 (where Deane and Dawson JJ had referred to the weight to be given to the bargain that the parties had made) and in which their Honours (at 526 - 527) said: ... It is in that sense [that equity will generally hold parties to their bargains and not remake their contracts simply because it transpires that there has been a bad bargain] that it is said that the circumstances must be exceptional to warrant relief in favour of a purchaser who is in breach of an essential term and that there must ordinarily be something such as fraud, mistake, accident or surprise before relief will be granted. These elements do not, however, exhaust the scope of unconscionable or unconscientious behaviour; they are referred to in this context to emphasize that a strong case must be made out to warrant departure from the general approach, which is to hold the parties to their bargain. The general underlying notion is that which has long been identified as underlying much of equity's traditional jurisdiction to grant relief against unconscientious conduct, namely, that a person should not be permitted to use or insist upon his legal rights to take advantage of another's special vulnerability or misadventure for the unjust enrichment of himself : cf, eg, for example, Holdsworth, History of English Laws , 3rd ed (1945), vol V, pp 293-332; Yale, Lord Nottingham's Chancery Cases , vol II (1961) Selden Society vol 79, pp 8-9; Turner, Equity of Redemption (1931), pp 22-23; Corbin, 'The Right of a Defaulting Vendee to the Restitution of Instalments Paid', Yale Law Journal , vol 40 (1931) 1013, at 1023. (my emphasis) 79Mr Einfeld submits that in the case of both mortgages it would be unconscionable for Mr Barton to assert unencumbered title to the property by reason of the mistake of the Investors' solicitors, in circumstances where Mr Barton was made aware or had reason to be aware (on 6 July 2011) of their mistake. (In this regard, I note that there seems to be no reason why Mr Barton's conscience would not equally be affected even if no knowledge of the mistake was received until a later point in time, unless by then Mr Barton had acted in some way in the belief that the discharge was not mistaken so as to render it not unconscionable for him to rely on the unencumbered title.) 80As to the necessary quality of the mistake required to give rise to the operation of an in personam claim falling within the personal equities exception to indefeasibility, there is nothing in the authorities to which I have been taken (nor have I been able to find any other authority to this effect) that limits relief to cases where there has been a mistake of fact (such as the inadvertent inclusion in a bundle of documents of the discharge in question or the incorrect description of the property on the discharge form), as opposed, for example, to a mistake as to the legal obligation of the party to effect the discharge in question. The mistakes relied upon in the St George case were not only the factual mistake as to whether the sum outstanding on the mortgage had been paid out but also the mistake as to whether there remained an operative mortgage securing the further advances; the mistake in Tutt v Doyle was as to the legal effect of the transfer having regard to the earlier mistake in relation to the subdivision of the land. Further, in Stern v McArthur the principle that relief may be granted where there is unconscientious reliance on legal rights was referred to in terms that include the concept of 'misadventure' as well as that of mistake. 81I see no reason in principle why a mistake as to the legal consequences of a particular action or (as is the case here) as to the time at which a party is obliged under a particular contract to take certain action (such as the delivery of an executed discharge of mortgage) could not ground an in personam claim for relief if it would be unconscionable for the other party in the circumstances to take advantage of that mistake. (It is, of course, possible that where the mistake is one of law it might be harder to establish that the other party knew or had reason to know of the mistake, but that is a different issue.) 82Here, I accept that the discharges of mortgage were lodged by Mr Valmas in the mistaken belief that this was something necessary to be done in advance of the Settlement Date in order to enable his clients to comply with its obligations on that date. It seems to me that this is sufficient to give rise to unconscionability of the kind claimed if it can be said that Mr Barton knew or had reason to know that the discharges had (or might well have) been lodged by mistake (irrespective of whether he knew or had reason to know of the precise nature of the mistake that had been made) and if it would be unconscionable for him to take advantage of that mistake. 83In my view, it is almost inconceivable that Mr Barton's solicitors did not appreciate that the discharges might well have been lodged by mistake, since there was no apparent reason for that to have been done in advance of the time at which the Investors were obliged to provide the discharges and before the condition to which delivery of the discharges was subject had been satisfied. There is no suggestion that Mr Barton's lawyers are not experienced lawyers. The absence of any sound commercial reason for a party, who is not yet obliged to do so, to give up its security over real property must have given Mr Johns reason to suspect that there had been a mistake of some kind. It is recognised in Tutt v Doyle and Revell that reason to know that there might well have been a mistake is sufficient for this purpose. The observation in Mr Johns' correspondence that it was open to the Investors to lodge the discharges "at any time" (they simply not being obliged to do so until the settlement date) seems to me not to be to the point. It is open to any mortgagee to give up its security in advance of payment of the debt secured without being under an obligation to do so but I venture to suggest that in commercial practice it would not often be the case that, absent a cogent reason (and none was apparent in this case), a mortgagee would do so. 84I find that Mr Barton, through his solicitor, therefore had reason to know that there might well have been a mistake on the part of the Investors or their solicitors in lodging the executed discharges of mortgage in advance of the settlement. In those circumstances, is it unconscionable for him to assert as against the Investors an unencumbered title? Mr Cotman submits that it is not and that there has been no unjust enrichment as the Investors obtained what they bargained for under the 2011 Deed. 85Mr Einfeld submits that the events that have occurred gives rise to a claim in restitution in the event that (contrary to the principal submissions made for the Investors), it is found that the Investors retain no legal or equitable interest in the land. This is put on the basis that Mr Barton has not paid to the Investors the sum of $450,000 (or any other sum) in satisfaction of his obligation under clause 2.1 of the 2011 Deed and that, by reason of the mistaken discharge of the mortgages, Mr Barton has received a benefit in that he now holds the Wellington land free of the first and second mortgages. Thus it is submitted that Mr Barton has been unjustly enriched (and/or that if Mr Barton is not now obliged to re-execute or reconvey a legal security interest in the land, he will have been unjustly enriched) by having obtained a discharge of the mortgages without repaying the debt which he was obliged by the 2011 Deed to pay to the Investors, and that he is liable to make restitution to the Investors in effect by executing registrable mortgages in the form and upon the terms of the first and second mortgages. (A declaration is thus sought to the effect that Mr Barton is liable to restore the legal mortgages to the Investors and an order that he execute legal mortgages in the terms previously given.) The claim for restitutionary relief is, in effect, the basis of the personal equity relied upon by the Investors as giving rise to an exception to the indefeasible title obtained on registration of the discharges. 86Mr Cotman submits that there is no proper basis for restitutionary relief (and that it is not now unconscionable for Mr Barton to assert unencumbered title) because Mr Barton has not been unjustly enriched by the discharges of mortgage having been registered in advance of the settlement. 87This argument turns on the construction of the release clause 6.3 (which I consider below), which Mr Cotman notes was not made conditional upon the making of the payment under clause 2.1. Mr Cotman submits that that clause 5.1 addressed what was to happen on default of payment on the Settlement Date (namely that consent judgment could be entered). Insofar as this has turned out to be a bad bargain for the Investors, Mr Cotman points to the well-recognised principle (articulated in the cases referred to above) that equity is no mender of bad bargains ( Shiloh Spinners Ltd v Harding [1973] AC 691 at 723). In this regard, he submits that the language of the 2011 Deed is unambiguous language and the fact that it might have a more commercial and businesslike operation if otherwise interpreted is irrelevant. 88I accept that the court must give effect to the relevant clauses as properly construed (even if that might produce a surprising or uncommercial result). However, the ambit of the releases provided in clause 6.3 must be construed in the light of the provisions of the deed as a whole. What the 2011 Deed clearly contemplated was that the Investors would not be obliged to provide a discharge of mortgage unless and until the settlement sum was paid and that the Investors' rights under the deed were not encompassed in the release. If, as I consider below, clause 6.3 did not operate to release any subsisting interest in the land arising by reference to the covenants contained in the registered memorandum of mortgage by which borrowings under the first loan facility were secured, then the fact that no consideration was provided for the provision of the discharge of that mortgage in advance of the time it was required to be provided makes it unconscionable in my view for Mr Barton now to seek to take advantage of the mistake in question. 89What then as to the position of the mortgagee defendants? Reliance is placed by Mr Einfeld on the observation of Mayo J in Elder's Trustee and Executor Company Limited v Bagot's Executor and Trustee Company Limited [1964] SASR 306 at 306 (his Honour questioning why a discharge of mortgage that had been prepared and was to have been held by solicitors pending settlement but was, by mistake for which the solicitors accepted the responsibility, registered at the Lands Titles Office, should be allowed to stand), that: No person should be allowed to gain any advantage from that error, nor should any person suffer detriment by reason of its rectification. 90Mr Einfeld submits that the mortgagee defendants are volunteers and places reliance on what was said in Diamond Hill Mining Pty Limited v Huang Jin Mining Pty Limited [2011] VSC 288; (2011) 84 ACSR 616 at [100] - [101] in the context of a claim (based on the decision in Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105 , as applied in Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 76 NSWLR 230 ), that certain mining licences and land received by the recipients as volunteers could be recovered by the transferor (that claim having been put as an alternative to a claim of knowing receipt). Croft J there referred to the reasoning of Allsop P in Heperu (from [130]), including the passage at [131] - [132] where his Honour had said: The reference there [in Black v Freedman ] to liability to repay was in relation to an extant bank account. It was the restoration of an identified fund that was the subject of attention. These statements of Griffith CJ do not support a personal remedy against an innocent recipient (beyond a personal obligation to restore an identified fund or asset) in addition to any proprietary remedy against the identified asset, unless, with knowledge of the character of the "advantage" from the stolen asset, the recipient seeks to retain the advantage . It was in this sense that Griffith CJ spoke of becoming a party to the fraud (in effect an accessory after the fact). That may give rise to accessory liability in equity, but it is not the same as saying that a volunteer who receives the traceable property of the wronged party comes under a personal obligation to account in money terms for property received as well as a claim to restore the property itself. Barton J agreed with Griffith CJ at 110. (my emphasis) O'Connor J, at 110-111, agreed with Griffith CJ and then expressed himself somewhat differently, though to the same substantive effect. He said that where money is stolen it is trust money in the hands of the thief and can be followed into the hands of another person. The proprietary character of the remedy can be seen in the last sentence of his reasons at 111: In all the circumstances, I am of opinion that there was a prima facie case, that she was a volunteer, and that this money retains its character as trust money and she cannot be allowed to keep it. 91In Diamond Hill, Croft J noted the observation that had been made by Allsop P in Heperu to the effect that, having received the money as a volunteer, the wife in Black v S Freedman would also have been liable on a claim for money had and received (noting Lord Templeman's comment in Lipkin Gorman v Karpnale Ltd [ 1991] 2 AC 548; [1992] 4 All ER 512 that the reasoning in Black v S Freedman applied equally to a claim for money had and received). At [100]-[101], Croft J said: Huang Jin and the transferees of the land gave no consideration for the mining licence or the land, respectively. As discussed above, the plaintiff does not seek the mining licence back from Huang Jin, but rather equitable compensation, as Huang Jin disposed of that licence to Victoria Gold Mines NL. The transferees, as volunteers, are liable to restore the property to Diamond Hill. Like the wife in Black v S Freedman & Co, the transferees are informed of the case against them and the circumstances in which they have received the property, but are still seeking to retain the advantage. On this basis, Diamond Hill seeks a declaration that it has a caveatable interest over the land and an order that the transferees transfer the land to Diamond Hill. The same result would, in my view, also be reached if regard is had to the broader circumstances surrounding the transfer of the land which attract the application of restitutionary principles on the basis of mistake on the part of the transferor, Diamond Hill, which led to the execution of the transfers. There is no evidence of any relevant prejudice to the transferees which would prevent the application of these principles. In any event, even if any prejudice could be identified, beyond that flowing from the requirement of return of the land by restitution, any such claimed prejudice would need to be considered in the context of the circumstances of the transfers and the position of the transferees as volunteers . (my emphasis) 92Mr Einfeld submits that the provision of consideration by Mr Barton in the 2011 Deed for the agreement to discharge the mortgages (i.e. the obligation to pay the settlement sum and the giving by him of the releases contained in the deed) is insufficient to amount to consideration by Mr Barton for the mistaken discharge of the mortgages in advance of the time that they were obliged to be delivered and, in relation to the mortgagee defendants, that they have provided no consideration at all for the benefit received (i.e. in the improvement in the priority ranking of their securities on discharge of the mortgages), thus clearly being in the position of volunteers. 93Reference was also made to what was said in Whiteley v Delaney [1914] AC 132, by Viscount Haldane LC: He could not have taken advantage of his own wrong, nor could he had resisted a rectification which would have made the deeds carry out the bargain of the parties. But Manks only claims through Ogden. His title is equitable, and is no greater than that of the latter , and it is, for the purposes of a question with Farrar, the title of a volunteer who has given no consideration for the new priority which he is claiming . That title, therefore, remains subject to Ackroyd's original prior mortgage, which equity will not treat as displaced by the act of Ogden. (my emphasis) 94Here, while the position of the mortgagee defendants is affected if relief is granted to restore the Investors to their position as secured mortgagees (insofar as the former will lose the advantage gained from the improvement in the priority accorded to their equitable mortgages), I accept that nothing has been provided by those defendants for the new priority that results from the mistaken discharge of the mortgages in question. Mr Einfeld notes that the unregistered equitable mortgages were taken with notice of the then subsisting registered mortgages and well before the Discharges of Mortgage were mistakenly lodged for registration. It cannot be said that in reliance on the discharge of the earlier mortgages those parties acted to their detriment in providing finance to Mr Barton. Mr Einfeld submits that the lodgement of caveats by these third party mortgagees accords them no additional rights, nor confers upon them any priority (referring to FNCB-Waltons Finance Limited v Crest Realty Pty Limited (1977) 10 NSWLR 621 at 631 per Waddell J). 95Subject to consideration of the argument raised in relation to the construction of the release claim, I am satisfied that the Investors have established the basis for relief to remove the unconscionability that would otherwise arise of Mr Barton relying on the mistaken discharge of the mortgages. (ii) Construction of release in clause 6.3 96I turn then to the defendants' contention that, upon execution of the 2011 Deed, the Investors ceased to have any equitable or other interest in the subject property ([Points of Defence [5(b)], [11] & [19]) (and hence that there is no unconscionability in the assertion that the mortgages have been discharged and the title to the property is unencumbered thereby, since the mortgages by the time of their discharge in fact secured nothing). 97As I understand it, it is the defendants' position that, upon execution of the 2011 Deed, the Investors not only released Mr Barton from all existing debts and claims (including claims to any monies that may have been owing under the first and second mortgages), leaving the Investors to their entitlement to payment of the sum fixed under the 2011 Deed and interest thereon but also released Mr Barton from all covenants contained in the mortgage or underlying Deeds of Loan from that date and thereupon ceased to have any entitlement to assert an interest (equitable or otherwise) in the land. (Logically that would mean it was not unconscionable for Mr Barton to rely on unencumbered title if the present result was what had been contemplated or if the effect of what the parties contemplated meant that Mr Barton obtained no advantage from the circumstances that have transpired.) 98In this regard, it is noted by Mr Cotman that a mortgage of Torrens system land is not a conveyance of an interest in land but, rather, a charge on the land to secure the payment of a debt (Fisher & Lightwood's Law of Mortgage , 2nd Australian edition, at [4.1] and [4.3]). As Professor Butt notes in Land Law at [1820], although registered mortgages are sometimes equated with legal mortgages of land under old system title, the two are "fundamentally different" since, under s 57 of the Real Property Act 1900 (NSW), the registered mortgagee acquires an interest in the land, but neither the mortgagor's "legal" estate nor any "estate" at all. 99Mr Cotman submits that clause 6.3 of the 2011 Deed releases the debts under the mortgages and that, by doing so, the security for the debts has also been released (relying on the general principle is that, by releasing the debt, the security for the debt is also released - Cowper v Green (1841) 7 M & W 633; 151 ER 920). It is further submitted that the payment obligations contained in the 2011 Deed were not covenants secured by the first and/or second mortgages (reliance being placed on Queensland Premier Mines Pty Ltd v French [2007] HCA 53 ; (2007) 235 CLR 81 in this regard), so as to permit reliance on the those mortgages as a basis for asserting a security interest. 100Insofar as Mr Cotman submits that there was no "debt" as such but simply a claim (as defined in the 2011 Deed) in relation to the $420,000, with respect I disagree. There was a debt arising on acceptance of the 2003 offer of compromise. That debt (representing the rights arising under the agreement constituted by the acceptance of that offer) was assigned ultimately to the Investors. Although the quantum of the debt had not been quantified (that depending on the outcome of the off-setting claims in the Queensland proceedings), it seems to me that there was an underlying debt secured by the mortgages at the time of entry into the 2011 Deed. 101Mr Einfeld submits that even if it can be said (contrary to his submission) that the Investors' prior debts were released by the terms of the 2011 Deed (and it seems to me that this is clearly the effect of clause 6.3), the fundamental covenants contained in the loan agreement subsist and have the effect that the mortgagees' entitlement to hold the security for the debt provided for in that deed is not released. Mr Einfeld notes that there is only one reference to the release of covenants by the Investors in the 2011 Deed (and that is part of the general release provision). It is submitted that, had it been the intention to effect a release of the security by the provision in clause 6.3, then the parties would expressly have said so. In particular, Mr Einfeld submits that the language of clause 6.3 does not encompass a discharge of the proprietary interests of the Investors, distinguishing between a mortgage and an action, debt, agreement, cause of action or claim of the kind expressly released by clause 6.3. 102Further, and I accept the force of this submission, it is said that clause 6.3, insofar as it expressly preserved the Investors' rights to enforce the provisions of the 2011 Deed, maintains the entitlement of the Investors under clause 4.1 to retain the Certificate of Title and to refrain from providing executed Discharges of Mortgage until Mr Barton made payment in full. Mr Einfeld submits that the parties thus contemplated and accepted the continued operation of the two mortgages beyond the date of the 2011 Deed. In this regard, Mr Einfeld relies on the (uncontentious) proposition that the deed must be read as a whole ( Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109; Wilkie v Gordian Runoff Limited [2005] HCA 17 ; (2005) 221 CLR 522 at [16]). 103It is submitted by Mr Einfeld that the manifest intention of the parties was that the obligation to pay $450,000 is an embodiment of the obligation to pay the original sum $420,000 plus interest (in essence, a continuation of the same debt). Mr Einfield submits that if that is not the case (and the former debt of $420,000 was released by clause 6.3), then it was instantaneously substituted by clause 2.1 new debt of $450,000 such that at no point in time was it the case that the first mortgage secured no debt. On the basis that there is no hiatus between the release of the first debt and the creation of the new debt (it being said all to have happened at the one time), it is said that the language of the deed is apt to render the settlement sum of $450,000 figure as subject to and secured by the two legal mortgages (or alternatively the two equitable mortgages that are on the same terms as the original legal mortgages). Thus Mr Einfeld submits that even if the discharge of the respective mortgages is not reversed (and all the Investors are left with are the underlying mortgages), this debt is nevertheless made subject to those mortgages and there is no new mortgage (the existing mortgage simply securing a different debt). 104The fundamental question thrown up by the parties' respective submissions on this issue is whether the 2011 Deed operated to release all rights under the initial Deeds of Loan and mortgages which had been assigned to the Investors. 105It seems to me that there is no doubt that the 2011 Deed operated from its execution to release any claim in relation to the moneys that had been outstanding under the original loan facilities (assuming any such claim remained after the compromise agreed in 2003), i.e. the original debt arising under the Deeds of Loan, and the debt (or any claim in relation thereto) arising from acceptance of the Offer of Compromise in 2003. (The corresponding release by Mr Barton operated to release the claims that Mr Barton had made in the Queensland proceedings as to the existence of off-setting claims in respect of that debt.) This conclusion follows from the broad reference in the clause to the release of all "debts", "sums", "claims", "causes of action" or "demands that the Investors have or ever had against Mr Barton. 106In my opinion, the 2011 Deed clearly replaced the parties' respective rights in relation to those claims with an agreement on the part of Mr Barton to pay, and an agreement by the Investors to accept, a fixed sum of $450,000. This was (having regard to the recitals in the 2011 Deed) clearly intended as a compromise of all the claims then between the parties in relation to the matters in dispute or which had been in dispute (and extended to future claims in relation to those matters - although there would be a question of construction as to the ambit of the release of future claims, which it is not necessary to consider in the present proceedings). No doubt it was intended to bring to an end the longstanding disputes that had arisen with Mr Barton and that had given rise to court proceedings in two states. It nevertheless (and not surprisingly) preserved the rights arising under the deed itself. 107I do not accept that the payment obligation imposed by clause 2.1 constituted in some fashion a "composite" debt or a modification of an existing debt, if by this it is suggested that no new debt or obligation to pay money then arose. What the parties in my view were doing under this 2011 Deed was giving up rights in relation to the debt arising out of the 2003 compromise agreement (and the corresponding counterclaims the subject of the Queensland proceedings by reference to which the final quantum of that debt was to be calculated) for the certainty of a new agreement to pay the fixed amount in full and final satisfaction of the claims and disputes between them. This can be tested by asking under what agreement would the Investors sue to enforce the right to payment (assuming for present purposes that there had been no provision for entry of consent judgment for that sum). The answer must be that the Investors would sue on the obligation contained in the 2011 Deed not the 2003 accepted offer of compromise. That seems to me not to be a surprising outcome in circumstances where parties are compromising their disputes and making provision for rights to arise under a new compromise agreement. In that sense, the 2011 Deed can be seen as superseding the arrangements under which moneys outstanding under the original loan facilities were to be repaid. 108However, what I also do not accept is the proposition that, on the proper construction of the 2011 Deed, Mr Barton was released by the Investors from the covenants in their favour in the mortgages and underlying documents at least insofar as they operated (on the proper construction of those documents) to secure the payment of the obligations imposed under the 2011 Deed. Otherwise, there would have been no point to the provision that obliged the Investors to deliver the discharges of the mortgages only upon payment of the settlement sum. 109As to whether the then existing mortgages were capable on their terms of securing the monetary obligations imposed on Mr Barton in the 2011 Deed, Mr Einfeld relies on clauses 11.1 and 26.4 of the registered Memorandum of Mortgage (expressly incorporated into the first mortgage), providing that the mortgage would not be wholly or partially discharged if any of the moneys secured by the mortgage remained payable (clause 11.1) and that the mortgage would not be affected or discharged by any mistake or other act on the part of the mortgagees or any other person (clause 26.4(c) and (f)). Thus it is submitted that the first mortgage secured the $450,000 obligation as at the time of the mistaken registration of the Discharge of Mortgage. 110I accept that, in its terms, the registered Memorandum of Mortgage incorporated into the first mortgage encompassed an agreement that the security provided for under the first Deed of Loan extends to moneys that Mr Barton might subsequently become liable to pay to the Mortgagee or its successors in title. The definition of Moneys Hereby Secured plainly covers such moneys. Thus (absent any release of those provisions by reference to clause 6.3 of the 2011 Deed) the debt of $450,000 arising under the 2011 Deed would be secured by the first mortgage and the Investors would continue to have the rights available under that mortgage in relation to what I consider to have been the newly created debt of $450,000. (If so, it cannot be said that, by releasing the earlier debt, the security was automatically discharged). 111If, properly construed, the 2011 Deed operated to release all rights that the parties had under the first Deed of Loan and registered Memorandum of Mortgage, with effect from the date of the Deed, as the defendants contend, then I accept that the rights that the Investors now seek to invoke under the first mortgage (among other things, to argue that as at the date of the mistaken discharge there was still a subsisting mortgage) will have been released. 112Had clause 6.3 not included the one word reference to "covenants", then I would have had no hesitation in concluding that, although clause 6.3 released the $420,000 debt and claims in relation thereto, the 2011 Deed did not release any contractual rights subsisting under the first mortgage in relation to the $450,000 debt newly created by the 2011 Deed. Does the reference to "covenants" alter that conclusion? I have concluded that it does not for the following reasons. 113The relevant clauses have the appearance of boilerplate clauses - being in broad terms and without reference to specific matters referable to particular claims, covenants or the like. The releases given by the Investors mirror those given by Mr Barton. On one view (and this is the position for which Mr Barton contends) the clause might be construed as releasing all covenants other than those expressly contained in the Deed itself. However, if so, the provisions relating for the delivery of the Discharge of Mortgages only upon payment of the debt arising under the 2011 Deed makes no commercial sense. For it to have been contemplated that the Investors would retain the benefit of the Mortgages until payment of the sum provided for in the Deed, it must have been contemplated that the rights under those mortgages (and the underlying Deed of Loan) would continue until that time. 114Therefore, as a matter of construction of the 2011 Deed, I find that it did not operate to release the contractual promises (or covenants) contained in the then existing first mortgage and Deed of Loan. On that basis, I find that the obligation to pay $450,000 provided for under the 2011 Deed is one that is secured by the first mortgage. 115The next question is as to the effect of the registration of the Discharge of Mortgage (albeit that it was done by mistake on the part of the Investors' solicitor). It operates to discharge the registered security interest over the land not the underlying debt (hence the recognition by Mr Cotman that the Investors retain a claim as debtor of Mr Barton - albeit unsecured). If the covenants under the first Deed of Loan subsisted as at the date of the mistaken discharge of the mortgages, as I consider they did, then notwithstanding the removal of the legal mortgage interest from the register, there is a continuing agreement to provide security for the Moneys Hereby Secured and that will constitute an equitable mortgage (in the absence of registration of that mortgage interest). Thus, while the legal mortgage interest was discharged, there remained a subsisting obligation to provide security for the Moneys Hereby Secured, including the $450,000 and thus I am of the view that the Investors retain an equitable interest in the land. 116That equitable mortgage interest is one that was created when the Deed of Loan was first executed (ahead of the mortgagee defendants' equitable interests). There has been no postponing conduct in circumstances where the mortgage was registered (and the mortgagee defendants were on notice of it when they entered into their respective equitable mortgages). Further, there is no issue raised as to the initial stamping of the Deed of Loan and mortgages, albeit that they might now perhaps need to be upstamped if the amount secured thereby has increased. 117Had I been of the contrary view (namely that clause 6.3 operated to release the covenants contained in the initial Deed of Loan and the first mortgage), and hence the discharges of the mortgages had operated to discharge an equitable interest in the land arising under the Deeds of Loan, because clause 6.3 released all covenants thereunder) then the question would be whether the rights under the 2011 Deed (which were expressly preserved) give rise to an implied agreement to grant a mortgage to secure the $450,000 payment (since there is no express agreement under the Deed to grant a new mortgage in respect of that debt). I consider this when addressing issue (iv) below. 118My conclusion as to this second issue, therefore, is that on the proper construction of the 2011 Deed, it did not operate to release the covenants contained in the mortgages, delivery of discharges of which were not required until the payment of the sum of $450,000 on the Settlement Date. (iii) Subrogation 119Insofar as the Investors are left to rely on an equitable mortgage arising either from a subsisting agreement to grant a mortgage (assuming the covenants in the registered Memorandum of Mortgage securing the first Deed of Loan are not released and extend to moneys that later became owing to the Investors under the 2011 Deed) Mr Cotman submits that the 2011 Deed itself constitutes the new equitable mortgage, and thus that the Investors will not have priority over the prior equitable mortgages in respect of which caveats have been lodged (though, in light of their registered caveat, they would have priority over the registered proprietor and any unsecured creditors). 120Mr Einfeld's response to this is that if Mr Cotman is correct in this submission, which is not accepted, the equitable principle of subrogation can be applied by extension in the circumstances to enable the (the Investors) to overcome that lack of priority. (In light of my earlier findings this issue does not arise but I consider below what would have been my findings had it arisen for determination.) 121In Ghana Commercial Bank v Chandiram [1960] AC 732 at 745 the Privy Council applied the principle that where a third party pays off a mortgage that party is presumed (unless the contrary appears) to intend that the mortgage shall be kept alive for its own benefit. In Burston Finance Ltd v Speirway Ltd [1974] 3 All ER 735, Walton J said at 1652 - 3 (to which reference is made in Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (4 th edn) at [9-060]) that the basis of the doctrine is simply that "where A's money is used to pay off the claim of B, who is a secured creditor, A is entitled to be regarded in equity as having had an assignment to him of B's rights as a secured creditor". 122Mr Einfeld submits that the equitable principle of subrogation can be applied (if it be the case that the earlier secured debts were discharged) to the circumstances in which the mortgagees entered into the 2011 Deed and thereby "discharged" the earlier debts and created a new debt as mortgagees. In effect, this requires the "third parties" in this instance (i.e. the Investors) to be treated as the very mortgagees into whose shoes they seek to step. Mr Einfeld recognises that the mortgagees have not paid any money in order to discharge the previous mortgages, but submits (at T.19) that there has been a "notional substitution of the obligation to receive the payment on our [the mortgagees'] part and on the part of the mortgagor to pay". 123The issue is thus whether the equitable principle of subrogation can be applied by analogy to the present circumstances. In Cochrane v Cochrane (1985) 3 NSWLR 403, Kearney J said (at 405): This principle is based on equity's concern to prevent one party obtaining an advantage at the expense of another which in the circumstances of the case is unconscionable. Hence, there is a common thread running through there relevant cases to the effect that the conscience of the mortgagor should be affected so as to cause the mortgage to be kept alive. This is illustrated in the text book examples first, of a third party not being entitled to a right by way of subrogation where he simply lends the money on an unsecured basis to the mortgagor who then uses such funds to pay off the mortgage; and secondly, of a third party being so entitled where he advances the money to pay out the mortgage on the understanding that security would be provided for such advance upon the mortgage being paid out. As a corollary to this basis for the principle, there is no occasion for equity to intervene by way of subrogation where there is available to the third party a remedy at law or in equity sufficient to avoid an unconscionable result . (my emphasis) 124In Registrar General v Gill (unreported, NSWCA, 16 August 1994), Gleeson CJ, Mahoney and Priestley JJA said that: The equitable principles relating to subrogation aim to adjust the interests of three parties, such as a creditor, a debtor and an insurer or surety, in such a way as to avoid the unconscionable result of double recovery by the creditor or inequitable discharge of the liability of the debtor. 125In Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd [2003] NSWSC 1072; (2003) 12 BPR 22,257, Bryson J (as his Honour then was), referring to a claim that the plaintiffs were entitled to rely, by subrogation, on a registered first mortgage to secure them to the extent of moneys paid out to the first mortgagee with the intention of securing a discharge of that mortgage (so as to prevent registration of a then unregistered discharge of mortgage), concurred with what had been said by Kearney J in Cochrane . Bryson J there considered Banque Financiere and stated: I would respectfully say that Lord Hoffman's relation, at AC 234; All ER 747, of subrogation to unjust enrichment was not articulated in the authorities to which his Lordship referred, and is not established in Australian case law. In my understanding explanation of subrogation in terms of restitution and unjust enrichment was introduced by Millett LJ in Boscawen v Bajwa at 776, and was not earlier found ... To my mind it is enough to see subrogation as an entitlement which equity accords to the payer, firmly established by judicial decisions notwithstanding that a satisfactory doctrinal basis is difficult to identify, and notwithstanding that classification of the mortgagor's position as unconscionable seems very attenuated. 126In Paul v Speirway Ltd (in liq) [1976] 2 All ER 587 at 597, Oliver J stated that: It is always dangerous to try to lay down general principles unnecessarily, but it does seem to me to be safe to say that where on all the facts the court is satisfied that the true nature of the transaction between the payer of the money and the person at whose instigation it is paid is simply the creation of an unsecured loan, this in itself will be sufficient to dispose of any question of subrogation. That really, as it seems to me, is to say no more than that the question of subrogation or no subrogation cannot be divorced from a review of the rights proved or presumed to be intended to be created between the payer of the money and the person requiring its payment. 127The operation of subrogation was described by Cohen J in State Bank of New South Wales v Geeport Developments Ltd (1991) 5 BPR 11,947, (at 19) as follows: Equity does not create a fresh right against the debtor or mortgagor, but against the creditor or mortgagee. In that way a first mortgage, when paid out by a person who is subrogated, remains in priority to a subsequent encumbrance, even though that later encumbrance came into being, whether at law or in equity, at an earlier time that the payment. See Drew v Lockett (1863) 32 Beav 499; 55 ER 196. On this principle the interest which the subrogated person obtains is the existing mortgage interest and not a new equitable interest in the land. 128Reference was made to Boscawen and others v Bajwa and another; Abbey National plc v Boscawen and others [1995] 4 All ER 769, where it was said that equity intervenes on the basis of the conduct of the parties and in circumstances where it is unconscionable for the mortgagor to deny the interest of the third party. Millett LJ there said of a claim for subrogation: The appellants submit that the mere fact that the claimant's money is used to discharge someone else's debt does not entitle him to be subrogated to the creditor whose debt is paid. There must be 'something more': Paul v Speirway Ltd (in liq) [1976] 2 All ER 587 at 597, [1976] Ch 220 at 230 per Oliver J; and see Orakpo v Manson Investments Ltd [1977] 3 All ER 1 at 7, [1978] AC 95 at 105, where Lord Diplock said - 'The mere fact that money lent has been expended on discharging a secured liability of the borrower does not give rise to any implication of subrogation unless the contract under which the money was borrowed provides that the money is to be applied for this purpose: Wylie v Carlyon [1922] 1 Ch 51.' From this the appellants derive the proposition that in order to be subrogated to the creditor's security the claimant must prove (i) that the claimant intended that his money should be used to discharge the security in question (that being the 'something more' required by Oliver J) and (ii) that he intended to obtain the benefit of the security by subrogation. I cannot accept that formulation as a rule of general application regardless of the circumstances in which the remedy of subrogation is sought. The cases relied on were all cases where the claimant intended to make an unsecured loan to a borrower who used the money to discharge a secured debt. In such a case the claimant is not entitled to be subrogated to the creditor's security since this would put him in a better position than he had bargained for. ... In [ Paul v Speirway ] Oliver J was plainly limiting his observations to a claim to be subrogated to the creditor's security. The mere fact that the payer of the money intended to make an unsecured loan will not preclude his claim to be subrogated to the personal rights of the creditor whose debt is discharged if the contractual liability of the original borrower proves to be unenforceable: see eg Re Wrexham, Mold & Connah's Quay Rly Co [1899] 1 Ch 440 (where the borrowing was ultra vires) and B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48 (where the borrowing was unauthorised). In Orakpo v Manson Investments Ltd [1977] 3 All ER 1 at 7, [1978] AC 95 at 107 Lord Diplock pointed out that the remedy of subrogation was available in a whole variety of widely different circumstances, and that this made- 'particularly perilous any attempt to rely on analogy to justify applying to one set of circumstances which would otherwise result in unjust enrichment a remedy of subrogation which has been held to be available for that purpose in another and different set of circumstances.' The converse is equally true. It is perilous to extrapolate from one set of circumstances, where the court has required a particular precondition to be satisfied before the remedy of subrogation can be granted, a general rule which makes that requirement a precondition which must be satisfied in other and different circumstances. In the present case there was no relevant transaction between Abbey National (the payer of the money) and Mr Bajwa (the person at whose instigation it was paid). This does not mean that the test laid down by Oliver J in Paul v Speirway has not been satisfied; it means that the test is not applicable. In Butler v Rice [1910] 2 Ch 277 the fact that the debtor had not requested the claimant to make the payment and did not know of the transaction was held to be immaterial. This is not to say that intention is necessarily irrelevant in a case of the present kind; it is to say only that where the payment was made by a third party and the claimant had no intention to make any payment to or for the benefit of the recipient the relevant intention must be that of the third party. (my emphasis) In cases such as Butler v Rice and Ghana Commercial Bank v Chandiram [1960] 2 All ER 865, [1960] AC 732, where the claimant paid the creditor direct and intended to discharge his security, the court took the claimant's intention to have been to keep the original security alive for his own benefit save in so far as it was replaced by an effective security in favour of himself. In the present case the Abbey National did not intend to discharge the Halifax's charge in the events which happened, that is to say in the event that completion did not proceed. But it did not intend its money to be used at all in that event. If Butler v Rice and similar cases are relied upon to support the proposition that there can be no subrogation unless the claimant intended to keep the original security alive for its own benefit save in so far as it was replaced by a new and effective security, with the result that the remedy is not available where the claimant had no direct dealings with the creditor and did not intend his money to be used at all, then I respectfully dissent from that proposition. I prefer the view of Slade LJ in Re TH Knitwear (Wholesale) Ltd [1988] 1 All ER 860 at 867, [1988] Ch 275 at 286 that in some situations the doctrine of subrogation is capable of applying even though it is impossible to infer a mutual intention to this effect on the part of the creditor and the person claiming to be subrogated to the creditor's security. In the present case the payment was made by Hill Lawson, and it is their intention which matters. As fiduciaries, they could not be heard to say that they had paid out their principal's money otherwise than for the benefit of their principal. Accordingly, their intention must be taken to have been to keep the Halifax's charge alive for the benefit of the Abbey National pending completion. In my judgment this is sufficient to bring the doctrine of subrogation into play. 129More recently, in Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291, Neuberger LJ (with whom Lord Phillips MR and Kennedy LJ agreed), sitting in the Court of Appeal in England and Wales, set out the following principles in relation to the law of equitable subrogation, having first accepted the definition of principle stated by Walton J in Burston Finance. At [32] - [44], his Lordship said: First, subrogation "embraces more than a single concept": it is sometimes contractual in nature and it is sometimes based on equity - see per Lord Diplock and per Lord Keith of Kinkel in Orakpo at 104D and 119A-B. The particular type of subrogation with which cases such as the present are concerned was described by Lord Hoffmann in Banque Financiere at 231G-H as: "An equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived." Any reference hereafter to subrogation should be treated as a reference to this equitable species of subrogation. Secondly, subrogation is a remedy primarily aimed at preventing unjust enrichment. That is clear from what was said by Lord Diplock in Orakpo -v- Manson Investments Limited [1978] AC 95 at 104C-D, and it has been recently repeated by Millett LJ in Boscawen at 335C, and by Lord Hoffman and by Lord Clyde in Banque Financiere respectively at 231G-H, and 237D-E. Thirdly, subrogation is a flexible remedy, which nonetheless must be applied in a principled fashion. That was made clear by Millett LJ in Boscawen at 338G - 339C relying in part on what was said by Lord Diplock in Orakpo at 104, and by Lord Clyde in Banque Financiere at 237D-E. Fourthly, a classic case of subrogation is that described by Walton J in Burston Finance at 1652B-D, cited above. The reasons that a lender's anticipated security may not have been forthcoming so that he has sought to invoke subrogation are various. Examples include the lender's ineptitude (as in Burston Finance ), the lender being misled (as in Banque Financiere and in Boscawen ), the borrower being an infant (as in Thurstan -v- Nottingham Building Society [1903] AC 6), and the borrowing being ultra vires the borrower (as in Re Cork and Youghall Railway Co (1860) LR 4 Ch App 748). Fifthly, although the classic case of subrogation involves a lender who expected to receive security (in the proprietary sense - eg a mortgage) claiming subrogation to another security, it can apply to personal rights. In Re Wrexham Mold and Connah's Quay Railway Co [1899] 1 Ch 440 at 458, Vaughan Williams LJ referred to the claim for subrogation being to "the rights of the creditor who has been paid off", and does not appear to have limited those rights to proprietary rights. In Banque Financiere , the lender bargained for what Lord Hoffmann called at 229C "a negative form of protection ... in the form of an undertaking", which he did not get. This did not prevent his claim to be subrogated to a security, albeit essentially as a personal remedy - see per Lord Steyn at 228C-D and Lord Hoffmann at 229C. Sixthly, the fact that a lender of money gets some security does not prevent him from claiming to be subrogated to another security: see Banque Financiere , perhaps most clearly per Lord Hutton at 241C-D. In that case, the lender anticipated two forms of protection, one of which (a pledge of shares) was provided as agreed. Although this was "the principal security" (see at 229G), it did not prevent the lender obtaining a subrogated right owing to the failure of the other form of protection. Seventhly, a lender cannot claim subrogation if he obtains all the security which he bargained for, as in Burston Finance (applying Capital Finance Co Limited -v- Stokes [1969] 1 Ch 261) or where he has specifically bargained on the basis that he would receive no security as in Paul -v- Speirway Limited (in liquidation) [1976] 1 WLR 220. Eighthly, the fact that the lender's failure to obtain the security he bargained for was attributable to his negligence is irrelevant. It does not prevent him from claiming subrogation - see per Lord Hoffmann at 235E-G in Banque Financiere . The effect of that observation was probably impliedly to disapprove observations of Walton J in Burston Finance at 1657C and F. However, Walton J was concerned with a case where the lender obtained the security, but negligently failed to protect himself by registering it, whereas in Banque Financiere the lender's negligence was in failing to check that he had obtained the security. Ninthly, the absence of a common intention on the part of the borrower and the lender that the lender should have security is by no means fatal to a lender's subsequent claim for subrogation: see Banque Financiere at 232B-234C. However, the intention of the parties to the arrangement which is said to give rise to a claim for subrogation may be "highly relevant": ibid at 234D. It would seem that the intention of the lender is particularly important (see for example Banque Financiere at 235A-B and Boscawen at 339H-340A). Tenthly, subrogation cannot be invoked so as to put the lender in a better position than that in which would have been if he had obtained all the rights for which he bargained: see Banque Financiere at 235D and 236G-273B per Lord Hoffmann. This point was also made by Lindley MR in Wrexham at 447. Eleventhly, it is difficult, and may be impossible, for a lender who has obtained security to invoke subrogation where the security he has obtained gives him all the rights and remedies of security to which he claims to be subrogated (see Burston Finance at 1653D-E), or is a security in which the original security would naturally merge (see Burston Finance at 1653C and per Lord Diplock in Orakpo at 105B-C). Twelfthly, the capital sum in respect of which a lender is subrogated cannot normally be greater than the amount of the secured debt that has been discharged: see per Lord Diplock in Orakpo at 104G, and per Evans LJ in Halifax Mortgage Services -v- Muirhead 76 P&CR 418 at 426. Finally, normal equitable principles apply to subrogated rights. Thus, the familiar equitable defences can be raised against a claim for subrogation, and priority as between the person with the subrogated right and other parties are to be determined in accordance with normal equitable principles: see Halifax -v- Omar , at paragraphs 81-83 per Jonathan Parker LJ. 130This formulation has not been wholly accepted in Australian law. In Saffron Sun Pty Ltd v Perma-Fit Finance Pty Ltd (in liq) [2005] NSWSC 1317; (2005) 65 NSWLR 603, Windeyer J stated (at [13]) that: Australian law does not embrace all of the thirteen point summary of subrogation enunciated by Neuberger LJ in Cheltenham & Gloucester plc v Appleyard [2004] 13 EG 127 and in particular does not embrace the acceptance there that equitable subrogation is a remedy to reverse unjust enrichment: see the report of Challenger Managed Investment Ltd v Direct Money Corporation Pty Ltd in (2003) 12 BPR 22257 at 22269 and see the discussion in E L G Tyler, P W Young, C Croft, Fisher and Lightwood's Law of Mortgage , 2nd Australian ed (2005) Sydney, Butterworths LexisNexis at 872 [42.19]. 131In Fisher and Lightwood's Law of Mortgage (2 nd Australian edn), the learned authors note (at [42.19]), that: In his article on this case, G Tilley, in 'Restitution and the Law of Substitution in England and Australia' (2005) 79 ALJ 518 remarks that this is a useful summary of the law for Australia, but that, insofar as it relies heavily on Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221; [1998] 1 All ER 737, which has not, at least yet, been recognised in Australia, care must be taken with many of the propositions. He notes that proposition 8 is questionable...thus claims in Appleyard such as 'subrogation is a remedy primarily aimed at preventing unjust enrichment' might be seen as denying the equitable basis of the remedy as the Australian courts currently prefer it to be framed. 132In Equity: Doctrines and Remedies, the authors consider the correctness of the decision in Banque Financiere (at [9-075]): ... However, rather than asking whether it was unconscionable for OOL to keep the advantage it had gained from BFC's mistake, as Kearney J had noted in Cochrane v Cochrane (to which their Lordships do not appear to have been taken), and consistently with Millett LJ's analysis in Boscawen v Bajwa [1995] 4 All ER 769 (whose judgment was described as "valuable and illuminating"), Lord Hoffmann applied the rules of unjust enrichment, which turned ... on whether the enrichment was "unjust". That is often an unhelpful and unilluminating exercise. Even Goff and Jones acknowledge the difficulty of identifying "unjust" enrichment in subrogation, which by definition involves multilateral, rather than bilateral relations (R Goff and GH Jones, Law of Restitution , 5 th edn) (although this has not deterred C Mitchell, The Law of Subrogation, 1994). In Australia, at least, unjust enrichment is descriptive as a legal concept, but not normative as of itself giving rise to rights and obligations, and an analysis of "unjustness" has been eschewed ( David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-9. 133The question whether the party providing the funds to discharge the mortgage has done so in order to keep the security alive can be determined by ascertaining the intention of the party making the payment. If all the party intended to obtain was an unsecured loan, then the party cannot seek to improve his/her position by asking equity to provide more ( State Bank of South Australia v Rothschild Australia Ltd (1990) 8 ACLC 925). 134Mr Einfeld recognises that the principle must be applied by way of extension in this case. The Investors say that if the construction of clause 6.3 is correct then what has occurred is the substitution of one entitlement as mortgagee to be paid the mortgager for another; hence while it is not a payment in cash it is a notional substitution of the obligation to receive the payment on the part of the Investors and on the part of Mr Barton to pay. By analogy, Mr Einfeld submits that the Investors are entitled to stand in the shoes of (themselves as) first and second mortgagee of the original mortgages if otherwise they have been discharged. It is said that what happened in essence (if the scenario put by the defendants is correct) was that the Investors on that scenario paid out another mortgage (their own). 135Mr Cotman submits that the principle underlying the entitlement to subrogation (where there is a third party payment of another person's secured debt) is no more than an application of a more general rule that unless there is some reason to explain why a person pays for a property the interest of which is in someone else a resulting trust arises but that where there is an explanation for the payment no such presumption would arise. Here, it is said, there is a clear compromise, on the face of the deed, to explain the discharge of the mortgages and hence no right to subrogation would arise (there being an agreement, in effect, that acceptance of the compromise will cause the amount payable under that compromise to be paid in lieu of the amount of the claim which was secured under the existing mortgages). 136Further, Mr Cotman submits that this is not the case of a consensual substitution of one secured creditor with another. (In this regard Mr Cotman further submits that the amount of $420,000 had not, as at the date of the 2011 Deed, matured into a debt giving one access to the first and second mortgages and that it is relevant that there is nothing expressed in the Deed to provide for the securing of $450,000 payment under the first and second mortgages.) 137Mr Einfeld relies on the presumed intention arising out of the notional payment out of the debt and submits that no consensual substitution is required. Further, it is submitted that the language of the 2011 Deed is consistent with that intention because the deed acknowledges the right of the Investors to retain the discharges and certificate of title until payment. It is submitted that clear language would be required to rebut such a presumed intention and that there is none in this case. 138The stated purpose of the principle of subrogation as applied in this context does not in my view lend itself to an application of the kind that is sought by Mr Einfeld. As recognised in Registrar-General v Gill and Cochrane v Cochrane (quoted above), the intervention of equity in this context aims to adjust the interests of three parties, and to avoid the unconscionable result that a third party, who has paid to discharge a mortgage or other security for the purpose of obtaining the benefit of that mortgage or security, is not able to take advantage of that benefit. Not only is there no "third party" in the present circumstances, but also no money has been expended in order to discharge the prior mortgages and therefore make it unconscionable for subrogation not to occur. 139I am not satisfied that the principles of subrogation applies in the present instance. In any event, in the circumstances there is no occasion for equity to intervene where I have found that there is an otherwise available remedy to avoid an unconscionable result in this case (adopting the language in Cochrane ). (v) Equitable Mortgage 140Professor Butt notes that it is settled law that, by analogy with the position under old system title, an agreement for valuable consideration to grant a mortgage over Torrens title land creates an equitable mortgage over that land (see Butt, Land Law (3 rd edn) at [1824]). 141Mr Cotman submits that (even apart from the defendants' argument based on the construction of clause 6.3) the 2011 Deed is not on its face capable of creating an equitable mortgage or charge to secure the payment by Mr Barton of the amount specified in clause 2.1 of that document. He notes that, to be valid, an equitable mortgage must be in writing, signed by the mortgagor (pursuant to sections 23C and 54A of the Conveyancing Act 1919 (NSW)) and that an equitable mortgage is not effective and is not enforceable unless it is created or evidenced by a written instrument that sets out its terms (per Bryson J in Double Bay Newspapers Pty Limited v AW Holdings Pty Limited (1996) 42 NSWLR 409 at 418). 142In particular, Mr Cotman submits that the writing must identify the essential terms of the mortgage ( Nearhaze v The Official Trustee [1999] NSWSC 959; Shawyer v Amberday Pty Limited (In Liq) [2001] NSWSC 399; GE Commercial Corporation (Australia) Pty Limited v L&B Enterprises Pty Limited [2009] NSWSC 770 and Performance Capital Mortgage Pty Ltd v Motive Finance & Leasing Pty Limited [2010] NSWSC 429) and that the term establishing what debt or obligation is to be charged on the land is an essential element of any mortgage ( Double Bay Newspapers ). It is submitted that the 2011 Deed does not meet this requirement. (Of course, what Mr Einfeld is submitting is that the payment obligation under the 2011 Deed falls within the definition of Moneys Hereby Secured under the first mortgage and hence is subject to the agreement for security contained in that document - the terms of which are clear.) 143Reference was made to what was said as to the elements of an equitable charge in Swiss Bank Corporation v Lloyds Bank Limited & Ors [1982] AC 584 at 594-595 (and to Peters v Lithgow Forge Pty Limited & Ors [2010] NSWSC 283 at [45] per Slattery J): An equitable mortgage is created when the legal owner of the property constituting the security enters into some instrument or does some act which, though insufficient to confer a legal estate or title in the subject matter upon the mortgagee, nevertheless demonstrates a binding intention to create a security in favour of the mortgagee, or in other words evidences a contract to do so: see Fisher and Lightwood's Law of Mortgage, 9th ed. (1977), p. 13. An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially appropriated to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale: see Fisher and Lightwood, p. 14. (my emphasis) 144I accept that the provisions of the 2011 Deed on their face may be insufficient to evidence a fresh agreement to create a mortgage in the sense considered above. However, as Professor Butt recognises, an equitable mortgage may also be created by the deposit of the "title deed" (in practice, the certificate of title) as security for the money advanced. In equity, the deposit of the certificate of title as security for money advanced is prima facie evidence of an agreement to grant a mortgage over the property and therefore, an equitable mortgage arises ( Ex parte Langston (1810) 17 Ves 227; 34 ER 88; UTC Ltd v NZI Securities Australia Ltd (1991) 4 WAR 349 at 351). The deposit of title deeds alone will give rise to a presumption of an equitable mortgage ( Re Wallis & Simmonds (Builders) Ltd [1974] 1 All ER 561; [1974] 1 WLR 391 ) and the deposit of such documents of title may be construed as a sufficient act of performance of an implied agreement to give security ( Bank of New South Wales v O'Connor (1889) 14 AC 273 ) so as to render the agreement capable of specific performance. 145Professor Butt, in his text, states (at [1814] - [1815]) that: The principle applies to land under old system title and land under Torrens title. It also applies where an owner deposits deeds to secure a debt owned by a third party ... Writing is not necessary to the validity of a mortgage by deposit of title deeds, because the act of depositing the deeds with the lender is a sufficient act of part-performance ... Absent agreement to the contrary, the mortgage is discharged only by repaying the debt. The mortgagee is entitled to keep the deeds until the debt is extinguished. If the mortgagee parts with the deeds, that of itself does not indicate that the mortgagee is abandoning its interest in the land. The deeds must have been deposited with the intention of providing security over the land to which they relate, the onus of proof lying on the mortgagee. A mortgage is not created where the title deeds are deposited for some reason other than giving security. Thus, in Norris v Wilkinson (1805) 12 Ves 192, the debtor's title deeds were deposited with the creditor's solicitor, not for the purpose of conferring an immediate security over the land, but to enable the solicitor to prepare a formal mortgage to be signed at a later date. Nor is a mortgage created where the deeds are deposited by mistake. Further, title deeds in themselves are merely chattels, and it may be that what is intended by handing them to the lender is a security over the deeds as chattels (a pledge), rather than an interest in the land they represent. 146The relevant question is whether the intention of the parties (as discernible from the implicit acknowledgement that the Investors could retain until payment of the Settlement Sum both the certificate of title and the discharge of mortgage forms) was that this operate in effect as a mortgage (giving rights, for example, of foreclosure) or only as a pledge in the sense of a chattel being lodged or retained as security for performance but without carrying with it any right of foreclosure. Given that the Investors were implicitly entitled not only to retain the title deed but also not to deliver the executed discharge of mortgage forms, it must have been contemplated that the latter might have some work to do. I consider that the 2011 Deed thus evidences an equitable mortgage by way of the permitted retention of the title deed. 147It is in my view clear by the terms of the 2011 Deed that it was the parties' intention that the Investors' possession of the certificate of title (and the presence of the mortgages undischarged on the register) would act as security for payment of a debt. Clause 4.1(a) of the Settlement Deed provides that: 4.1 On the Settlement Date, provided that the Payment is made in full, the Investors will cause: (a) the Certificate of Title, and the duly executed Discharge of Mortgage in registrable form to be delivered to Barton; ... 148I accept that the deposit of the title deed occurred, in this case, at the time the initial mortgage was granted. However, what then occurred was that at the time of the 2011 Deed the mortgagor (Mr Barton) implicitly acknowledged the entitlement of the mortgagee to retain the certificate of title until payment of the money that was due under the deed. On one view it might be thought that this simply operated to extend the existing entitlement of the mortgagees to retain the certificate of title - hence that any existing equitable mortgage by deposit of the title deed is implicitly extended to cover the newly incurred debt and no new mortgage has arisen. However, I consider that the better characterisation of what has occurred is that the equitable mortgage by the retention of the title deeds only came into existence as at the date of the 2011 Deed. 149I am therefore satisfied that the Investors (had they not otherwise been able to establish their claim for reinstatement of the legal mortgages and had there been no subsisting agreement to grant a mortgage) would have established that there was an equitable mortgage by the recognition that the Investors could retain the title deeds. 150Had that been the only basis for relief, then a question of priority arises by reference to the existence of other unregistered equitable mortgages on the title. It is well recognised that where there are two or more unregistered mortgages over Torrens land, the priority is determined by analogy with the general rules governing priority between competing equitable interests in land under old system title and, in accordance with the maxim " qui prior est tempore potior est jure ", the earlier equitable interest prevails unless there is conduct by the holder of the earlier interest that makes it inequitable for the earlier to prevail. 151In Barry v Heider [1914] HCA 79; (1914) 19 CLR 197, Isaacs J held that while the effect of s 41(1) of the Real Property Act was to deny the effect of unregistered instruments, the subsection does not affect rights arising out of the transaction that created the interest, saying (at 216): Consequently, section 41, in denying effect to an instrument until registration, does not touch whatever rights are behind it. Parties may have a right to have such an instrument executed and registered; and that right, according to accepted rules of equity, is an estate or interest in the land. Until that instrument is executed, section 41 cannot affect the matter, and if the instrument is executed it is plain its inefficacy until registered - that is, until statutory completion as an instrument of title - cannot cut down or merge the pre-existing right which led to its execution. 152The status of, and priority between, unregistered interests (including unregistered mortgages) is determined by reference to the transaction that gave rise to the interest and the conduct and intention of the parties is relevant. In Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 at 580-581, Latham CJ said (at 580 - 581): It is established by authority that equitable interests in land can be created under the Real Property Act ( Barry v. Heider ; Great West Permanent Loan Co. v. Friesen ). Thus a contract for the sale of land may create an equitable interest in accordance with the rules of the general law of property. But no instrument of transfer until registered can itself be effectual to pass any estate or any interest in any land under the provisions of the Real Property Act (sec. 41 (1)). Thus the instrument of transfer in itself cannot be effectual to vest in the defendant either a legal or an equitable interest in the land (See Williams v. Papworth ). But where there is a transaction for value which is recorded in a contract followed by an instrument of transfer, or where there is a transaction for value which itself is recorded in a transfer ( Mathieson v. Mercantile Finance and Agency Co. Ltd. ), then "the transaction behind the instrument" and upon which it rests may create an equitable interest in the land which will be recognized in the courts, such interest being subject to the risk of being defeated by a transfer to a bona fide purchaser for value which obtains prior registration. As Isaacs J. says in Barry v. Heider , sec. 41 of the Real Property Act 1900 "in denying effect to an instrument until registration, does not touch whatever rights are behind it." 153It is submitted by Mr Cotman that the mortgages of the mortgagee defendants are earlier in time and there has been no postponing conduct on the second to fourth defendants part to deny the priority which prima facie arises from having the equitable interests which are first in time ( Latec Investments Ltd v Hotel Terrigal Pty Limited (in liq) (1965) 113 CLR 265 at 276; Heid v Reliance Finance Corporation Pty Limited [1983] HCA 30; (1983) 154 CLR 326; Elderly Citizens Homes of South Australia Inc v Balnaves (1998) 72 SASR 210). 154When giving effect to the maxim referred to above, there are two rules that can be applied - the 'notice rule' and the 'better equity rule'. 155The notice rule emanates from the principles enunciated in Moffett v Dillon [1999] 2 VR 480 by Brooking J, where his Honour noted that if the holder of a later equitable interest takes its interest with notice of the earlier equitable interest, then he/she takes that interest subject to the earlier equitable interest (notice in this context meaning actual, constructive or imputed notice). Exceptions to the notice rule arise where the holder of the earlier interest is guilty of conduct which may have induced the later interest to believe that the earlier interest no longer exists ( Green v Commonwealth Bank of Australia (No 2) (1994) 29 ATR 599 at 603), or where the later interest holder is induced to believe that the earlier interest holder will not be enforcing its equitable interest. As a general rule, however, and irrespective of the conduct of the holder of the earlier interest, a later unregistered interest cannot prevail over an earlier one where (at the time of acquiring the later interest) the holder of the later interest had notice of the earlier (see also Courtenay v Austin (1961) 78 WN (NSW) 1082 at 1097; Taddeo v Catalano (1975) 11 SASR 492 at 498 - 501). 156The better equity rule emanates from the principle enunciated in Rice v Rice (1853) 2 Drew 73; 61 ER 646 by Kindersley VC to the effect that "As between persons having only equitable interests, if their equities are in all other respects equal, priority in time gives the better equity". Under this rule, consideration is given to all relevant factors to find the better equity, and there is resort to the "first in time" maxim only where the claimants' respective merits are equal and there exists no other sufficient ground for preferring one over the other. Reference is generally made to three matters when determining which of the competing unregistered interests is the "better equity": first, the nature and condition of the respective equitable interests; second, the circumstances and manner of acquisition of those interests; and, third, the whole conduct of the parties. (So, for example, see Lapin v Abigail (1930) 44 CLR 166; Clark v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790; Heid v Reliance Finance Corporation Pty Ltd ). 157In identifying the better equity, a significant factor that the court takes into account is whether or not the owner of the equitable interest has registered a caveat over the title to protect its interest. A caveat on title does not enlarge or add to the rights the caveator otherwise would have to the interest claimed. As Griffith CJ held in Butler v Fairclough (1917) 23 CLR 78 at 84: The effect of these provisions is not to enlarge or add to the existing proprietary rights of the caveator upon which the caveat is founded, but to protect those rights if he has any. In the case of a caveat lodged by a beneficiary or equitable mortgagee, its effect is to prevent the registration of any instrument the registration of which might have the effect of defeating his equitable interest in the land without giving him an opportunity of invoking the assistance of the court to give effect to that interest. 158The primary purpose of a caveat is said to be to protect the caveator's interest from being defeated by a registered dealing without the caveator first having the opportunity to approach the Court for an order protecting the interest ( J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 228). Failure to lodge a caveat in respect of an unregistered equitable mortgage will generally have the effect of postponing the earlier to the later unregistered interest, thereby giving the later mortgage priority (at least in the absence of any other postponing conduct such as a the delivery of the certificate of title and signed transfer). 159In the present case all of the equitable mortgage holders have lodged caveats over the title. It is submitted by Mr Cotman that any equitable mortgage relied upon by the Investors came into existence after the lodgement of the four earlier caveats. Further, it is submitted that if it can be said that at the time when the Investors' later equitable mortgages came into existence, they had notice of the earlier unregistered mortgages (as is said to be the case because of the existence of the caveats on the title), then regardless of their conduct in attempting to protect their interest, the earlier unregistered mortgages will have priority. 160(Mr Cotman also submits that the equitable mortgages asserted by the Investors can at best secure only the sum of $450,000 specified in clause 2.1 of the Deed. It is submitted that even if the underlying mortgage covenants remain, such that the agreement to grant a mortgage extends to the further advance, the debt thereby secured is one that arose as at the date of the 2011 Deed not earlier. Further, insofar as the Investors have any interest in the Wellington land (which is denied by the defendants), it is said that this only arose after 12 August 2011 (being the settlement date nominated by the Investors) and that it can only relate to Mr Barton's interest in the Wellington land, which is an equity of redemption after the mortgages the subject of the caveats lodged by the mortgagee defendants have been satisfied. Mr Einfeld, on the other hand, submits that what is secured is a composite amount - or an amount that was the subject of the initial mortgage by now crystallised by agreement into that specific amount. I have some difficulty with that proposition as discussed earlier.) 161If the equitable mortgage is one arising by the implicit agreement for the retention of the title deeds, that securing the newly created debt of $450,000, it seems to me that this unregistered interest is one created later in time from the interests of the mortgagee defendants and would take priority after those interests (but ahead of the registered proprietor and unsecured creditors). 162Finally, in relation to the equitable mortgage so arising, I note that insofar as the application initially was for an extension of the Investors' caveats, Mr Cotman submitted that the lack of any evidence that the 2011 Deed had been stamped was fatal to the Investors' case (referring to Boral Recycling v Wake [2009] NSWSC 712 per McDougall J at [15]; Bellissimo v JCL Investments Pty Limited [2009] NSWSC 1260 per White J at [21]. 163Section 211 of the Duties Act, 1997 (NSW) provides: A mortgage on which duty is required by this Chapter to be paid is unenforceable to the extent of any amount secured by the mortgage on which duty has not been paid. 164For the purposes of s 211, the definition of mortgage is contained in s 205: For the purposes of this Chapter, an instrument is a "mortgage" if it is: (a) a security by way of mortgage or charge over property wholly or partly in New South Wales at the liability date, or ... (c) a security by way of a transfer or conveyance of any property in New South Wales that is held in trust to be sold or otherwise converted into money, redeemable before such a sale or conversion either by express stipulation or otherwise, except where the transfer or conveyance is made for the benefit of creditors who accept the transfer or conveyance in full satisfaction of debts owed to them, or (d) an instrument that, on the deposit of documents of title to property in New South Wales or instruments creating a charge on property in New South Wales, becomes a mortgage or evidences the terms of a mortgage. 165In Boral Recycling Pty Ltd v Wake [2009] NSWSC 712 McDougall J considered the above sections and s 304 of the Act (contained in Ch 12), which deals with the separate question of the admissibility of unstamped documents into evidence. Section 304 provides as follows: (1) An instrument that effects a dutiable transaction or is chargeable with duty under this Act is not available for use in law or equity for any purpose and may not be presented in evidence in a court or tribunal exercising civil jurisdiction unless: (a) it is duly stamped, or (b) it is stamped by the Chief Commissioner or in a manner approved by the Chief Commissioner. (2) A court or tribunal may admit in evidence an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, and that does not comply with subsection (1): (a) if the instrument is after its admission transmitted to the Chief Commissioner in accordance with arrangements approved by the court or tribunal, or (b) if (where the person who produces the instrument is not the person liable to pay the duty) the name and address of the person so liable is forwarded, together with the instrument, to the Chief Commissioner in accordance with arrangements approved by the court or tribunal. (3) A court or tribunal may admit in evidence an unexecuted copy of an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, if the court or tribunal is satisfied that: (a) the instrument of which it is a copy is duly stamped, or is stamped in a manner approved by the Chief Commissioner, or (b) the copy is duly stamped under section 299. 166From [10], his Honour said: Clearly, so far as admissibility is concerned, the problem could be cured under s 304. But would that cure the problem under s 211? In my view, it would not. I shall explain why. If cl 9 is to create a caveatable interest it must be ... because it operates, at least in equity, as a mortgage or charge. If, and to the extent that, it so operates, then it is a mortgage as defined by s 205 of the Duties Act. It does not fall within any of the exemptions from stamping set out in Pts 3A and 4 of Ch 7 of the Duties Act. Thus, prima facie ..., it was required to be stamped in accordance with the provisions of Pt 2 of Ch 7. Not having been stamped, the consequences prescribed by s 211 must follow. A mortgage that is required to be stamped is enforceable only to the extent of the amount secured by it on which duty has been paid. In this case, no duty having been paid, the relevant amount, for the purposes of s 211(1) is zero. There appears to be some lack of authority on the point. ... That may, perhaps, reflect the fact that no one has yet sought to take it. In any event, the matter was considered (although obiter) by Young CJ in Eq in Neoform Developments and Interiors Pty Ltd v Town and Country Marketing Pty Ltd [2002] NSWSC 344. There were a number of points taken in that case, including one as to s 211 of the Duties Act. His Honour noted at [29] that the point had not been fully argued before him. But, in circumstances where the mortgage with which his Honour was concerned had not been stamped with mortgage duty (which is also the case in the matter with which I am concerned today), his Honour concluded that the mortgage was not enforceable. Specifically, his Honour said at [31], not only was the mortgage unenforceable but the particular provisions of s 211 applied over the general provisions of s 304. The latter section, his Honour said, "gives way in the case of mortgages". Further, as his Honour pointed out at [32], the relevant date for assessing enforceability was the date the caveat was lodged. The mortgage not having then been stamped, his Honour said that it would seem "that in any event the caveat could not be supported". In my respectful opinion, that is the approach to be taken to the section. The starting point is, as I have pointed out, that if the provisions of cl 9 are to create a caveatable interest it must be because they operate as a mortgage or charge. Therefore, s 205 of the Duties Act attracts the obligation to stamp. A failure to stamp attracts the operation of s 211. There is no point in standing the matter down to enable the mortgage to be stamped because that would operate to make it enforceable from the date of stamping. Even if this were incorrect (and under the Stamp Duties Act, 1920, it appears that late stamping may have validated an instrument ab initio - see McKensey v Hewitt [2004] NSWSC 636 at [11]) the question is to be assessed today in respect of the particular caveat lodged. (my emphasis) 167His Honour implicitly recognised that the document would become enforceable from the date of stamping; the issue there being whether there was an enforceable interest at the date the caveat was lodged so as to support its extension. 168In Bellissimo , White J reached a similar conclusion and noted at [22]: I should add that there is a public policy interest in persons taking instruments which are intended to create a mortgage or charge in drawing to the attention of the mortgagor or chargor, being the party primarily liable for the duty, that, such a liability exists. At the very least that would draw to the attention of those signing such instruments that an agreement, which in terms is expressed to be an agreement to the lodgment of a caveat, will be contended by the other party to amount to a charge over the first person's land. 169It is submitted by Mr Cotman that if the obligation to pay contained in clause 2.1 of the Deed is said to create the caveatable interest, then that must be because it operates, at least in equity, as a mortgage or charge and that if (and to the extent that) it so operates, then it is a mortgage as defined by s 205 of the Duties Act and (not falling within any of the exemptions from stamping set out in Parts 3A and 4 of Chapter 7 of the Act), it is required to be stamped in accordance with the provisions of Part 2 of Chapter 7. Hence, it is submitted that, not having been stamped, the consequences prescribed by s 211 and identified by McDougall J in Boral must follow: namely, that a mortgage that is required to be stamped is enforceable only to the extent of the amount secured by it on which duty has been paid) and if no duty has been paid then the relevant amount, for the purposes of s 211(1), is nil. 170Mr Einfeld submits that there is no question before me as to the enforcement of the equitable mortgages - rather, all that is sought is a declaration as to the existence of the mortgages (although that seems not to take into account any claim for specific performance of the implied obligation contained under the 2011 Deed to make payment of the sum or any implied obligation under that deed on the part of Mr Barton to execute a further mortgage). An undertaking was proffered (without admission that the document was liable for stamping or that, if it were, the Investors were the parties primarily liable so to do) for the purposes of s 304 that the Investors would make the appropriate notification under s 304(2)(b). That, as is made clear from the judgments referred to above, addresses the admissibility issue but not the issue as to the enforceability of the unstamped deed insofar as it operates as a mortgage or charge. 171I accept that for the purposes of considering whether there is an enforceable interest as claimed in the caveat, the relevant date for assessing enforceability is the date the caveat was lodged. If the 2011 Deed operates in equity as a mortgage or charge and this is the equitable interest claimed under the caveats then, the Deed not having been stamped as a mortgage, the caveats could not be supported. Notwithstanding that the relevant equitable mortgage may only be one created by the deposit or retention of the title deed as security for performance of the obligation to make payment under the 2011 Deed, this would still arguably fall within the definition of mortgage in s 205(d) of the Act, meaning that there would be a requirement to pay duty on this as an instrument that, on the deposit of documents of title to property, becomes a mortgage or evidences the terms of a mortgage. (Whether any argument could be raised that this does not fall within the section because it is a document that on the acknowledged retention of title deeds has that effect, was not an issue explored in argument before me.) In any event, I do not consider it necessary to determine this issue because the question now before me is not as to the extension of the caveats as such, and because the basis on which I have determined that the Investors are entitled to relief is the in personam claim for restitutionary relief consequent upon the otherwise unconscionable conduct of Mr Barton in seeking to take advantage of the mistaken discharge of mortgage. Thus, I am not called upon to enforce any equitable mortgage arising under or evidenced by the 2011 Deed. Further, an undertaking has been proffered for the notification to the relevant authority of the instrument such that any determination as to the liability to stamp duty will no doubt be made in due course by that authority. (vi) Possessory lien 172In response to the defendants' submission that there is no proper reason why the Investors should be entitled to retain the Certificate of Title to the land (at [37]), the Investors submit that they have a possessory lien over the document (akin to a solicitor's lien over client documents) and are entitled to retain the Certificate of Title and to enforce their rights as though the first and second mortgages were still on title to obtain a reconveyance (or more precisely a re-execution) by Mr Barton of the first and second mortgages. 173Whilst not dependent on contract, an equitable lien is said often to arise when the parties are in a contractual or quasi-contractual relationship ( Tresize v Bilato Nominees Pty Ltd & Northern Gold NL (1986) 83 FLR 44 per O'Leary CJ at 46). In Hammonds v Barclay (1802) 2 East 227 at 235, Grose J defined a lien as "...a right in one man to retain that which is in his possession belonging to another till certain demands of him the person in possession are satisfied." The circumstances in which equitable liens will be arise by implication of law were identified in Hewett v Court [1983] HCA 7; (1983) 149 CLR 639 at 663. There is, however, a distinction drawn between equitable liens and common law possessory liens. 174In On Equity, the learned authors observe (at [9.200]) that a common law lien differs from an equitable lien in that the latter does not depend upon the person who has the lien having possession of the property over which the lien exists: An equitable lien may arise in a variety of circumstances and may attach to real or personal property. The categories are not closed and it is not necessary that there be a contractual relationship between the relevant parties. A trustee, for instance, has a lien over trust property by way of indemnity to secure liabilities incurred by the trustee in the authorised conduct of the trust. Liens also arise in the context of purely equitable obligations through the implication of some equitable doctrine applicable to the circumstances. It follows that, where there is contractual relationship between the parties, an equitable lien may arise regardless of whether the contract would be specifically enforceable ( Hewett v Court (1983) 149 CLR 639 at 664 - 664; Chattey v Farmdale Holdings Inc [1998] 75 P & CR 298 at 305 - 307). As is the case with all equitable remedies, the enforcement of an equitable lien is discretionary, and is moulded to the individual circumstances of the case: Inetstore Corporation Pty Ltd (in liq) v Southern Matrix International Pty Ltd (2005) 221 ALR 179 at 182. 175Here, what is sought is a declaration that there is a possessory lien. As its name implies, this will subsist only where there is factual possession of the relevant goods or documents (and generally, a possessory lien needs to be continuous Young v Matthew Hall Mechanical & Electrical Engineers Pty Ltd (1988) 13 ACLR 399 per Brisden J at 404), and where that possession arises from the actions of the owner conferring possession on the third party claiming the lien. Halsbury's states (at [295-4605]) that a general possessory lien gives a common law entitlement to the lienee to retain the relevant goods or documents as security for the payment of the full debt of the lienor, no matter on what account the indebtedness may be due. It takes effect as a right against property by implication of equity to secure the discharge of actual or potential indebtedness. In Protean Enterprises (Newmarket) Pty Ltd v Randall [1975] VR 327, Gillard J noted (at 333) that so far as possessory liens are concerned, they may only arise from possession of property given to the lienee by or with the authority of the owner of the property . 176A common law possessory lien most often arises as a result of the carrying on of a quasi-public function (for example, an inn-keeper or a ship carrier) or as the result of work requiring skill and labour which is carried out in relation to the goods ( Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd (1973) 129 CLR 48 at 54 - 62 per Stephen J). The common law has recognised a general lien over relevant goods or documents in favour of solicitors, bankers ( MPS Constructions Pty Ltd (in liq) v Rural Bank of New South Wales (1980) 4 ACLR 835; 49 FLR 430) factors, stockbrokers ( Mercantile Credits Ltd v Jarden Morgan Australia Ltd [1991] 1 Qd R 407 per Kelly SPJ at 410) and insurance brokers without proof of usage in the particular trade or profession. The present case falls within none of those categories unless the Investors are said to be in the position of bankers. 177It has been held that whether a lien arises depends on the purpose for which the goods or documents came into the possession of the lienee, as such purpose may lead to the conclusion that the possession was so confined to that particular purpose as to exclude the implication of a lien ( Duke Finance Ltd (in liq) v Commonwealth Bank of Australia (1990) 22 NSWLR 236 per Giles J at 245, 246). Here, the title documents clearly came into the possession of the Investors as security for the loans made to Mr Barton, albeit by reference to the earlier loans not the present debt. 178The common law has also recognised general liens in favour of other categories of persons, but only where a lien can be proved by evidence of usage within the particular trade (see generally Majeau Carrying v Coastal Rutile ). 179It seems that four elements must be present in the particular circumstances for a common law possessory lien to have arisen: first, that the holder of the lien must be in physical possession of the goods/documents; second, that the holder of the lien must be in possession of the goods/documents to secure the discharge of actual or potential indebtedness; third, that the holder of the lien must have been in continuous possession; and, fourth, that the holder of the lien must have been given authority by the owner of the goods/documents to hold them. Those elements would be satisfied in the present case. 180However, if on the facts an equitable mortgage by deposit and retention of title deeds arose (as I am satisfied would have been the case had the Investors not been able to rely on their principal claim for the reinstatement of the registered mortgages), then no equitable or possessory lien would need to be implied as a matter of law. Therefore, had the issue arisen and had I not in those circumstances been satisfied that an equitable mortgage by deposit and retention of title deeds would have arisen on the facts of this case, (as to both of which this is not the case in light of the findings above) then I would have been satisfied that a possessory lien had arisen. In the circumstances, however, it would not be necessary to impose such a lien if there were an equitable mortgage in existence. (iv) Specific performance 181Mr Einfeld refers to Turner v Bladin (1951) 82 CLR 463 at 473 as support for the proposition that this is an appropriate case in which to grant an order for the specific performance by Mr Barton of his obligations under the 2011 Deed. It is submitted that Mr Barton should be ordered to pay the moneys due to the Investors in order that they may dispose of their interests as mortgagees. Reference is made in this regard to clause 11.1 of the 2011 Deed, under which Mr Barton remains obliged to execute all documents necessary to secure the Investors' position as mortgagee (such as documents permitting the re-registration of the two mortgages). Re-conveyance is said to be an appropriate means of securing the Investors' interests ( Tutt v Doyle (1997) 42 NSWLR 10 at 17). 182In Turner v Bladin (1951) 82 CLR 463 Williams, Fullagar and Kitto JJ said: We are of opinion that the contract was specifically enforceable. We reject the contention that a contract, some part of which is not immediately performable, is not capable of specific performance. In our opinion proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived. The court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under the decree as may be necessary to carry into effect all the promises of both parties whether they are presently performable or are only performable in the future. The statement of Dixon J. in J. G, Williamson Ltd. v. Lukey that " the remedy (of specific performance) is not available unless complete relief can-be given, and the contract carried into full and final execution so that the parties are put in the relation contemplated by their agreement " relied upon by counsel for the appellant lends no support to his submission. His Honour was discussing the kind of contract that is capable of specific performance and not the time at which a suit for the specific performance of such a contract may be instituted. In the present case the only terms of the agreement not presently performable at the date of the writ were the terms for the payment of the instalments which had not then become payable and Nives v. Nives is a direct authority that a vendor whose purchase money is payable by instalments, some of which are not yet payable, can obtain a decree for specific performance and an order for payment of the instalments that are overdue, the plaintiff to have liberty to apply in respect of future instalments as they become payable. We are of opinion that where the contract is of such a kind that the purchaser can sue for specific performance, the vendor can also sue for specific performance, although the claim is merely to recover a sum of money and that he can do so although at the date of the writ the contract has been fully performed except for the payment of the purchase money or some part thereof. We are therefore of the opinion that his Honour had jurisdiction to give judgment for specific performance. 183Mr Cotman maintains that an order for specific performance is not appropriate in circumstances where there is no term that requires an order for specific performance and the parties have agreed as to what would occur in the event of non-compliance with the clause 2.1 of the Deed (referring to clause 5.1(b) of the Deed) and where such an order would have the effect of transforming a judgment debt into a contempt. It is submitted that there is no impediment to the Investors obtaining the consent judgment in these proceedings and, consequently, a judgment debt which can be enforced in the usual manner. 184Specific performance is a discretionary remedy. Mr Einfeld submits that an order for specific performance would be appropriate in the particular circumstances of this case because the effect of such an order would be that the Investors are able to treat a failure to pay the $450,000 owed under the Deed as a contempt of court and pursue Mr Barton in that respect. Disobedience of an order for specific performance may constitute a civil contempt ( CH Giles & Co Ltd v Morris [1972] 1 All ER 960; 1 WLR 307). In contrast, the 'mere' refusal by a party to an action to abide by a declaratory order is not a contempt of court (though if a declaratory order proves to be ineffective an injunction or other coercive order may be sought) ( Webster v Southwark London Borough Council [1983] QB 698; 2 WLR 217 at 222-4; Dashwood v Dashwood [1927] WN 276). 185The historical basis of specific performance is a discretionary jurisdiction to do justice in cases where common law remedies are inadequate ( Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1988] AC 1). Principally, specific performance will be ordered where a damages award would be, in the circumstances, an inadequate remedy. In the present case, it is not suggested that damages would be difficult to assess; rather it is submitted in effect that an order for damages would not do justice between the parties, in circumstances where the damages award may prove to be unsuccessful in enabling recovery. 186Carter on Contract notes at [45-020] that, in recent years, there has been a tendency to enlarge the situations in which the remedy is available and suggests that this has in part been due to a refusal by the courts to draw a sharp distinction between discretionary defences, such as hardship, and factors such as an element of personal service in the contract, which have in the past been treated as going to the 'jurisdiction' of the court. At [45-050], the authors note that although the fact that a contract obliges the plaintiff (or defendant) to pay money does not preclude the court making an order for specific performance, there has been a reluctance outside the context of sale of land cases to do so. It is noted that: Where all that remains to be done under the contract is the payment of money specific performance is rarely ordered, because there is normally an adequate remedy under the common law, namely, to recover the sum which the defendant agreed to pay as a debt due or as damages. However, if the remedy at common law is not adequate there is a basis for arguing that specific performance should be available to the plaintiff. 187I am not satisfied that specific performance is warranted in this case. It is well recognised that an order for specific performance will not be appropriate where there is an adequate remedy at law (as noted in Carter above and in Meagher Gummow & Lehane's Equitable Doctrines & Remedies 4th edition at [20-030]). I accept that this issue arises in the present case in the context of interests in land. However, the Investors are in a position to enter judgment for the amount payable. The fact that they might not ultimately recover the whole amount payable under that judgment (due to the financial position of the judgment debtor and other claims by secured and unsecured creditors) does not seem to me to provide a sufficient basis for the potential imposition of liability for contempt. 188I therefore would not make an order for specific performance of the obligation to make payment under the 2011 Deed. Specific performance of an implied agreement to grant a mortgage to secure the newly created debt under that deed would of course be a different issue, but in the circumstances this does not arise given the restitutionary relief I propose to grant. Conclusion 189In summary, the Investors' principal position is that it is unconscionable for Mr Barton to seek to take advantage of the mistaken discharge of the mortgages having knowledge of the existence of such a mistake or the likelihood that registration of the discharge in advance of the date required under the Deed was due to a mistake. I accept that submission. The basis on which the defendants maintain that it is not unconscionable for Mr Barton now to assert unencumbered title is based on a construction of clause 6.3 of the 2011 Deed that I do not accept - namely, that it operated to release the security constituted by the mortgages because it released not only the debt under the initial deeds of loan (however that might ultimately have been calculated having regard to the off-setting claim in the Queensland proceedings) but also released (unspecified) "covenants", which are said to include the covenants under the registered Memorandum of Mortgage securing the first loan. 190While I do not accept the submission for the Investors that the $450,000 debt provided for under the 2011 Deed is not a "new" or substitute debt (but simply a "crystallisation" of the previous obligation to pay the sum of $420,000 plus interest), such that the 2011 Deed simply modified the existing debt, I consider that the provisions of the deed make it clear that the parties' intention was that the mortgages were to be retained until payment of that amount (and hence that the parties should be taken to have intended that the provisions under the mortgage which extended the security to moneys that might become owing in the future would continue to operate). If the mortgages were intended to have been discharged on execution of the 2011 Deed there would be no purpose to be served in providing, as the parties did, that they were only required to be delivered on the settlement date and on payment of the outstanding sum on that date. Therefore, it cannot be said that there was no interest left to discharge as at the time of the mistaken discharge of mortgage (as was the basis for the contention that Mr Barton had not been unjustly enriched thereby). 191As to the position of the mortgagee defendants, I accept that in relation to the benefit that has been conferred on them by registration of the discharges they are in the position of volunteers. Therefore, the Investors succeed on their primary submission. 192Mr Einfeld's second submission was that if there was a new or substitute debt created by the 2011 Deed, the mortgages could not have been released insofar as the intention evidence by the deed was that this debt would become subject to the existing mortgages without the creation of any new mortgage - that being the natural consequence of the provision entitling the Investors to retain the certificate of title and not to hand over the discharge until payment in full. In this regard, I accept that clause 6.3 (which appears to be a boilerplate clause and which does not identify any particular covenants to which it refers in the text of the clause) must be read in the light of clause 4.1 and does not release the covenants contained in the mortgages that the Investors were entitled under clause 4.1 to retain until payment in full of the settlement sum. 193As to the claim based on subrogation to the rights under the discharged mortgages (which is put as an alternative basis to the relief claimed) I am not satisfied that there has been any notional discharge of the earlier debt - what has occurred is that the parties have agreed to quantify the amount that is to be payable (thus obviating the necessity for a determination of the off-setting claim by Mr Barton) and to impose a fresh liability for that amount. I do not accept that it should be presumed that by so doing the Investors were to stand in the shoes of themselves wearing a different hat (i.e. as assignees of the mortgages that have now been discharged). 194The next alternative argument is that there was an equitable mortgage arising by retention of the title deeds (though Mr Einfeld accepted that this might not give the Investors priority over the mortgagee defendants it would have given priority over Mr Barton and any unsecured creditors). Had I not found otherwise in relation to the principal claim for relief, I would have held that there was an equitable mortgage so arising and that it had the effect conceded in relation to priority over unregistered interests (though not over the other unregistered mortgage holders). 195Finally, as to the claim for a possessory lien, it does not arise in light of the findings above. Further, in circumstances where I would otherwise have held that there was an equitable mortgage arising from the retention of title deeds this would make any claim to a possessory lien redundant. It would not be the case that there would be found to be both an equitable mortgage of this kind and a possessory lien. Therefore, it is not necessary to consider this issue further. Orders 196For the above reasons I make the following declarations and orders: 1.A declaration that the property known as Nanima, Wellington in the state of New South Wales, being the land contained and described in Folio Identifier 2/806578 (the "Land"), is subject to an equitable mortgage in favour of the First Plaintiffs in priority to any other subsisting equitable interest in the Land; 2.A declaration that the Land is subject to an equitable mortgage in favour of the Second Plaintiffs in priority to any other subsisting equitable interest in the Land other than the equitable mortgage in favour of the First Plaintiffs; 3.A declaration that the equitable mortgages in favour of the First and Second Plaintiffs secure payment by the First Defendant to the First and Second Plaintiffs of the sum of $450,000 specified in clause 2.1 of the Deed of Settlement dated 27 May 2011 between the First and Second Plaintiffs and the First Defendant, together with interest and the costs of these proceedings; 4.Order that the First Defendant execute two mortgages in registrable form, in the same terms as those contained in mortgages no. 286026 and no. 6667596, to stand as security for the payment of the said sum of $450,000, together with interest and the costs of these proceedings; 5.Order that the Second, Third and Fourth Defendants lift their caveats over the Land for the purpose of permitting the said two mortgages to be registered. 197As to order 5, I consider that it would be appropriate to nominate a time within which this is to occur, failing which the Registrar-General should be ordered to effect the appropriate entries, but I will hear submissions as to the mechanics of this order. I consider that the appropriate order would be that the First Defendant pay the costs of the Plaintiffs of the proceedings and that the Second to Fourth Defendants bear their own costs of the proceedings. I will hear submissions as to costs at a convenient time if Counsel wish to make submissions that there should be any other costs order. ********** 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. Decision last updated: 05 April 2012