This paper was presented on Thursday, 18 August 2022 in the Mortgage & Securities Intensive at the Leo Cussen Centre for Law.
1. The Doctrine of Marshalling
A right to marshal arises where:
- there are two or more properties owned by the same person over which a creditor has security;
- at least one but not all of the properties are subject to a lower ranking security to another creditor; and
- the first creditor takes payment from a property that the second creditor has an interest in, and thereby prevents or diminishes the second creditor’s recourse to that property.
The right to marshal is an equitable right pursuant to which the second creditor is allowed recourse to the other properties in which the first creditor has an interest, that is, to the properties over which the second creditor does not have security (apart from the marshalling right). The right or remedy available to the second creditor is a species of subrogation: the second creditor is entitled to be subrogated to the first creditor’s securities over the other properties.
The doctrine is the subject of a book by Associate Professor Ali, now of Melbourne University[1], and a chapter in Meagher, Gummow and Lehane’s Equity: Doctrines & Remedies[2]; see also The Law of Securities by Sykes and Walker and Fisher & Lightwood’s Law of Mortgage[3].
It has been said that marshalling is most significant when the mortgagor is insolvent[4]:
“marshalling only really comes into its own when the mortgagor/ debtor is insolvent: marshalling improves the position of the second mortgagee as against the unsecured creditors of the debtor, not as against the debtor herself.”
This is a truism in that proprietary security in general is most significant when the debtor is insolvent. It is the case, however, that a secured creditor usually has better, quicker and more effective remedies than an unsecured creditor, even if the debtor is solvent.
2. The Facts in Hill v Love
2.1 Facts Relevant to Marshalling
The basic facts in Hill v Love were straightforward:
- Hill, a solicitor, was the second registered mortgagee of 275 O’Herns Road, Epping. He took the mortgage to secure the payment of his costs and disbursements by his client, Mr. Love. The second mortgage secured:
“each and all sums of money in which the Mortgagor may now or hereafter be indebted or liable or contingently indebted or liable to the Mortgagee in any manner or on any account whatever”
- The first registered mortgagee of 275 O’Herns Road was the Commonwealth Bank of Australia. Its first mortgage was also an all moneys security.
- The Bank had similar first registered mortgages over 315 O’Herns Road, Epping and 460 Cooper Street, Epping. Hill did not have security over 315 O’Herns Road or 460 Cooper Street.
- After the mortgagor, Mr. Love, defaulted, the Bank sold 275 O’Herns Road. This sale was completed by the registration of the transfer to the purchaser from the Bank on 16 February 2012. Upon that registration, Mr. Hill’s second mortgage was removed by the Registrar of Titles in accordance with section 77 of the Transfer of Land Act 1958.
- Hill then sued Mr. Love in debt for approximately $3.75 million in the County Court and, pursuant to terms of settlement with Mr. Love, obtained judgment by consent for a compromise amount, $2.2 million.
- After that, Mr. Hill became aware of his right to marshal and lodged caveats over 315 O’Herns Road and 460 Cooper Street.
- 315 O’Herns Road was later sold by the Bank as first mortgagee but the proceeds were not sufficient to cover the Bank debt.
- 460 Cooper Street was the third property sold by the Bank as first mortgagee. The proceeds of that third sale were sufficient to satisfy the Bank and the surplus, approximately $5.9 million, was paid into Court.
- After the sale but before the settlement of 460 Cooper Street, Mr. Love became bankrupt.
The main facts are summarized in a diagram in the Appendix below, as is the counter-factual situation which would have existed if the Bank had sold the properties in the opposite order.
2.2 The Marshalling Dispute
The contest in Hill v Love in relation to the marshalling doctrine was, by the time of the trial, between Mr. Hill and the trustees in bankruptcy of Mr. Love in relation to the surplus paid into Court from the first mortgagee’s sale of the third property, 460 Cooper Street.
The proceeding was commenced, however, before the sale of the second and third properties and before the bankruptcy of Mr. Love, and initially sought:
- declarations as to Mr. Hill’s right to be subrogated to the Bank’s securities over 315 O’Herns Road and 460 Cooper Street;
- declarations that Mr. Hill had a caveatable interest in 315 O’Herns Road and Cooper Street;
- injunctions to prevent Mr Love from dealing with 315 O’ Herns Road and 460 Cooper Street in a way that would prejudice Mr. Hill’s marshalling rights; and
- orders requiring that Mr. Love execute mortgages over 315 O’Herns Road and Cooper Street to give legal effect to Mr. Hill’s marshalling rights.
3. The Right to Marshal
The facts set out in paragraphs (a) to (d) in section 2.1 above entitled Mr. Hill to marshal against 315 O’Herns Road and 460 Cooper Street, that is, to be subrogated to the rights of the first mortgagee in relation to the latter properties. After the sale of the third property by the Bank, Mr. Hill was held to be entitled to be subrogated to the rights of the Bank as first mortgagee of 460 Cooper Street. Mr. Hill was entitled, therefore, to as much of the surplus moneys paid into Court as was needed to satisfy the liabilities which would have been secured by his second mortgage, had it not been removed as a result of the first mortgagee’s sale.
In the words of the trial judge, Sifris J.[8], citing Meagher, Gummow and Lehane[9]:
“Marshalling is an equitable doctrine that rests upon the principle that a senior creditor, having two funds to satisfy a debt, may not defeat a subordinated creditor who may resort to only one of the funds.
The effect of a successful marshalling claim is that the subordinated creditor is subrogated to the rights of the senior creditor. In the circumstances of this case, the doctrine would result in Hill being treated as holding a second-ranking mortgage over 460 Cooper Street on the same terms as his mortgage over 275 O’Herns Road.”
According to the Court of Appeal[10], “the equitable doctrine of marshalling of mortgages”:
“allows a second mortgagee whose debt has not been paid from the sale of the mortgaged property to access the proceeds of sale of another property mortgaged by the same debtor to the same first mortgagee, even though the second mortgagee has no security over the other property.”
The right to marshal exists even if the mortgagor and mortgagee have agreed that the mortgagee will not have security over any property other than the property over which the subordinated security exists.[11]
No question of protecting a right to marshal can arise until the marshalling right itself exists, that is, not until the realization by the prior encumbrancer of the subsequent encumbrancer’s security property leaving no surplus or an insufficient surplus for the subsequent encumbrancer. Before that event, the subsequent encumbrancer has no marshalling right at all; that right has not yet arisen and there is no equity to prevent any dealing with the other property over which the prior (but not) the subsequent encumbrancer has security.[12]
4. Limitations On and Justification of Marshalling
It is important to distinguish the justification for or principles lying behind the doctrine of marshalling, on the one hand, from the criteria for and limitations of the application of the doctrine, on the other hand.
4.1 Principle
According to Meagher, Gummow and Lehane[13], marshalling rests on the principle that:
“a senior creditor, having two funds to satisfy a debt, may not defeat a subordinated creditor who may resort to only one of the funds.”
This does not mean that the senior creditor is prohibited from resorting first to the fund over which the subordinated creditor has security. The position is otherwise in the United States of America. In England and Australia, however, the holder of the prior security is free to realize his, her or its securities in whatever order the prior security holder chooses. The doctrine of marshalling protects the subsequent security holder from the harm that this freedom of choice could otherwise cause.
In various authorities and texts, the adjectives capricious, fortuitous, adventitious, arbitrary, and self-interested have been applied in describing the behaviour of prior security holders from which subordinated creditors are protected by the doctrine of marshalling. Despite these seemingly pejorative adjectives, however, two important points must be made. The first is that there is nothing wrong, in Australian or English law, with a first mortgagee resorting first to the doubly secured fund or exercising its security rights for its own benefit and in a way which might, from the point of view of a subsequent security holder, be adventitious or seem arbitrary. The second is that it is wrong to elevate the policy reasons underlying the existence of the marshalling doctrine to the level of “essential elements to be established before the doctrine can be relied upon.”[14] It is not the law that for a right of marshalling to exist, it must be possible to describe the conduct of the prior encumbrancer by some adjective such as “ arbitrary” or “capricious” or the result as “fortuitous”. The criteria for the application of the doctrine are free of such value judgements and are set out in section 1.
4.2 Arrangement as to Order of Realization of Securities
The policy justification of the doctrine of marshalling has, however, led to a rule that marshalling of securities is not permitted where the prior ranking security holder is bound to resort first to the property or properties over which the subordinated creditor has security.[15]
In Hill v Love, the Bank was not bound to sell 275 O’Herns Road before the other properties but there was an accommodation by the Bank of the desire of Mr. Love that that property be sold first. The trustees in bankruptcy argued that because of this arrangement, the decision of the Bank to sell 275 O’Herns Road first was not arbitrary or capricious. The trial judge held that because there was no agreement or binding arrangement as to the order of sale, there was no impediment to marshalling.[16] The Court of Appeal said that there is no impediment to marshalling unless there is:
“a contractually enforceable arrangement, binding estoppel, or legislative obligation”
in relation to the order of sale of the relevant security properties.[17] It was in this context that the Court of Appeal made the comment referred to in section 4.1 above that it is wrong to elevate the matters of policy underlying the marshalling doctrine to essential elements for its application.
It is doubtful whether any arrangement, estoppel or obligation of the kind referred to by the Court of Appeal would prevent marshalling if it were entered into after the subordinate security were created, since impeding the potential marshalling right of the holder of the subordinate security would be inequitable as between the grantor and the holder of that security.
5. What is Secured by Marshalling?
The consequences of the existence of a right to marshal securities depend both on the proprietary effect of the doctrine and on the question of what debts and liabilities are covered by it.
5.1 Value of the Security Property
The right to marshal is limited to the (unencumbered) value of the property (or properties) over which the subordinated creditor’s security existed. It would be inequitable for the holder of the subordinated security to obtain more from the higher ranking security over other property to which he, she or it is subrogated than could have been obtained from the property (or properties) over which security was actually taken.[18]
This limitation was not relevant in Hill v Love because the second mortgage property was worth far more than the amount secured by the second mortgage. It was perfectly equitable, therefore, for Mr. Hill to recover the whole amount owed to him from the surplus proceeds of the first mortgagee’s sale of 460 Cooper Street: Mr. Hill was not getting more security than he had bargained for in taking his second mortgage over 275 O’Herns Road.
5.2 Liabilities at Time of Realization of Prior Security
The right to marshal securities concerns liabilities secured by the subordinate security at the time that that security is removed (leaving, ex hypothesi, nothing[19] or an insufficient amount[20] for the holder of the subordinate security).[21]
In Hill v Love, Mr. Love’s trustees in bankruptcy argued that Mr. Hill’s debt claim merged in, and was therefore extinguished by the County Court judgment obtained by Mr. Hill. Since that judgment, so they argued, was obtained after the removal of the second mortgage and “created a ‘new charter’[22] of rights which were the only rights that could thereafter found a claim”, there were no liabilities remaining which were in existence at the time of the removal of the second mortgage and, therefore, there was nothing left to marshal.
This argument was rejected by the trial judge who said that although a debt or other cause of action ceases to have an independent existence after judgment, the judgment does not eliminate the initial obligation and replace it with another.[23] Sifris J. cited Tomlinson v Ramsey Food Processing Pty. Ltd.[24] for the proposition that a final judgment quells the controversy between the litigants with the rights and obligations in controversy “merging” in the final judgment.
Far from extinguishing and replacing an existing obligation, a judgment vindicates and confirms that obligation.
The Court of Appeal had a further reason for rejecting the trustees’ argument in relation to the liabilities secured by the second mortgage at the time that that security was removed following the first mortgagee’s sale.[25] The Court of Appeal noted that Mr. Hill’s second mortgage was an all moneys security: see the clause quoted in paragraph (a) in section 2.1 above. The Court accepted that the remedy of marshalling is not available when the second mortgage does not secure any liability but said that[26]:
“it does not follow that the extent of the second mortgagee’s marshalling right is limited to the exact amount and legal character of the secured debt at the time the first mortgagee chooses to sell the commonly mortgaged property.”
The Court of Appeal referred to a number of types of liability in relation to which marshalling would be available whether or not there was a present debt immediately payable at the time of the first mortgagee’s sale. These included cases where the second mortgage secured a fluctuating line of credit; a future debt; a contingent debt; and a debt payable on demand, where no demand had been made at the time of the first mortgagee’s sale.[27]
5.3 Interest and Costs
As a secured creditor, Mr. Hill was entitled to resort to the marshalled security for the full amount of his secured debt, including interest and, given that his second mortgage so provided, solicitor – own client costs or, according to the present nomenclature in the Supreme Court Rules, indemnity costs. The Court ordered that Mr. Hill’s costs be paid out of the surplus on an indemnity basis pursuant to the terms of his second mortgage.[28] Interest, which was covered by the all moneys clause of the second mortgage, accrued on the County Court judgment debt under section 73(4) of the County Court Act 1958 at the rates from time to time applicable under section 2 of the Penalty Interest Rates Act 1983. It was ordered to be paid to Mr. Hill out of the surplus.
6. Uncertainties in Marshalling
There are a number of uncertainties surrounding the doctrine of marshalling. The most significant of these concern the conceptual uncertainty as to the nature of the interest which the subordinated security holder has in the properties in relation to which there is a right to marshal. A further uncertainty is whether the doctrine of marshalling requires a personal indebtedness on the part of the grantor of the relevant securities or whether a proprietary obligation is sufficient. Another uncertainty was mentioned at the end of section 4.2 above.
6.1 Nature of Marshalling Right
It is not clear whether a right to marshal gives rise to an equitable proprietary interest in the properties to which it permits the subordinated security holder to resort: see Meagher, Gummow and Lehane[29]. The better view is that the right is a proprietary one: see Lawrance v Galsworthy[30] and, in Victoria, Bank of New South Wales v Colonial Mutual Life Assurance Society Limited[31]. The opposite view is taken, however, in Commonwealth Trading Bank v Colonial Mutual Life Assurance Society Ltd.[32], Across Australia Finance Pty. Ltd. v Kalls[33] and Sarge Pty. Ltd. v Cazihaven Homes Pty. Ltd.[34] and seems to be more widely accepted. The non-proprietary view of the marshalling right was advanced in Hill v Love by the trustees in bankruptcy and was noted but not adopted by Sifris J.[35]
The proprietary or other character of a marshalling right is likely to be acutely relevant where there is a priority issue between a subordinated creditor claiming a right to marshal, on the one hand, and a party claiming some other interest in the same property, on the other hand. The clarification of the theoretical nature of a right to marshal is likely to assist in drawing conclusions about the relevance of matters such as priority in time, actual knowledge, constructive notice and consideration in resolving such priority issues.
Whatever the conceptual nature of a right to marshal, it seems clear that once the right to marshal has arisen by the prior encumbrancer selling the subsequent encumbrancer’s security property[36], the grantor of the security will be restrained by injunction from acting in a way which would prejudice the right to marshal.[37] It would also seem to follow from the principle that a right to marshal consists of a right to be subrogated to the prior encumbrancer’s other securities that the grantor of the relevant securities could be required by the Court to execute security instruments which would vindicate the subrogation right of the party entitled to marshal.
6.2 Caveatable Interest?
It follows from the view that a right to marshal gives rise to an equitable proprietary interest in the subject property that the claimant could, if the property were land subject to the Transfer of Land Act 1958, lodge a caveat to protect the right to marshal. Conversely, it might be argued that the opposite view leads to the conclusion that a caveat cannot be lodged to protect a marshalling right. It is thought, however, that it would be wrong to take too prescriptive an approach to the question of what equitable rights may be protected by a caveat based on any traditional classification seeking to distinguish equitable interests, mere equities and personal equities. Even if a marshalling right is seen as a mere equity in such a catalogue, it is thought that since a right to marshal is constituted by a right to be subrogated to the higher ranking creditor’s security, the right is closely analogous to an equitable security of the same kind. On this basis, it should be possible to protect it by lodging a caveat.
It seems that the Registrar of Titles takes the view that a right to marshal can be protected by caveat and that the proper “Estate or interest claimed” is “Interest as Mortgagee” or “Interest as Chargee” with the “Statement of claim” in the caveat form being completed respectively by the words “Subrogation to a mortgage with the following parties and date.” or “Subrogation to a charge with the following parties and date.”[38] These grounds of claim appear as part of the interactive electronic lodgment form.
The opposite view is apparently taken in New South Wales but the leading case on the point, Sarge Pty. Ltd. v Cazihaven Homes Pty. Ltd.39, has no analysis of the concept of caveatable interest in this context, but has an obiter dictum that the marshalling right is not a proprietary interest.
6.3 Proprietary Obligations
There was a difference of opinion in National Crime Agency v Szepietowski[39] with the majority holding that it is a pre-requisite for marshalling securities that the owner of the relevant security properties, that is, the grantor of the relevant securities be personally indebted to the relevant creditors and not that there simply be a proprietary burden on the security properties without personal liability on the part of the property owner. On this point, Lords Neuberger, Sumption and Reed favoured the view that personal liability is required and Lords Carnwath and Hughes took the opposite view. This difference of opinion was not relevant to the result because all five judges would have rejected the marshalling claim for other reasons.
In principle, the minority position is correct.[40] It is just as undesirable that a subordinated creditor be prejudiced by the adventitious or arbitrary behaviour of a prior encumbrancer in the case where the obligations are purely proprietary as it is where personal liabilities are secured on the relevant properties.
6.4 Obligations as to the Order of Realization of Securities
As mentioned in section 4.2, if there is a contractually enforceable arrangement, binding estoppel, or legislative obligation under which the first ranking security holder is bound to resort first to the doubly secured fund, the subordinate security holder will not be able to marshal against the first ranking security holder’s other securities. For the reasons alluded to in the last paragraph of section 4.2 and by analogy with the right of the holder of the subordinate security to protect his, her or its marshalling right by seeking an injunction to prevent the grantor of the security from acting in a way which would prejudice the right to marshal[41], it is doubtful whether an obligation in relation to the order of realization of securities created after the grant of the lower ranking security can prevent marshalling for the benefit of the holder of that lower ranking security.
7. Advising Clients
7.1 Protecting a Right to Marshal
Because of the conceptual uncertainty as to the nature of the right to marshal[42], no ready answer can be given to questions concerning the priority of a right to marshal as against the rights of a subsequent purchaser, mortgagee, charge holder or lessee. It appears that later proprietary interests may have priority, even if taken with notice of the marshalling right, although this is far from clear.[43] A party entitled to marshal should be able to prevent by injunction against the debtor or grantor of the relevant securities any dealing which would prejudice the marshalling right.[44]
In principle, there can be no objection to the prior security holder giving a discharge of the security to which the party entitled to marshal would be subrogated but, in such a case, that security would be treated, as against its grantor, as still existing. The party entitled to marshal could, presumably, obtain an order requiring the grantor of the discharged security to execute a new security instrument in his, her or its favour on the terms of the original subordinate security.
When the prior security holder sells the property to which the marshalling right applies, it is thought that he, she or it holds any surplus proceeds on trusts which would include the rights of a party entitled by marshalling, assuming that the selling party had notice of the marshalling claim. It is essential, therefore, that a party claiming a right to marshal give notice to the relevant prior encumbrancer of the marshalling claim. From the selling party’s point of view, the best and safest course is to pay any surplus sale proceeds into Court rather than attempt itself to resolve any competing claims.
7.2 Lodging a Caveat
7.3 Injunction
Because of the conceptual uncertainty concerning the nature of a right to marshal, the undoubted weakness in priority of that right and the freedom, in English and Australian law, of the prior encumbrancer to act as it chooses in its own interests in realizing and dealing with its securities, it may be in the interests of a subsequent encumbrancer with a right to marshal to seek an undertaking from the grantor of the relevant securities that he, she or it will not act in a way which will prejudice the right to marshal and, failing the giving of such an undertaking, to apply for an injunction to that effect.[46] Whether the cost and risk associated with such an application would be justified would depend upon the value of the relevant securities and a careful analysis of the detailed facts of the case. Absent an injunction restraining prejudicial dealings, however, a party with a right to marshal remains in a weak position unless and until the prior encumbrancer realizes the property to which the right to marshal relates and pays the surplus proceeds from the sale into Court.
Appendix
Facts of Hill v Love
| 275 O’Herns Road | |
|---|---|
| Sold First | |
| Sale Price: | $10.4 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | ZERO |
| Second Mortgage Debt | $3.3 m |
| 315 O’Herns Road | |
|---|---|
| Sold Second | |
| Sale Price: | $2.8 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | ZERO |
| Available for Marshalling | ZERO |
| 460 Cooper Street | |
|---|---|
| Sold Third | |
| Sale Price: | $9.0 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | $5.9 m |
| Available for Marshalling | $5.9 m |
Note: The First Mortgage Debt to the Bank includes interest, fees and costs. The Second Mortgage Debt to Mr. Hill includes interest but not costs. The costs of protecting the right to marshal, including the costs of the proceeding, both at first instance and on appeal (on an indemnity basis because of the terms of the Second Mortgage), were added to the $3.3 million of principal and interest and paid in full from the amount available for marshalling.
Counter-Factual
| 460 Cooper Street | |
|---|---|
| Sold First | |
| Sale Price: | $9 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | ZERO |
| No Second Mortgage | |
| 315 O’Herns Road | |
|---|---|
| Sold Second | |
| Sale Price: | $2.8 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | ZERO |
| No Second Mortgage | |
| 275 O’Herns Road | |
|---|---|
| Sold Second | |
| Sale Price: | $10.4 m |
| First Mortgage Debt | $16.3 m |
| Surplus After Sale | $5.9 m |
| Second Mortgage Debt | $3.3 m |
© D.G. Robertson, K.C., B.A., LL.M., Dip.I.C.Arb., F.C.I.Arb.
King’s Counsel
Victorian Bar
Liability limited by a scheme approved under Professional Standards Legislation
[1] P.A.U. Ali, Marshalling of Securities, Oxford University Press, 1999.
[2] J.D. Heydon, M.J. Leeming and P.G. Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, Lexis Nexis, 2014, (Fifth Edition), Chapter 11 in Part III.
[3] E.I. Sykes and S. Walker, The Law of Securities, The Law Book Company Limited, 1993, (Fifth Edition) at 182 to 185 and E.L.G. Tyler, P.W. Young and C. Croft, Fisher & Lightwood’s Law of Mortgage, Lexis Nexis, 2005, (Second Edition) at 684 to 689.
[4] National Crime Agency v Szepietowski [2014] A.C. 338, [2013] UKSC 65, at [32] on 350.
[5] (2018) 53 V.R. 459; [2018] VSC 29 (Sifris J.).
[6] [2019] VSCA 94 (Kaye, McLeish and Hargrave JJ.A.).
[7] The case also addresses the construction of words of release in terms of settlement. That aspect of the case was analysed by Leeming J.A. (Judge of Appeal, Supreme Court of New South Wales; co-author of J.D. Heydon and M.J. Leeming Jacobs’ Law of Trusts in Australia, Lexis Nexis, 2016, (Eighth Edition) and of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, op. cit., supra note 2) in the Equity and Trusts section of the Australian Law Journal: M.J. Leeming, “Marshalling Securities and Construing Releases in Equity” (2019) 93 A.L.J. 626. See also a Letter to the Editor from me in the November 2019 issue of the Journal: (2019) 93 A.L.J. 904.
[8] Hill v Love (2018) 53 V.R. 459 at [43] and [44] on 468.
[9] Op. cit., supra note 2, at [11-030].
[10] Burness v Hill [2019] VSCA 94 at [1].
[11] Hill v Love (2018) 53 V.R. 459 at [21] on 464 and [54] on 470.
[12] Barnes v Racster (1842) 1 Y. & CCC. 401, 62 E.R. 944, at 409 and 410 per Knight Bruce V.C.
[13] Quoted in section 3 and approved in Hill v Love (2018) 53 V.R. 459 at [43] and [44] on 468.
[14] Burness v Hill [2019] VSCA 94 at [54].
[15] See, for example, the very complex case of Miles v Official Receiver in Bankruptcy (1963) 109 C.L.R. 501 at 510 and 511.
[16] Hill v Love (2018) 53 V.R. 459 at [51] and [52] on 469.
[17] Burness v Hill [2019] VSCA 94 at [54]; see also the Court’s comments at [50] in relation to contractually enforceable obligations, statutory obligations and binding estoppels.
[18] See Meagher, Gummow and Lehane, op. cit., supra note 2, at [11.020].
[19] As in Hill v Love itself.
[20] As in Bank of New South Wales v Colonial Mutual Life Assurance Society Limited [1969] V.R. 556.
[21] National Crime Agency v Szepietowski [2014] A.C. 338 at [50] and [52] on 353 and 354.
[22] The expression “new charter” comes from Tomlinson v Ramsey Food Processing Pty. Ltd. (2015) 256 C.L.R. 507 at [20].
[23] Hill v Love (2018) 53 V.R. 459 at [61] on 471 (approved on appeal in Burness v Hill [2019] VSCA 94 at [38]).
[24] (2015) 256 C.L.R. 507 at [20] on 516.
[25] Burness v Hill [2019] VSCA 94 at [39].
[26] Ibid.
[27] Burness v Hill [2019] VSCA 94 at [42].
[28] This part of the decision of Sifris J. is noted by the Court of Appeal in [2019] VSCA 94 at [27]. The second mortgage provided for the payment of the mortgagee’s “legal costs as between a solicitor and his own client”. In Re National Safety Council of Australia, Victorian Division (in liq) (No 2) [1992] 1 V.R. 485 at 500 Phillips J. said that “taxing a bill of costs as between a solicitor and his own client” affords “in substance an indemnity”. It follows that under the present rules, the Court should order taxation on an indemnity basis to give effect to the terms of a mortgage providing for costs on a solicitor – own client basis.
[29] Op. cit., supra note 2, at [11.030] to [11.040].
[30] (1853) 3 Jur. (N.S.) 1049.
[31] [1969] V.R. 556 at 559 and, especially, 560 per Gillard J.
[32] [1970] Tas. S.R. 120 per Neasey J.
[33] (2018) 3 B.F.R.A. 205, [2008] NSWSC 783 at [18] per Bryson A.J.
[34] (1994) 34 N.S.W.L.R. 658 at 665.
[35] (2018) 53 V.R. 459 at [71] to [73] on 474.
[36] See the last paragraph of section 3 above.
[37] Meagher Gummow and Lehane, op. cit., supra note 2, at [11-045] and [11-105]. The right to marshal is always enforceable against the grantor of the securities: see Ali, op. cit., supra note 1, at 171 ff.
[38] See Guide: Grounds of claim for caveats, The State of Victoria Department of Environment, Land, Water and Planning (accessed 5/ 8/ 2022) at https://www.land.vic.gov.au/land-registration/fees-guides-and-forms 39 (1994) 34 N.S.W.L.R. 658 at 665.
[39] [2014] A.C. 338.
[40] See also W.M.C. Gummow and J.G.H. Stumbles, “Marshalling, the Personal Property Securities Act 2009 and third party securities: Highbury and Szepietowski — New applications of enduring principles” (2014) 25 J.B.F.L.P. 106 at 111 in support of this proposition.
[41] See Ali, op. cit., supra note 1, at 171 ff and the reference to seeking an injunction in section 6.1 above.
[42] See section 6.1 above.
[43] Meagher Gummow & Lehane, op. cit., supra note 2, at [11.105]. In Barnes v Racster (1842) 1 Y. & CCC. 401, 62 E.R. 944, the question of the priority of a later mortgage as against the party claiming a right to marshal concerned a dealing before any enforcement of any security had taken place, that is, before the right to marshal had arisen; what the position of the later mortgagee would have been if that mortgage had been granted after enforcement proceedings had commenced was expressly left open by Knight Bruce V.C. at pages 407 and 408.
[44] See the last paragraph of section 6.1 above.
[45] See section 6.2 above as to whether a right to marshal gives rise to a caveatable interest.
[46] See the last paragraph of section 6.1 above in relation to the right to an injunction to protect a right to marshal
