Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Rich v Westpac Banking Corporation [2014] NSWCA 136 Hearing dates: 18 March 2014 Decision date: 06 May 2014 Before: Ward JA at [1]; Emmett JA at [82]; Gleeson JA at [100] Decision: 1. Application for leave to appeal dismissed with costs [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: APPEAL - general principles - interference with discretion of court below - interlocutory orders - joinder and addition of parties - whether applicant had established arguable defence to proceedings brought by plaintiff APPEAL - practice and procedure - general principles - admission of fresh evidence - whether evidence could have been obtained for use at first instance APPEAL - practice and procedure - when appeal lies by leave of court - interlocutory orders and judgments Legislation Cited: Australian Securities & Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 Competition and Consumer Act 2010 (Cth) Contracts Review Act 1980 Family Law Act 1975 (Cth) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 Adams v Bank of New South Wales [1984] 1 NSWLR 285 Akins v National Australia Bank (1994) 34 NSWLR 155 Bathurst City Council v PWC Properties Pty Limited [1998] HCA 59; (1998) 195 CLR 566 Be Financial Pty Ltd v Das [2012] NSWCA 164 Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 Coroneo v Australian Provincial Assurance Association Ltd (1935) 35 SR (NSW) 391 Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 Disctronics Ltd v Edmonds [2002] VSC 454 Dobbs v The National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643 Draper v Official Trustee in Bankruptcy [2006] FCAFC 157; (2006) 156 FCR 53; (2006) 236 ALR 499 Estoril Investments Pty Limited v Westpac Banking Corporation (1993) 6 BPR 13,146 Fisher v Fisher (No. 2) [1986] FLC 91-767 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Hammond v JP Morgan Trust Australia Ltd (2012) NSWCA 295 House v R [1936] HCA 40; (1936) 55 CLR 499 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 Oayda v Mercantile Mutual Life Insurance Co Ltd (Family Court of Australia, Rourke J, 1 December 1995, unrep) Parianos v Melluish [1999] FCA 684; 93 FCR 191 Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120 Permanent Trustee Co Ltd v Gulf Import and Export Co [2008] VSC 162 Perpetual Trustees Victoria Limited v Cipri [2008] NSWSC 1128 Perpetual Trustees Victoria Limited v Van den Heuvel [2009] NSWSC 57 Re Chemaisse; Federal Commissioner of Taxation (Intervener) [1990] FLC 92-133 Re Osborn [1989] FCA 494; (1989) 25 FCR 547 Secretary, Department of Social Security v Agnew [2000] FCA 59; (2000) 96 FCR 357 Smith v Elders Rural Finance Ltd (1995) Aust Contract R 90-054 Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 Sui Mei Huen v Official Receiver [2008] FCAFC 117; (2008) 248 ALR 1 University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68 Victoria University of Technology v Wilson [2004] VSC 33 Warragamba Winery Pty Ltd v State of NSW [2010] NSWCA 174 Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287 Texts Cited: E L G Tyler, P W Young and C E Croft, Fisher and Lightwood's Law of Mortgage, (3rd Aust ed 2014, LexisNexis Butterworths) Category: Principal judgment Parties: Kim Louise Rich (Appellant) Westpac Banking Corporation (Respondent) Representation: Counsel: W J Dixon (solicitor) (Appellant) A R Zahra (Respondent) Solicitors: Hassett Dixon (Appellant) HWL Ebsworth Lawyers (Respondent) File Number(s): CA 2013/385918 Publication restriction: Nil Decision under appeal Citation: [2013] NSWSC 1759 Date of Decision: 2013-12-02 00:00:00 Before: Bellew J File Number(s): SC 2013/154060 Judgment 1WARD JA: This is an application by Mrs Rich for leave to appeal from the dismissal of her application, by amended notice of motion dated 6 November 2013, for leave to be joined as a defendant and cross-claimant in proceedings brought by Westpac Banking Corporation against the trustee of her former husband's bankrupt estate. In those proceedings, Westpac seeks an order for possession of land at Vaucluse, the registered proprietor of which at all relevant times was Mr Rich. 2Mr Rich became bankrupt in November 2012, before the Common Law Division possession proceedings were commenced. His trustee in bankruptcy does not dispute the debt claimed by Westpac and has consented to an order for possession of the Vaucluse property. Westpac does not make any claim against Mrs Rich in respect of the moneys owing to it. Background 3The Vaucluse property is presently occupied by Mrs Rich and the couple's two children. Westpac has sought possession of the property in the exercise of its rights as mortgagee under two mortgages granted by Mr Rich (those mortgages being dated 22 December 2004 and 16 August 2007 respectively). It claims that Mr Rich is indebted to it under three separate loan facilities (dated, respectively, 4 February 2009, 6 February 2009 and 6 December 2011) for amounts totalling in excess of $4 million and that this indebtedness is secured by each of the mortgages. Mr Rich does not deny liability. 4The mortgages are what are commonly referred to as "all money" mortgages in that they contain clauses to the effect that the mortgages secure all amounts that are payable or owing or that remain unpaid by Mr Rich to Westpac. 5Mr Rich's indebtedness under the first two facilities arises in his capacity as guarantor (those facilities being granted to a company of which he was a director); his indebtedness under the third facility is as a borrower. Mrs Rich is named as a guarantor in respect of the first two facilities and a borrower under the third. She denies having signed (and denies having had knowledge of) any of the relevant documents. Westpac does not dispute this. 6Westpac issued certificates of debt, certifying the indebtedness of Mr Rich as at 30 November 2012 at $5.03 million and as at 6 November 2013 as $4.77 million. It relies on clauses in the mortgages (clauses 31 and 25 of the 2004 and 2007 mortgages respectively) that provide for such a certificate to constitute "sufficient" evidence of the amounts owing to it, unless proved to be incorrect, to similar effect as the provisions accepted in Permanent Trustee Co Ltd v Gulf Import and Export Co [2008] VSC 162 as analogous to "conclusive evidence" provision of the kind considered in Dobbs v The National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643. 7Mrs Rich and her former husband separated on 14 November 2011. She contends that, by entering into the 6 December 2011 facility, Mr Rich was deliberately "stripping out" the family assets. 8After Mr Rich became bankrupt, and his property had vested in his trustee in bankruptcy, the Family Court of Australia ordered (on 9 August 2013) that all interest, rights and entitlement of Mr Rich in the Vaucluse property be transferred to Mrs Rich. It is not contended by Mrs Rich that her equitable interest in the property pursuant to those orders takes priority over the interest of Westpac under its registered mortgages. Nevertheless, in the course of argument on the present application, Mrs Rich contends that she had an equitable interest in the property, of which Westpac had constructive notice, at the time Westpac entered into the facility agreements and mortgages in question. I consider this contention later in these reasons (at [60]-[65]). Primary judgment 9Mrs Rich was represented at the hearing of her joinder application by Mr Zipser of Counsel. The primary judge noted (at [33] of his reasons), that Mr Zipser had accepted that the making of an order joining Mrs Rich as a party to the proceedings pursuant to r 6.24 of the Uniform Civil Procedure Rules 2005 (NSW) was dependent upon her establishing an arguable defence to the proceedings brought by Westpac. His Honour also noted that the parties had agreed that, in determining whether or not an arguable defence had been established, his Honour would be guided by the tests in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 (at 92 per Dixon J) and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 (at 129 per Barwick CJ). 10His Honour records in his reasons that three principal submissions were made on behalf of Mrs Rich. First, that the 2004 and 2007 mortgages did not secure the payment of the relevant moneys (relying on the guidelines for construction of "all moneys" or "dragnet" mortgage clauses that were set out by Young J (as his Honour then was) in Estoril Investments Pty Limited v Westpac Banking Corporation (1993) 6 BPR 13,146). Second, that there had been no relevant default by Mr Rich. Third, that there were discrepancies as to the quantum claimed by Westpac to be outstanding. 11As to the first, his Honour considered the potential application of various of the guidelines referred to in Estoril as being illustrative of how courts "often" approach "dragnet" clauses in mortgages. 12Mrs Rich had relied on an affidavit of 29 August 2013 in which, among other things, she deposed to various property dealings in which she and her former husband had been involved and as to her belief as to the particular loans that the 2004 and 2007 mortgages were intended to secure. Mrs Rich contended that the 2004 mortgage was intended to secure only advances that were made in connection with certain investment units in Bondi and that the 2007 mortgage was to secure the purchase by the couple of a Toorak property. Mrs Rich further contended that the mortgages were never intended to secure anything other than those liabilities and that those liabilities have been discharged. 13His Honour noted (at [60]) a concession made by Mr Zipser that there was no direct evidence as to the type and character of the original debt incurred by Mr Rich. 14His Honour considered that there was a clear reference in the letters setting out the 2009 and 2011 facility offers to an existing mortgage; noted that the only existing mortgages at the time were the 2004 and 2007 mortgages and inferred that the parties intended that those mortgages would secure the additional advances ([62]). His Honour was not satisfied that it was open to infer that the parties did not intend the 2004 and 2007 mortgages to secure the amounts advanced under the 2009 and 2011 facilities ([63]) and was not satisfied that there was any evidence that would "even remotely" suggest that the initial debt had been extinguished ([64]). 15As to the second submission, his Honour referred to a number of clauses contained in the respective mortgage memoranda that he considered tended wholly against the proposition that no default had occurred (clauses 23(k) and 23(n) of the 2004 mortgage and clause 19(b) of the 2007 mortgage), having regard variously to Mr Rich's entry into bankruptcy and to Mr Rich having parted with possession of the Vaucluse property (to his former wife) without Westpac's consent. 16As to the third submission, his Honour accepted that, for the purposes of establishing an arguable defence, Mrs Rich did not have to prove conclusively that the sum referred to in Westpac's certificate of debt was false. However, his Honour considered that the submission made by Mrs Rich as to quantum was based only on a possibility that the amount secured by the 2004 and 2007 mortgages might be less than the current market value of the Vaucluse property ([69]). 17His Honour was not satisfied that Mrs Rich had an arguable defence to the proceedings brought by Westpac ([70]). His Honour also considered (at [71]) that a factor tending against the joinder of Mrs Rich as a defendant was that her interest in the property (being an equitable interest) did not have priority over Westpac's interest under the 2004 and 2007 registered mortgages and that the effect upon Mrs Rich of any judgment for possession entered in favour of Westpac was indirect (referring to what was said in Hammond v JP Morgan Trust Australia Ltd (2012) NSWCA 295 at [69]-[72] by Meagher JA, with whom Basten JA and Bergin CJ in Eq agreed). 18Finally, his Honour considered that there was no utility in giving Mrs Rich leave to bring a cross-claim against Westpac ([73]). Proposed grounds of appeal 19In Mrs Rich's draft notice of appeal, 16 grounds of appeal are identified. Leaving aside the submissions contained within the text of the grounds set out in the draft notice of appeal, what Mrs Rich contends in essence is that his Honour erred: (1)at [22] in failing to find, or place sufficient weight on her evidence, that she did not apply for any of the loans the subject of the proceedings; (2)at [26] in finding that there is a substantial shortfall between the present market value of the Vaucluse property and the amount of the debt owing to Westpac; (3)at [27] in concluding that Mrs Rich's affidavit evidence (that she was until recently unaware of the couple's financial position and had never had access to any of "our bank accounts, credit card accounts or loan accounts") was there referring to the loans the subject of the proceedings as opposed to "earlier legitimate loans" (of which it is claimed Mrs Rich was aware in respect of certain investment properties); (4)at [60] in accepting Westpac's submission that the inference sought to be drawn from evidence of the sale of a Toorak property was purely speculative and in failing to place sufficient weight on Mrs Rich's evidence as to: to the purpose of the original loan secured by the 2004 mortgage; the existence of proceeds for payment out of those loans; the purpose of the later "business" loans in 2009 - 2011; and that the later loans were made without Mrs Rich's knowledge or consent and were not of the same type as the earlier property loans; (5)at [60] in stating that there was no direct evidence as to the type and character of the original debt which was incurred; (6)at [62] in stating that it was to be inferred that the parties intended that the 2004 and 2007 mortgages would secure the additional advances; (7)at [63] when stating that the inference was not open that the parties did not intend the existing mortgages would secure the loan; (8)at [64] in failing to place sufficient weight on Mr Rich's evidence that the initial debt had been extinguished by the time of 2009 and/or 2011; (9)at [68] when relying upon the certificate issued by Westpac as sufficient evidence of the debt owing to it; (10)at [69] (presumably, having regard to the submission made in this ground of appeal) in considering that there was no evidence which raised the possibility that the amount secured by the mortgages might be less than current market value; (11)at [71] in stating that the amount owing to Westpac did not substantially exceed the current market value of the property; (12)at [72] in not finding that Mrs Rich's case was "substantially different to" and factually distinguishable from the decision in Hammond; (13)at [73] in not granting Mrs Rich leave to bring a cross-claim against Westpac covering the same factual matrix as Westpac's claim and Mrs Rich's defence to that claim; (14)in disallowing Mrs Rich's amended notice of motion to join the proceedings, "expecting" Mrs Rich to produce evidence akin to what would be required at a final hearing (said to be a denial of procedural fairness). (Complaint is made in this context as to the alleged failure of Westpac to provide documentation for loans held in Mrs Rich's name or held or made by Mrs Rich with another person or entity or documentation relating to any account held by Mrs Rich); (15)that his Honour erred in failing to consider that Westpac's conduct in seeking to enforce the mortgage was unconscionable within the meaning of ss 51AB or 51AC of the Trade Practices Act or ss 12CB or 12CC of the Australian Securities & Investments Commission Act 2001 (Cth) or ss 236 or 237 of the Australian Consumer Law; and that Mrs Rich was entitled to relief; (16)in failing to consider that Westpac's conduct in seeking to enforce the mortgage was unconscionable within the meaning of s 7 of the Contracts Review Act and that therefore Mrs Rich was entitled to relief. 20Pausing here, it can be seen from the above that at least one of the draft appeal grounds (ground 5) is directly contradicted by the concession made by Mrs Rich's Counsel on the hearing of the joinder application and that a large number (such as grounds (1)-(4), (6)-(11)) focus on what conclusions were or should have been drawn from the evidence before his Honour. Application to file fresh evidence 21Mrs Rich was represented at the concurrent hearing of her application for leave to appeal and, if granted, appeal, by her solicitor. At the outset of the hearing, there was an application by Mrs Rich's solicitor for leave to file fresh evidence. That evidence comprised an affidavit sworn by Mrs Rich on 18 February 2014 (said to be relied on to expand the detail in Mrs Rich's earlier affidavit of 29 August 2013) and a report from a handwriting expert, Mr Chris Anderson, to the effect that, in his opinion, signatures purporting to be those of Mrs Rich on various of the facility or loan documents were forgeries. 22As to the affidavit, particular reference was made by Mrs Rich's solicitor to a document which appears to be an email communication from Westpac to Mr Rich. Mrs Rich says (at [31] of her 18 February 2014 affidavit) that this was only recently discovered and that it is a previously deleted email on her home computer (that she says her former husband used frequently prior to their separation). In her affidavit, Mrs Rich describes this email as containing correspondence between an officer of Westpac (Mr Layden) and her former husband on 18 September 2012 in relation to a letter of forbearance in respect of a certain business. The asserted relevance of that document on the present application was said to be that it demonstrated the lack of communication by Westpac with Mrs Rich about the relevant loans and her lack of awareness of those loans (said to be relevant to the alleged misleading and deceptive and/or unconscionable conduct on the part of Westpac in the way that the loans were formulated in the first instance). 23Reference was also made to updated valuation evidence that had been obtained in respect of the Vaucluse property. Mrs Rich's solicitor fairly conceded that valuations of the property could have been obtained when the matter was before the primary judge. 24In Akins v National Australia Bank (1994) 34 NSWLR 155, Clarke JA said (at 160): The Court is empowered to receive further evidence upon the hearing of an appeal (s 75A(7)) of the Supreme Court Act 1970) but pursuant to subs (8) of that section may not receive further evidence after a trial on the merits "except on special grounds". Although it is not possible to formulate a test which should be applied in every case to determine whether or not special grounds exist there are well understood general principles upon which a determination is made. These principles require that, in general, three conditions need be met before fresh evidence can be admitted. These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible. (my emphasis) 25Objection was taken by Westpac to admission of the fresh evidence sought to be relied upon by Mrs Rich on the basis that it satisfied none of the tests identified in Akins. 26As to the requirement that the evidence could not have been obtained with reasonable diligence for use on the joinder application, it was not contended by Mrs Rich that the handwriting expert's opinion (or any valuation evidence) could not have been obtained prior to the hearing before the primary judge. It may be that the discovery of the deleted email could not reasonably have been obtained at that time, although there was nothing to suggest that searches for deleted material on Mrs Rich's computer could not have been carried out at an earlier time. 27In any event, the real difficulty with the application to adduce the further evidence on which Mrs Rich wishes to rely to establish that her signature was forged on various documents and that she was not aware of the later loan facilities is that it does not go to any issue relevant to the existence of an arguable defence to Westpac's claim against Mr Rich. 28Mrs Rich contends that the signatures purporting to be hers on the documentation signed in connection with various of the loan facility documents (such as the loan facility offer of 6 December 2011 and the guarantee and indemnity granted in connection with that facility) were forged. Mrs Rich says that she did not meet with Westpac; was never asked by Westpac whether she wanted to borrow the money that was lent in 2009 and 2011; and that the money was lent without her knowledge or consent. 29However, Westpac does not make any assertion in the possession proceedings that any relevant document was signed by Mrs Rich and does not make any claim against her. Although, at [22] of his Honour's reasons, his Honour sets out (as part of facts that he was satisfied was established on the evidence) that Mrs (and Mr) Rich had signed each of the letters of 4 February 2009 and 6 December 2011, nothing in his Honour's reasons turned on this. For the purpose of the application for leave to appeal, it can be assumed that Mrs Rich's signatures on the various facility/guarantee documents were forged. It is therefore not necessary now to admit the evidence of the handwriting expert. 30As to the deleted email, again it does not go to any issue in dispute as to Westpac's entitlement to enforce the loan facilities against Mr Rich. Westpac does not contend that Mrs Rich had any knowledge of the relevant loan facilities. (I address in due course the contention that Westpac's failure to enquire of Mrs Rich before entering into the facilities with her husband amounted to unconscionable behaviour vis a vis Mrs Rich.) It is therefore not necessary to admit that evidence (and this was the only part of the affidavit ultimately pressed by Mrs Rich's solicitor). 31There was unchallenged evidence at first instance of the value of the property, namely a valuation report dated March 2013 from Jones Lang LaSalle (which provided a market valuation of $3.4 million and a forced sale valuation of $2.8 million). The relevance of evidence as to the present value of the Vaucluse property was said to be to a consideration of the balance of convenience. Mrs Rich's solicitor suggested that it provided a basis to conclude that Westpac would not be prejudiced if Mrs Rich were allowed to be joined as a defendant (because there is excess equity in the property over the amount of the claimed indebtedness). Apart from the fact that, as interest accrues, the amount of the indebtedness will continue to increase, the submission assumes that the property market will continue to improve. That seems to be an exercise in speculation given that there is nothing to indicate when the possession proceedings would be heard if Mrs Rich is now joined as a defendant or what might happen to the property market in the interim. In any event, it was a matter for Mrs Rich, if she wished to rely on valuation evidence in support of her joinder application, to obtain that evidence at the relevant time. 32The application to adduce further evidence was refused for the above reasons. Principles 33Mrs Rich seeks leave to appeal from an interlocutory ruling on a matter of practice and procedure. Appellate courts exercise particular caution in reviewing such decisions (Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at [9]). 34In Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 (at [45]), Heydon JA, as his Honour then was, noted what must be demonstrated for an appeal against an interlocutory order to succeed: that there has been an error of legal principle or a material error of fact; that some irrelevant matter has been taken into account; that there has been a failure to take into account, or to give sufficient weight to, some relevant matter; or that the result is so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. 35In Warragamba Winery Pty Ltd v State of NSW [2010] NSWCA 174 at [6], this Court confirmed the principles stated in Micallef, noting that it was "well established that parties who seek to challenge a discretionary interlocutory decision on a matter of practice and procedure ... face a difficult task". 36More recently, in Be Financial Pty Ltd v Das [2012] NSWCA 164 at [33], it was said that for leave to appeal to be granted in such a case, one needs to identify a particular issue of principle, question of general public importance or injustice (in the sense of going beyond what is merely arguable). Finding that no arguable defence was established 37In oral submissions on the hearing of the application for leave to appeal, Mrs Rich's solicitor, in effect, sought to re-run the arguments put before the Court below. However, he also contended that Mrs Rich had arguable defences (based on constructive notice or unconscionable conduct) on which Mr Zipser had expressly eschewed any reliance for the purposes of the joinder application. In that regard, I note that in Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 at [4], Beazley P referred to what was said in University of Wollongong v Metwally (No 2) [1985] HCA 28 at [7]; (1985) 60 ALR 68 at 71 to the effect that except in the most exceptional circumstances it would be contrary to principle to allow a party, after a case had been decided against him or her, to raise a new argument which, whether deliberately or by inadvertence, had not been put during the hearing when there was an opportunity to do so. 38Turning first to the matters that were argued before his Honour, reliance was again placed on the guidelines for construction of "all moneys" mortgages set out in Estoril. Emphasis was placed on Mrs Rich's evidence as to her understanding of the purpose of the earlier loan(s) secured by the 2004/2007 mortgages. Emphasis was also placed on the fact that in the later facility offers, where the reference was made to security including an existing mortgage over the Vaucluse property, there was an obvious error in that there was no "joint" mortgage over that property. It was submitted that therefore it should not have been inferred that this was a reference to the 2004 or 2007 mortgage and that it might have been a reference to some other joint mortgage over other property. 39Mrs Rich further argued that an inference could be drawn from the stamp duty paid on the mortgages that they were intended only to secure earlier loans obtained for the acquisition of the Bondi investment units and the Toorak property, which loans had (or she asserts should have) been repaid out of the proceeds of sale of those properties. 40The difficulty with Mrs Rich's contentions is that the language of the 2004/2007 mortgages was not limited to the indebtedness arising under the particular loans for which the security was given. Whether or not the Toorak property loan and the Bondi investment unit loans were repaid, the relevant question is whether the 2004 and 2007 mortgages were intended to secure other (future) indebtedness of Mr Rich. On their face, the mortgages were intended to secure future indebtedness (clauses 43 and 36, respectively) and the reference to an existing mortgage over the Vaucluse property (albeit wrongly referring to a "joint" mortgage) can be seen as a later acknowledgment by Mr Rich that this was indeed the case. The 2004 mortgage expressly contemplated that the mortgage would cover amounts owing whether or not they were of a type within the contemplation of the parties at the date of that mortgage (clause 43). 41There was nothing on the face of the documents (other than whatever inference might be drawn from the stamping of the documents) to support a conclusion that it was the intention of Westpac and Mr Rich, when the respective mortgages were signed, that the mortgages would not be regarded by Westpac as security for anything but those earlier specific liabilities. No such inference can in my view be drawn from the initial stamping and later up-stamping of the mortgages. Presumably they were stamped to reflect the indebtedness at that particular time. If, as Mrs Rich believes, by the time the later indebtedness was incurred the earlier loans had been repaid there would have been no need further to up-stamp those mortgages. 42While it is the case that some of the later loans were made to a company (the 2009 loans), the liability secured was personal liability of Mr Rich. The all moneys clauses in the later security documents indicate that both Westpac and Mr Rich considered that the earlier mortgages would cover the later loans. There can otherwise be no point in having included the existing mortgage over the Vaucluse property in the list of securities to be provided to secure the loan. 43As to whether there was an arguable case that there had been no default, Mrs Rich's solicitor advanced no submissions. Having regard to the terms of the respective mortgages and the evidence before his Honour, the conclusion reached by his Honour was, with respect, impeccable. 44As to the discrepancies identified in relation to the quantum of Mr Rich's indebtedness, Mr Layden's evidence at first instance dealt with the issues raised by Mrs Rich as to whether the sale of the Toorak and other properties had been taken into account in reduction of the debt. His Honour did not err in the conclusions reached in that regard. 45I note that after the power of sale is exercised Westpac will hold any surplus from the proceeds of sale, after discharge of the secured indebtedness, on trust for Mrs Rich (she having acquired her former husband's equity of redemption in the property by reason of the Family Court orders, which were made with the consent of Mr Rich's trustee in bankruptcy) and will thus be obliged to account to her as trustee for the surplus (Adams v Bank of New South Wales [1984] 1 NSWLR 285; Coroneo v Australian Provincial Assurance Association Ltd (1935) 35 SR (NSW) 391). Before the exercise of the power of sale, while the mortgagee/mortgagor relationship still subsists, Mrs Rich would be entitled, as holder of the equity of redemption, to seek an account from Westpac in order to determine how much is actually secured (see generally Fisher & Lightwood's Law of Mortgage [39.1]-[39.3]). Therefore, a dispute as to the quantum of Mr Rich's secured indebtedness is not shut out by the refusal to permit Mrs Rich to join the possession proceedings. It can be raised in separate proceedings at an appropriate stage (as can any dispute as to the ultimate exercise by Westpac of its power of sale). 46As noted in the course of the present application, the ordinary rule is that a mortgagor cannot bring proceedings in relation to the mortgage unless the mortgagor offers to redeem the mortgage (see cases cited in Fisher & Lightwood at [33.7]). In Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287, the Court noted that, once there is an arguable case that some money is owing, the mortgagee is entitled to pursue its rights under the mortgage. 47While there are exceptions to the ordinary rule referred to above, such as where only statutory (not equitable) relief is sought or where proceedings are brought for the construction of the mortgage, the claims that Mrs Rich wishes to bring (by way of challenge to the proposition that there has been a default under the mortgage or to dispute the quantum of the indebtedness secured by the mortgage) do not fall within such exceptions. The effect of the ordinary rule is that Mrs Rich would not be in a position to resist an order for possession by disputing the quantum of the debt unless she is in a position to tender what is owed. Mrs Rich has not made any offer to redeem the mortgage and it is clear from her solicitor's submissions that she is not in a position to do so. 48None of the matters to which Mrs Rich points on this application suggests that his Honour erred in concluding, for the reasons given by him, that no arguable defence was raised on any of the three principal ways put for Mrs Rich. 49Turning then to the additional defences now pressed by Mrs Rich's solicitor, his Honour can hardly be said to have erred in not concluding there was an arguable defence that Mrs Rich's then Counsel expressly indicated he was not prepared to agitate and did not press. 50On the joinder application, in written submissions, Mr Zipser indicated that he would not make submissions in support of the defence pleaded concerning unconscionable conduct or under the Contracts Review Act 1980 (NSW) and would not advance orally any alternative defences of unconscionable conduct or under the Contracts Review Act. 51Mr Zipser repeated in oral submissions that he was not defending or pressing any unconscionable conduct claims and contracts in the pleadings in support of the application. He also said he did not seek to "get in the back door" a pleading of unconscionable conduct under the Contracts Review Act which he was not prepared to defend before his Honour on the amended notice of motion. 52The only part of the proposed pleadings in that regard that Mr Zipser said he did defend was the constructive trustee part of the cross-claim. The only submission made in relation to that claim was that there were properties that Mrs Rich owned with Mr Rich; that there was a question how the moneys on the sale of those properties were applied and that it was possible that they were applied to reduce the debts the subject of those properties after the commercial facility which it is said would be relevant to the defence on quantum. Alternatively, it was said that Mrs Rich might want to say in respect of the same moneys that she had an entitlement to them and that Westpac's use of them to reduce moneys owing by Mr Rich involved breach of fiduciary duty to her. I consider those submissions later (at [67]-[69]). 53Mrs Rich is bound by the forensic decisions made at the time of hearing of the joinder application. His Honour did not err in not addressing those additional defences. Even had his Honour done so, the result would in my view have been the same. 54What Mrs Rich seeks, by the additional defences now sought to be pressed, is to have the loan contracts set aside. She wishes to argue that there would then be no basis for Westpac to exercise its rights under the mortgage granted by her former husband. However, neither the additional defences Mrs Rich now seeks to run nor her foreshadowed cross-claim raises any question as to whether or not the loan contracts are enforceable by Westpac against Mr Rich. Rather, Mrs Rich's case seems to be that Westpac engaged in misleading and deceptive, or unconscionable, conduct towards her and that as a result she can obtain relief in respect of contracts to which she was not a party and that her former husband has not suggested are not enforceable against him. 55Mrs Rich's draft defence sets out, in incomplete and poorly drafted terms, the following allegations of "constructive notice and trust" and of unconscionable conduct: 24 Constructive Notice and Trust Particulars of Constructive Notice The Plaintiff knew from its dealing with Mr Rich and from loans on the properties and that the properties were in joint names that Mr Rich and Mrs Rich were husband and wife and shared a relationship of trust and confidence. The Plaintiff did not take reasonable steps to discharge the constructive notice. At no time did the Plaintiff advise Mrs Rich about the loans or seek her consent. At no time did the Plaintiff advise Mrs Rich to take independent legal or financial advice. Unconscionable conduct Contracts Review Act 25. Mrs Rich has standing to seek relief under the Contract Review Act [sic]; i)Mrs Rich has title to the property as on 9 August 2013, by consent the Family Court transferred to Mrs Kim Rich all interest, rights and entitlement of the land described in certificate folio identifier 19/2/8451 [i.e., the Vaucluse property] ...from [Mr Rich](100%) by his trustee in bankruptcy ... to [Mrs Rich] as sole proprietor (100%). ii)the loan and guarantee documents produced by the Plaintiff all bear Mrs Rich's alleged signature as either borrower of guarantor. Mrs Rich's signature was fundamental to the loans being made, either as co borrower, co guarantor or as an officer of the borrowing company. The loans would not have been made without her signature. The Plaintiff division of [Westpac] should not have made the loans. The Plaintiffs [sic] conduct in making the loans was unconscionable. The Plaintiffs [sic] actions in making the loans have caused Mrs Rich loss and damage. Mrs Rich's [sic] should be allowed to defend the Plaintiff's possession proceedings. iii)Mrs Rich owned as joint tenants in common a number of properties in North Bondi and in Toorak in Melbourne whereby the proceeds of those properties repaid the loans secured by mortgages ... on the property. Mrs Rich's [sic] should be allowed to defend the Plaintiff's claim to any other loans secured by these mortgages. 26. The loans referred to in the Statement of Claim and particularised in paragraph 20 herein were unjust within the meaning of s 9 of the Contracts Review Act 1980 (NSW). 56The draft defence claims relief pursuant to s 7 of the Contracts Review Act as well as relief under the Trade Practices Act 1974 (Cth) and Australian Securities & Investments Commission Act and Competition and Consumer Act 2010 (Cth) and pecuniary penalties at Sch 2 of the Competition and Consumer Act 2010. 57For Mrs Rich, it is submitted that whether an allegation of constructive trust is reasonably arguable is something not readily able to be determined on an interlocutory basis, having regard to the caution expressed in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 (at [128]-[129]). 58Apart from the fact that the draft pleading of "constructive notice and trust" seems to be not a pleading as such, but is limited to the particulars set out under that heading, the matters there set out do not give rise to any arguable defence against Westpac's claim to enforce the mortgages against Mr Rich. 59Mrs Rich's solicitor contends that Westpac was clearly on notice of her "entitlement" because she was named as a party on Westpac's facility documents. However, the fact is that Mrs Rich had no "entitlement" or interest in the Vaucluse property at the relevant time. Mrs Rich obtained no interest in the Vaucluse property until the Family Court order was made. The fact that Westpac may have mistakenly understood her to have been a party to the transactions goes nowhere in circumstances where Westpac is not seeking to hold Mrs Rich personally liable. 60Insofar as it seemed to be asserted that, prior to the loans the subject of the proceedings, Mrs Rich owned or had an equitable interest in a 50% equitable share in the Vaucluse property which was at that time unencumbered, there is no legal basis articulated for that contention. 61What seems to be suggested is that (whether because of the fact of her marriage or perhaps her contributions to the marriage), Mrs Rich had an equitable interest in the Vaucluse property at some time prior to the Family Court order. It was conceded by Mrs Rich's solicitor that no argument was put before the primary judge to that effect, nor was it contended that there was any resulting trust or other equitable interest in the property prior to the Family Court orders. 62As noted in Oayda v Mercantile Mutual Life Insurance Co Ltd (Family Court of Australia, Rourke J, 1 December 1995, unrep), there is no interest in a spouse's property under the Family Law Act 1975 (Cth) unless and until an order is made (Fisher v Fisher (No. 2) [1986] FLC 91-767 at 75,597; Re Chemaisse; Federal Commissioner of Taxation (Intervener) [1990] FLC 92-133 at 77,915). 63Even if Mrs Rich could have brought a claim for equitable relief against her husband seeking an order that he held part or all the money on constructive trust for her, no such claim was made and no such relief has been granted. Furthermore, even if such relief could have been sought against Mr Rich (whether as part of the present proceedings or otherwise), an interesting issue would presumably then have arisen given the position of Westpac as to whether the imposition of a constructive trust (assuming grounds for this were established) would be the minimum equity to do justice having regard to the interests and as to the time at which any such trust should be imposed or declared (having regard, inter alia, to the prejudice to secured creditors). None of that was explored in the submissions before the primary judge or on this application for leave to appeal. 64I refer in this regard, without seeking to be exhaustive, to the consideration of relevant principles in Bathurst City Council v PWC Properties Pty Limited [1998] HCA 59; (1998) 195 CLR 566 at 585 and Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at 113; and, as to the time at which a constructive trust founded upon the common intention of the parties comes into existence, Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120; Parianos v Melluish [1999] FCA 684; 93 FCR 191; Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 (per Deane J at 623); Re Osborn [1989] FCA 494;(1989) 25 FCR 547; Secretary, Department of Social Security v Agnew [2000] FCA 59; (2000) 96 FCR 357 at 365; Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 per Gummow J in dissent at 555; Disctronics Ltd v Edmonds [2002] VSC 454 per Warren J, as her Honour then was, at [212]-[213]; Victoria University of Technology v Wilson [2004] VSC 33, per Nettle J at [216]; Sui Mei Huen v Official Receiver [2008] FCAFC 117 at [78]; (2008) 248 ALR 1 at 22 and Draper v Official Trustee in Bankruptcy [2006] FCAFC 157; (2006) 156 FCR 53; (2006) 236 ALR 499 at 522. 65Westpac's interest as mortgagee is not affected by the fact that it was on notice of the fact that Mr Rich was married, nor that Mrs Rich might have had a potential claim against him for an interest in the property. The proposition seems to be put that it is unconscionable conduct for a bank to lend money secured over property solely owned by one party to a marriage, without first consulting his or her spouse (or advising the spouse to seek legal advice). No authority for that proposition has been cited. 66The particulars to paragraph [25] in the draft pleading (going to the alleged Contracts Review Act claim) all appear to go to the question of Westpac's conduct towards Mrs Rich. Nothing is there alleged as going to any misleading conduct or unconscionability by Westpac as against Mr Rich. The trustee in bankruptcy has not made any claim to have the loan contracts avoided and does not appear to have asserted any basis on which Mr Rich could say that he should not pay the money to Westpac. Similarly, the broad assertion made in submissions that this was "asset lending" takes the matter no further when there is nothing to suggest that (even assuming the facilities can be so characterised) Mr Rich was not well able to assess the risks and benefits of such lending. 67The draft cross-claim has a section headed "Claim against the cross-defendant as a constructive trustee". This, it seems, was all that Mr Zipser considered could properly be contended was arguable when the matter was before his Honour. It relates to the allocation of the proceeds of sale of the Toorak and Bondi investment properties, not as to what was secured by the 2004/2007 mortgages nor as to what was owing by Mr Rich. 68The draft cross-claim alleges that Westpac knew or ought to have known that the proceeds of sale of the Bondi investment units and Toorak properties "represented properties the subject of fiduciary duties owed by it and [Mr Rich] to [Mrs Rich]" and that Westpac holds half the proceeds of sale of the properties on trust for Mrs Rich and is accountable to Mrs Rich for those moneys. Alternatively, that Westpac allowed Mr Rich to make withdrawals of Mrs Rich's money held on trust by Westpac for her and that Westpac knew or ought to have known that it and Mr Rich were acting in breach of their fiduciary duties to Mrs Rich. Further, or in the alternative, it is alleged that Westpac itself (or where it assisted Mr Rich's withdrawal of her money, Mr Rich) was dishonest by the ordinary standards of reasonable and honest bankers. On that basis, a claim is sought to be made that Westpac is liable as a constructive trustee to account for the moneys or for having dishonestly assisted in breach of fiduciary duty and that half the proceeds of sale of these properties is payable to Mrs Rich. 69Insofar as complaint is made as to the appropriation of moneys, said to have been on deposit with Westpac, representing proceeds of sale of either the Toorak property or Bondi units for repayment of the facilities entered into by Mr Rich on the basis Mrs Rich did not give any lawful authority for that conduct, that complaint would not remove Mr Rich's liability to Westpac. Rather, if Westpac was not entitled to appropriate some or all of the proceeds of the Toorak sale in satisfaction of Mr Rich's indebtedness, and that appropriation were notionally set aside, the indebtedness secured by the Vaucluse property would be greater (and there would be less available out of the sale of the Vaucluse property to satisfy Mrs Rich's equitable interest pursuant to the Family Court orders). 70As to the basis of Mrs Rich's claim for relief under the Contracts Review Act, reference was made by Mrs Rich's solicitor to the decision of Bryson J, as his Honour then was, in Smith v Elders Rural Finance Ltd (1995) Aust Contract R 90-054. There, the executors of the estate of the late Mr Smith (two of whom were residuary beneficiaries under his will) commenced proceedings seeking relief under the Contracts Review Act in relation to a mortgage given by Mr Smith over a property owned by him to secure a loan agreement between Elders and a partnership in which Mr Smith (with the executors and others) was a partner. The relief sought was for the modification of the obligations of the late Mr Smith under the loan agreement. The question was raised as to whether it was necessary for there to be a contract between the relevant parties for there to be standing to bring a claim under the Contracts Review Act. 71His Honour noted that the Contracts Review Act did not in its terms confer a cause of action or a right to apply for relief on any person and that there was no explicit statement in s 11(2) (authorising the commencement of proceedings for the purpose of obtaining relief under the Act in relation to a contract) as to by whom the proceedings might be commenced. His Honour noted that the processes which the Court is to follow in deciding whether or not to make an order for relief in respect of an unjust contract are such that it is not possible to say before an order is made that any applicant is entitled to an order; and that there are no facts or circumstances on the proof of which an order follows as of right. His Honour said (at 90,268): ... A decision on standing must be based on an appraisal of whether, prima facie, the applicant has rights which may be affected by a possible outcome. By authorising commencement of proceedings for orders modifying obligations the Act impliedly authorises persons whose rights may be affected by an order to apply for one; the Act means nothing unless the orders can be sued for. 72His Honour concluded that there was standing to apply to the Court to make orders under the Act if rights of the applicant would be directly affected by orders which could be made and said (at 90,268): ... In my opinion the power of the Court extends to modifying the obligations of one debtor under a contract on the application of another debtor; that power could be exercised if there were a good reason to exercise it constituted by a direct effect on the interests of the applicant in the modification of the obligations of the other debtor. The amounts of money which the plaintiffs are personally liable to pay and charged on property which they own may be altered. 73In that case, Bryson J considered that the plaintiffs' rights were directly affected by the personal liability of the deceased in that, if their liability were modified and that of the deceased was not, they would have a liability by way of contribution to his estate. His Honour considered that not only were their rights as co-borrowers so affected, but also that the deceased's executors had a direct interest in modifications of the deceased's liability, by reference to their obligations as executors of the estate, and so did the residuary beneficiaries. Therefore, the plaintiffs were able to bring a claim seeking relief with respect to the deceased's obligations. 74In two later cases (Perpetual Trustees Victoria Limited v Cipri [2008] NSWSC 1128 and Perpetual Trustees Victoria Limited v Van den Heuvel [2009] NSWSC 57), the existence of a contract was considered necessary for there to be standing to bring a Contracts Review Act claim, though in neither case was the Court's attention drawn to the Smith v Elders decision. 75In Cipri, the question was whether a mortgagee was precluded from enforcing its mortgage in circumstances where the wife had forged her husband's signature on a loan agreement and mortgage. No claim was made in relation to the loan agreement. Hall J held (at [129]) that as there was no contract between the husband and Perpetual, the basis required for the grant of relief under the Contracts Review Act was absent. His Honour found that a mortgage, once registered, is not a contract for the purposes of the Contracts Review Act. 76In Van den Heuvel, Price J considered a similar situation. There, it was the wife's signature that was forged on the mortgage and loan agreement with the lender; default judgment for possession and the amount owing on the mortgage was obtained against the husband, in proceedings commenced against both husband and wife; and the wife alleged that the loan agreement and mortgage were unjust contracts within the meaning of s 7 of the Contracts Review Act and sought a declaration that they are void ab initio. His Honour held that the wife was not a party to the loan agreement as she had not in any way participated in its formation and was not persuaded that the mortgage, upon registration, was deemed to be a contract. His Honour was not persuaded that the wife had standing to seek relief under the Contracts Review Act, stating at [91] that "[t]he existence of a contract between [the lender and the wife] is fundamental to the claim for declaratory relief under the Contracts Review Act and the claim for relief under that Act must fail". 77If the proposition is that Mrs Rich has standing to seek relief under the Contracts Review Act because her equitable interest may be directly affected by an order modifying the obligations under the relevant contract, then I accept that Smith v Elders would support such a conclusion. However, unlike the position in Smith v Elders, what Mrs Rich is arguing is that Westpac's conduct towards her (not her former husband) should lead to a modification of her former husband's contractual obligations. No basis on which such a claim might be able to be argued was articulated. (Moreover, the dismissal of her application to join the proceedings does not preclude a claim for relief under the Contracts Review Act or otherwise in separate proceedings against Westpac if, properly advised, Mrs Rich wishes to pursue it). 78The claim Mrs Rich seeks to raise is not one that provides a defence to Westpac's claim as against her former husband. Neither Mr Rich nor his trustee in bankruptcy has made any complaint as to misleading and deceptive or unconscionable conduct. There is no suggestion that Mr Rich was not well aware of the nature of the loans. 79His Honour did not err in concluding that, on the evidence before him, no arguable defence to Westpac's claim against Mr Rich had been identified. Nor was there any error established in the sense required by House v R ([1936] HCA 40; (1936) 55 CLR 499) in the exercise of discretion by the primary judge to refuse to permit the joinder of Mrs Rich to the proceedings for the purpose of filing a cross-claim in the terms of the draft cross-claim, particularly having regard to the requirements of ss 56-59 of the Civil Procedure Act 2005 (NSW). Conclusion as to proposed grounds of appeal 80In light of the above, the grounds of appeal sought to be brought by Mrs Rich are in my view bound to fail. Briefly, adopting the numbering above, I reach this view for the following reasons: (1)the fact that Mrs Rich did not apply for any of the loans the subject of the proceedings was irrelevant and his Honour did not err in placing no weight on this evidence; (2)the evidence before his Honour amply supported the conclusion that there was a substantial shortfall between the present market value of the Vaucluse property and the amount of the debt owing to Westpac and there was no error in his Honour proceeding on that basis; (3)it does not appear to have been submitted to his Honour that Mrs Rich's affidavit evidence was to be read in the fashion now contended but in any case, even if one accepts her evidence that she was not aware of the later financial dealings but had a belief as to the purpose of the earlier financial dealings that does not demonstrate error in his Honour's conclusion as to the application of the mortgages to the later indebtedness; (4)his Honour's conclusions at [60] were available on the evidence and there was no error shown in his Honour's assessment of Mrs Rich's evidence in this respect; (5)his Honour did not err in accepting the very submission made by Mrs Rich's counsel that there was no direct evidence as to the type and character of the original debt which was incurred; (6)no error was shown in his Honour's drawing an inference from the facility offers that the parties (Mr Rich and Westpac) intended that the earlier mortgage(s) over the Vaucluse property would secure the additional advances; (7)similarly, his Honour did not err in rejecting as an available inference that the parties (Mr Rich and Westpac) did not intend that the existing mortgages would secure the loan; (8)the relevant question was not whether the initial debt had been extinguished from the time of the 2009 and/or 2011 facilities but whether those facilities were secured by the earlier mortgages; no error was shown in relation to his Honour's conclusions at [64]; (9)his Honour did not err in taking into account, as evidence of the debt owing to Westpac, the certificates issued by it, having regard to the provisions of the relevant mortgages (and the claim that there were discrepancies in relation to the application of proceeds of sale from other properties was answered in the evidence relied upon by Westpac); (10)his Honour's findings in relation to the amount secured by the mortgages compared to the current market value were based on the valuation evidence before him and no error was demonstrated in this regard; (11)similarly, on the evidence before him, his Honour did not err in proceeding on the basis that the amount owing to Westpac did not substantially exceed the current market value of the property; (12)there was no error shown in his Honour considering the dicta in Hammond to be relevantly applicable for the proposition his Honour stated at [72]; (13)no error in the exercise of his Honour's discretion to refuse leave to bring a cross-claim was demonstrated; (14)there is nothing in his Honour's reasons to support the contention that there was a denial of procedural fairness: his Honour clearly proceeded on the basis that the guidelines applicable in General Steel and Dey were to apply and did not require Mrs Rich to prove her case as if this had been a final hearing; secondly, the complaint as to the alleged failure of Westpac to provide documentation in relation to loan accounts was a matter raised before the Registrar and not before his Honour; and (15)& (16) his Honour cannot fairly be criticised for not expressly dealing with the arguable or otherwise nature of defences/cross-claims in respect of which counsel appearing for Mrs Rich on the joinder application expressly eschewed reliance; but, in any event, the submissions made for Mrs Rich on the appeal do not indicate any arguable defence by her to the claim for enforcement of the mortgages as against her husband based on those additional defences. 81For the above reasons I would dismiss the application for leave to appeal with costs. 82EMMETT JA: Mrs Kim Rich seeks leave to appeal from an interlocutory decision made by a Judge of the Common Law Division refusing her application to be joined as a defendant in proceedings brought by Westpac Banking Corporation (Westpac) against the trustee in bankruptcy of her former husband, Mr David Rich. In those proceedings (the possession proceedings), Westpac sought an order for possession of a property situated in Vaucluse, New South Wales, which is presently occupied by Mrs Rich and her two children. Mr Rich at all relevant times was the registered proprietor of the Vaucluse property. 83By mortgages dated 22 December 2004 and 16 August 2007, Mr Rich mortgaged the Vaucluse property to Westpac. The first mortgage was expressed to secure all amounts that, at any time, for any reason, are payable or owing by Mr Rich to Westpac. The second mortgage was expressed to secure all money that Mr Rich owes or will or may owe to Westpac in the future. 84Westpac claims that Mr Rich is indebted to it under three different facilities. The first facility, dated 4 February 2009, for an amount of $985,000, was between Westpac as lender and Air Sea Customs Services (NSW) Pty Ltd as borrower. The second facility, dated 6 February 2009, for an amount of $1,480,000, was between Westpac as lender and Air Sea Customs Services (NSW) Pty Ltd and Rich International Pty Limited as borrowers. Mr Rich and Mrs Rich were directors of Rich International Pty Limited and Mr Rich guaranteed the repayment by the borrowers of the indebtedness under the facilities. Guarantees by Mrs Rich of the obligations under the facilities were purportedly signed by Mrs Rich. However, Mrs Rich denies that she signed either of the guarantees. Westpac has not disputed that denial in these proceedings. 85The third facility, dated 6 December 2011, for the sum of $925,000, was between Westpac as lender and Mr and Mrs Rich as borrowers. While a copy of the facility letter is purportedly signed by Mrs Rich, she denies any knowledge of the facility. Westpac has not disputed that denial in these proceedings. 86Westpac asserts that Mr Rich is indebted to it in a sum in excess of $4,000,000, representing the total amount payable under the three facilities, together with unpaid interest. Neither Mr Rich, nor his trustee in bankruptcy, has disputed the indebtedness of Mr Rich to Westpac. Mr Rich and his trustee in bankruptcy have consented to judgment in the possession proceedings. Accordingly, but for the joinder application made by Mrs Rich, Westpac would have had possession of the Vaucluse property without opposition. 87Mrs Rich claims to be the beneficial owner of the Vaucluse property by reason of orders made by the Family Court of Australia under the Family Law Act 1975 (Cth). However, she does not contend that any interest that she has in the Vaucluse property takes priority over the mortgages given to Westpac by her former husband. 88Two broad bases were relied upon by Mrs Rich before the primary judge in her application for leave to be joined as a defendant in the possession proceedings. First, she relied upon allegations of unconscionability and misleading and deceptive conduct on the part of Westpac. Mrs Rich complained that Westpac had advanced monies under the facilities on the basis that she accepted responsibility for the advances, but made no attempt to communicate directly with her in relation to the advances. Counsel who appeared for Mrs Rich before the primary judge eschewed any reliance upon such alleged conduct on the part of Westpac. Nevertheless, on the hearing of the present leave application, Mrs Rich's solicitor indicated that he wished to rely on such arguments. However, he failed to articulate any rational basis on which any such conduct on the part of Westpac could operate to deprive it of the benefit of the right to possession of the Vaucluse property under the mortgages. 89The second broad basis upon which Mrs Rich asserted an interest in the proceedings is that a proper analysis of the relationship between Mr Rich and Westpac would lead to the conclusion that neither of the mortgages was intended to secure any liability of Mr Rich in relation to the three facilities described above. Mrs Rich did not put in issue the question of whether Mr Rich owed monies to Westpac, although she disputed the quantum of the amount claimed by Westpac. Rather, the basis for her contentions was that whatever indebtedness Mr Rich may have to Westpac, it is not secured by the mortgages. Four reasons were advanced in support of that contention, in reliance on Estoril Investments Pty Limited v Westpac Banking Corporation (1993) 6 BPR 13,146. 90First, Mrs Rich asserts that only later debts of the same type or character as the debt originally secured by either of the mortgages would be secured by that mortgage. She says that the first mortgage was granted to secure advances made in connection with a development of an investment property situated in Bondi that was undertaken by Mr Rich and Mrs Rich. She says that the second mortgage was granted to secure an advance made to Mr Rich and Mrs Rich in connection with the purchase of a matrimonial home in Toorak, Victoria. Mrs Rich asserts that all of the indebtedness incurred for the purpose of the investment property in Bondi and the matrimonial home in Toorak has subsequently been repaid and that, on the proper construction of the mortgages, they were not intended to secure debts of the nature evidenced by the three facility letters because they are of a different character from those original debts. 91Such a contention, however, ignores the language of the mortgages and the terms of the subsequent arrangements between Mr Rich and Westpac. Each of the three facility letters contains a statement that the security for the facility was to be an "existing" first registered real property mortgage by Mr Rich and Mrs Rich over the Vaucluse property. The only first registered mortgage over that property that existed at the time of the facilities was the 2004 mortgage. 92Mrs Rich points to what appears to be an erroneous assumption on the part of Westpac that she was a joint owner of the Vaucluse property. In fact, Mr Rich was the sole registered proprietor of the Vaucluse property until his interest was transferred to his trustee in bankruptcy. The language of the mortgages is clearly wide enough to cover any indebtedness of Mr Rich to Westpac that might have arisen after the original secured indebtedness was repaid and irrespective of whether any subsequent indebtednesses was of the same character as the indebtedness originally secured. Further, it is clear that the terms of the facility letters contemplated that at least the first mortgage would stand as security for the advances to be made under the facilities. In those circumstances, the first contention has no prospect of success. 93Secondly, Mrs Rich contends that a "dragnet" clause such as those contained in the mortgages will cover future debts only if documents evidencing those debts specifically refer back to the clause. The obvious answer to that contention is that the provisions of the three facilities all refer specifically to the requirement for security to consist of a first mortgage over the Vaucluse property. Certainly, the second mortgage in 2007 was not a first mortgage. On the other hand, Westpac does not need to rely on the second mortgage, since the first mortgage secures all indebtedness of Mr Rich to it. There is no substance in the second contention. 94The third contention is that, since the subsequent debts were to be secured over other property, it should be assumed that Mr Rich and Westpac did not intend that those debts also be secured by the existing mortgages. At best, that could be no more than a presumption. However, the terms of the three facility letters make abundantly clear that it was the intention of Westpac and Mr Rich that any liability of Mr Rich in relation to the subsequent facilities would be secured by the existing first mortgage over the Vaucluse property. 95Finally, Mrs Rich contends that, since the original debts secured by the mortgages had been discharged, the mortgages were extinguished and could not secure future loans. Such a contention is inconsistent with the unequivocal language of the mortgages that they were intended to secure all amounts that at any time for any reason or circumstances in connection with any agreement are payable, owing or remain unpaid by Mr Rich to Westpac. In any event, the trial judge found that there was no evidence to suggest that the original debts had been discharged by the time of any of the facility offers. There is no substance in this contention. 96The primary judge concluded that Mrs Rich, if joined as a defendant in the proceedings, would be unable to establish an arguable defence to Westpac's claim for possession of the Vaucluse property. There was no error on his Honour's part in reaching that conclusion. 97Mrs Rich also complained that, as a result of her application to be joined as a defendant being refused, she would be unable to challenge the amounts that Westpac claims are owing by Mr Rich. However, as a consequence of the order made by the Family Court, Mrs Rich has now become beneficially entitled to such rights as Mr Rich had in relation to the Vaucluse property. In her capacity as mortgagor, she would be entitled to an account from Westpac following Westpac's exercise of any power of sale conferred by the mortgages. 98Mrs Rich also asserted that the value of the Vaucluse property exceeded the amount claimed by Westpac. However, she has made no attempt to tender payment of any amount that might be owing to Westpac. In those circumstances, there would be no basis for her to resist Westpac's claim for possession. 99Mrs Rich has demonstrated no error on the part of the primary judge in refusing leave for her to be joined as a defendant. Leave to appeal should be refused. Mrs Rich should pay Westpac's costs of the application for leave to appeal. 100GLEESON JA: I agree with Ward JA for the reasons given by her Honour that the application for leave to appeal should be dismissed with costs. ********** 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: 06 May 2014