Kyabram Property Investments v Murray [2006] NSWSC 54

In an earlier case the court ordered rectification of two mortgages. To give effect the orders required, among other things, the defendant to deliver to the plaintiff the original deeds. The title documents had been lodged with a bank in Tamworth. However, when the bank was asked for the documents, the reply was that it appeared that the file had been sent for destruction.

The plaintiff applied for the Court to make orders under section 138 of the Real Property Act 1900, requiring the Registrar-General to issue new folios in the register, and to record in the new folios the interest of the plaintiff as mortgagee. Campbell J commented that:

While in terms section 138(3) gives a wide discretion on the Court, it is appropriate to bear in mind, in exercising that discretion, practical difficulties which might arise from there being in existence two duplicate certificates of title relating to the same parcel of land. It is also a wise practical guideline that the power under section 138 should usually be exercised only if there is no other way of solving the particular problem which has presented itself.

His Honour found there was no other way and made the order.

The plaintiffs sought an order for indemnity costs of the present application. The mortgage contained the following covenant:

“In addition to all costs expenses and other moneys which the Mortgagor may be liable at law or in equity to pay in respect of or in relation to this Mortgage the Mortgagor will upon demand pay to the Mortgagee … all moneys paid or expenditure incurred by the Mortgagee for or in connection with … this mortgage or any security collateral hereto or with their preparation or completion … or in or incidental to the exercise or attempted exercise of any right power authority or remedy conferred on the Mortgagee under or by virtue of this … security and the same shall be a charge upon the mortgaged premises and be deemed moneys hereby secured and bear interest accordingly and the expression ‘costs’ shall mean and include Solicitor and own client’s costs as well as party and party costs and costs of and incidental to the preparation execution stamping and enforcement of this Mortgage …”

The defendant, opposed the making of an order for indemnity costs. Saying that the problem which arose in the execution of the order was not a problem created by the defendant. However, His Honour held that those considerations were, given the basis on which the application for indemnity costs was made, beside the point. The jurisdiction being invoked was the jurisdiction of the Court to make an order for costs on a basis a contractual agreement.

His Honour stated:

It is because contracts are concerned with the allocation of risk, that it is appropriate for the Court to give effect to the contractual arrangement between the parties. Even though it might not be the fault of the defendant that the extra costs have been incurred, nonetheless the circumstances which led to the incurring of these costs are within the scope of the risks that she has undertaken, by the mortgage, to bear.

Accordingly the defendant was ordered to pay the costs on an indemnity basis.

Click here to read the full judgment

Scroll to Top