{\rtf1\ansi\ansicpg1252\uc1\deff0\stshfdbch0\stshfloch0\stshfhich0\stshfbi0\deflang5129\deflangfe5129{\fonttbl{\f0\froman\fcharset0\fprq2{\*\panose 02020603050405020304}Times New Roman;}{\f1\fswiss\fcharset0\fprq2{\*\panose 020b0604020202020204}Arial;} {\f59\fswiss\fcharset0\fprq2{\*\panose 020b0502050508020304}CG Omega{\*\falt Tahoma};}{\f65\froman\fcharset238\fprq2 Times New Roman CE;}{\f66\froman\fcharset204\fprq2 Times New Roman Cyr;}{\f68\froman\fcharset161\fprq2 Times New Roman Greek;} {\f69\froman\fcharset162\fprq2 Times New Roman Tur;}{\f70\froman\fcharset177\fprq2 Times New Roman (Hebrew);}{\f71\froman\fcharset178\fprq2 Times New Roman (Arabic);}{\f72\froman\fcharset186\fprq2 Times New Roman Baltic;} {\f73\froman\fcharset163\fprq2 Times New Roman (Vietnamese);}{\f75\fswiss\fcharset238\fprq2 Arial CE;}{\f76\fswiss\fcharset204\fprq2 Arial Cyr;}{\f78\fswiss\fcharset161\fprq2 Arial Greek;}{\f79\fswiss\fcharset162\fprq2 Arial Tur;} {\f80\fswiss\fcharset177\fprq2 Arial (Hebrew);}{\f81\fswiss\fcharset178\fprq2 Arial (Arabic);}{\f82\fswiss\fcharset186\fprq2 Arial Baltic;}{\f83\fswiss\fcharset163\fprq2 Arial (Vietnamese);}}{\colortbl;\red0\green0\blue0;\red0\green0\blue255; \red0\green255\blue255;\red0\green255\blue0;\red255\green0\blue255;\red255\green0\blue0;\red255\green255\blue0;\red255\green255\blue255;\red0\green0\blue128;\red0\green128\blue128;\red0\green128\blue0;\red128\green0\blue128;\red128\green0\blue0; \red128\green128\blue0;\red128\green128\blue128;\red192\green192\blue192;}{\stylesheet{\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 \snext0 Normal;}{ \s1\ql \li0\ri0\sb240\sa60\keepn\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0 \b\f1\fs28\lang2057\langfe1033\kerning28\cgrid\langnp2057\langfenp1033 \sbasedon0 \snext0 heading 1;}{ \s2\ql \li0\ri0\keepn\widctlpar\aspalpha\aspnum\faauto\outlinelevel1\adjustright\rin0\lin0\itap0 \b\fs24\ul\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 \sbasedon0 \snext0 heading 2;}{\*\cs10 \additive \ssemihidden Default Paragraph Font;}{\* \ts11\tsrowd\trftsWidthB3\trpaddl108\trpaddr108\trpaddfl3\trpaddft3\trpaddfb3\trpaddfr3\trcbpat1\trcfpat1\tscellwidthfts0\tsvertalt\tsbrdrt\tsbrdrl\tsbrdrb\tsbrdrr\tsbrdrdgl\tsbrdrdgr\tsbrdrh\tsbrdrv \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1024\langfe1024\cgrid\langnp1024\langfenp1024 \snext11 \ssemihidden Normal Table;}{\s15\ql \li0\ri0\widctlpar \tqc\tx4320\tqr\tx8640\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 \sbasedon0 \snext15 header;}{\s16\ql \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \b\f59\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 \sbasedon0 \snext16 Body Text 2;}{\s17\ql \li0\ri0\widctlpar\tqc\tx4320\tqr\tx8640\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 \sbasedon0 \snext17 footer;}{\*\cs18 \additive \sbasedon10 page number;}{\s19\qj \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0 \b\i\f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 \sbasedon0 \snext19 Block Text;} {\s20\qj \fi720\li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 \sbasedon0 \snext20 Body Text Indent 2;}{\s21\qj \li0\ri0\sl480\slmult1 \widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 \sbasedon0 \snext21 Body Text;}}{\*\listtable{\list\listtemplateid1140230982\listsimple{\listlevel\levelnfc0\levelnfcn0\leveljc0 \leveljcn0\levelfollow0\levelstartat2\levelspace0\levelindent0{\leveltext\'02\'00.;}{\levelnumbers\'01;}\fbias0 \fi-645\li1365\jclisttab\tx1365\lin1365 }{\listname ;}\listid32997251}{\list\listtemplateid-820475614\listsimple{\listlevel\levelnfc4 \levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat2\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-360\li1080\jclisttab\tx1080\lin1080 }{\listname ;}\listid111750099}{\list\listtemplateid2039489848\listsimple {\listlevel\levelnfc0\levelnfcn0\leveljc0\leveljcn0\levelfollow0\levelstartat2\levelspace0\levelindent0{\leveltext\'02\'00.;}{\levelnumbers\'01;}\fbias0 \fi-360\li1080\jclisttab\tx1080\lin1080 }{\listname ;}\listid282272491} {\list\listtemplateid-2061229004\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li1440\jclisttab\tx1440\lin1440 }{\listname ;}\listid380716468}{\list\listtemplateid-1075962880\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li720\jclisttab\tx720\lin720 } {\listname ;}\listid735055314}{\list\listtemplateid1033540280\listsimple{\listlevel\levelnfc0\levelnfcn0\leveljc0\leveljcn0\levelfollow0\levelstartat2\levelspace0\levelindent0{\leveltext\'02\'00.;}{\levelnumbers\'01;}\fbias0 \fi-360\li1080 \jclisttab\tx1080\lin1080 }{\listname ;}\listid833373192}{\list\listtemplateid364947192\listsimple{\listlevel\levelnfc2\levelnfcn2\leveljc0\leveljcn0\levelfollow0\levelstartat6\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li1440\jclisttab\tx1440\lin1440 }{\listname ;}\listid864292928}{\list\listtemplateid2080952414\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat2\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers \'02;}\fbias0 \fi-360\li1080\jclisttab\tx1080\lin1080 }{\listname ;}\listid951009956}{\list\listtemplateid1507781454\listsimple{\listlevel\levelnfc2\levelnfcn2\leveljc0\leveljcn0\levelfollow0\levelstartat1\levelspace0\levelindent0{\leveltext \'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li720\jclisttab\tx720\lin720 }{\listname ;}\listid1448433183}{\list\listtemplateid-2141932992\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat4\levelspace0\levelindent0 {\leveltext\'03(\'00);}{\levelnumbers\'02;}\b\i\fbias0 \fi-720\li1440\jclisttab\tx1440\lin1440 }{\listname ;}\listid1463160203}{\list\listtemplateid-1294972858\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0\levelstartat2 \levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li1440\jclisttab\tx1440\lin1440 }{\listname ;}\listid1537742931}{\list\listtemplateid55596080\listsimple{\listlevel\levelnfc4\levelnfcn4\leveljc0\leveljcn0\levelfollow0 \levelstartat2\levelspace0\levelindent0{\leveltext\'03(\'00);}{\levelnumbers\'02;}\fbias0 \fi-720\li720\jclisttab\tx720\lin720 }{\listname ;}\listid1540586454}{\list\listtemplateid-761898260\listsimple{\listlevel\levelnfc0\levelnfcn0\leveljc0\leveljcn0 \levelfollow0\levelstartat1\levelspace0\levelindent0{\leveltext\'02\'00.;}{\levelnumbers\'01;}\fbias0 \fi-720\li720\jclisttab\tx720\lin720 }{\listname ;}\listid2076856020}}{\*\listoverridetable{\listoverride\listid1448433183\listoverridecount0\ls1} {\listoverride\listid1540586454\listoverridecount0\ls2}{\listoverride\listid111750099\listoverridecount0\ls3}{\listoverride\listid951009956\listoverridecount0\ls4}{\listoverride\listid735055314\listoverridecount0\ls5}{\listoverride\listid1463160203 \listoverridecount0\ls6}{\listoverride\listid1537742931\listoverridecount0\ls7}{\listoverride\listid380716468\listoverridecount0\ls8}{\listoverride\listid864292928\listoverridecount0\ls9}{\listoverride\listid2076856020\listoverridecount0\ls10} {\listoverride\listid32997251\listoverridecount0\ls11}{\listoverride\listid833373192\listoverridecount0\ls12}{\listoverride\listid282272491\listoverridecount0\ls13}}{\*\rsidtbl \rsid3945449\rsid5921375\rsid12217295\rsid16416100} {\*\generator Microsoft Word 10.0.6612;}{\info{\title IN THE SUPREME COURT, FIJI ISLANDS}{\author fca}{\operator blake_r}{\creatim\yr2004\mo8\dy4\hr11\min10}{\revtim\yr2004\mo8\dy5\hr9\min43}{\printim\yr2003\mo4\dy17\hr9\min11}{\version4}{\edmins12} {\nofpages15}{\nofwords6547}{\nofchars37320}{\*\company Judicial Department}{\nofcharsws43780}{\vern16389}}\margb259 \widowctrl\ftnbj\aenddoc\noxlattoyen\expshrtn\noultrlspc\dntblnsbdb\nospaceforul\hyphcaps0\formshade\horzdoc\dghspace180\dgvspace180 \dghorigin1701\dgvorigin1984\dghshow0\dgvshow0\jexpand\viewkind4\viewscale100\pgbrdrhead\pgbrdrfoot\nolnhtadjtbl\rsidroot12217295 \fet0\sectd \linex0\endnhere\sectdefaultcl\sftnbj {\footer \pard\plain \s17\ql \li0\ri0\widctlpar \tqc\tx4320\tqr\tx8640\pvpara\phmrg\posxc\posy0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\field{\*\fldinst {\cs18\insrsid16416100 PAGE }}{\fldrslt { \cs18\lang1024\langfe1024\noproof\insrsid3945449 1}}}{\cs18\insrsid16416100 \par }\pard \s17\ql \li0\ri0\widctlpar\tqc\tx4320\tqr\tx8640\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\insrsid16416100 \par }}{\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}} {\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 IN THE SUPREME COURT, FIJI ISLANDS \par AT SUVA \par }{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 CIVIL }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 APPEAL NO. CBV0003 OF 1999S \par (Fiji Court of Appeal Civil Action No. ABU0045 of 1996S) \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 BETWEEN:}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid16416100\charrsid16416100 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 WESTPAC BANKING CORPORATION \par }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Appellant \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 AND:}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid16416100\charrsid16416100 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 FIJI FOREST SAWMILLING COMPANY LIMITED \par }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Respondent \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Coram:}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 \tab }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Hon. Justice Daniel V. Fati}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 aki, President of Supreme Court}{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Hon. Justice Jai Ra}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 m Reddy, Judge of Supreme Court}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Hon. Justice John von Doussa, Judge of Supreme Court \par \par Hearing:}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Monday, 14th April 2003, Suva \par \par Counsel:}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Mr. B.C. Patel for the Appellant \par Mr. S.R. Valenitabua for}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Respondent \par \par Date of Judgment:}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Thursday, 17th April 2003, Suva \par \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 JUDGMENT OF THE COURT \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 This appeal concerns the entitlement of a mortgagee after the sale of the mortgaged property to hold the proceeds of a fire insurance policy as security for}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 anticipated costs}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of defending legal proceedings against}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mort}{\fs24\lang2057\langfe5129\langnp2057\insrsid3945449 gagee brought by the mortgagor.}{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3945449 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The appeal comes to this Court by way of leave to appeal granted by the Court of Appeal on 4}{\fs24\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 May 1999 and 18}{\fs24\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 November 1999 on}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 questions certified by it under s.122(2)(a) of the Constitution Amendment Act 1997 to be of significant public importance, namely: \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \s19\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 \b\i\f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (i) \tab whether a mortgagee by virtue of clause 6 of the Schedule of covenants and conditions implied in mortgages by Section 68 of the Property Law Act is entitled to retain insurance proceeds payable by an insurance company in respect of the mortgaged property where the mortgagee\rquote s interest as mortgagee is noted. \par }\pard\plain \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (ii)\tab What is the meaning of the word \'93security\'94 in clause 6 of the Schedule of covenants and conditions implied in mortgages by Section 68 of the Property Law Act. \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (iii)\tab Whether a mortgagee, by virtue of clauses 5 and 25 of the mortgage, is entitled to retain all or part of the insurance proceeds payable by an insurance company in respect of the mortgaged property towards costs and}{ \b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 expenses payable by the mortgagor under clause 23 of the mortgage." \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In July 1979 the respondent (the company) granted a mortgage to the appellant (the Bank) over an hotel property owned by it to secure repayment on demand of advances and other accommodation.}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The mortgage was}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 registered}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Land}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Transfer Act (Cap. 131).}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The hotel building, stock and business furniture were insured against fire and other perils under a Fire Insurance Policy (the policy) with the New India Assurance Company Limited (the Insurer).}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The policy named}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93The Insured\'94}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as the company \'93as (O) and Westpac Banking Corporation (Sigatoka) as (M)\'94 and bore an endorsement that \'93 Loss if any payable to Westpac Banking Corporation As Mortgagee whose discharge shall be sufficient and binding to the company.\'94 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The hotel building was destroyed by fire in early 1993.}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Shortly afterwards the Bank made a demand for payment under the mortgage, and on 31}{ \fs24\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 st}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 October 1994 the Bank as mortgagee entered into a contract of sale to sell the hotel}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 property.}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The sale was completed on 13th}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 December 1994.}{ \fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 After deducting from the}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 proceeds of sale the expenses of sale and monies then owing for advances to the company and interest a balance of $13,143.91 remained. \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Before comp letion under the contract of sale the company sued the Bank alleging misconduct by the Bank in the sale and its alleged failure}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 render proper accounts (}{\b\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Lautoka Action No. HBC0234 of 1994).}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 After completion the company also sued the Insurer, and that li tigation resulted in a settlement under the policy of $125,000.}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On 12}{ \fs24\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 June 1996 an order was made in the High Court by consent that the insurance settlement money be paid to the company\rquote s solicitors \'93upon release of the assignment\'94 of the policy by the Bank. \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank refused to acknowledge the entitlement of the company to the release or to}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 payment of either the surplus proceeds of sale or the insurance settlement (the disputed monies).}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank contended that it was entitled to hold the disputed monies}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under the terms of the mortgage as security against the costs, including anticipated future costs, of defending the company\rquote s action against the}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bank.}{\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank relied on clause 23 of the mortgage which provides: \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \s19\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 \b\i\f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93 23(a) That the bank shall be at liberty fr om time to time without further authority than these presents to debit and charge the account of the Debtor or the account of the Mortgagor with all costs charges and expenses hereinafter mentioned and the same shall be covered by this security and shall be portion of the moneys hereby secured and the Mortgagor will indemnify the Bank against the same. \par }\pard\plain \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (b)}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That the expression \'93costs charge and expenses\'94 shall for the purposes of this covenant include all costs charges expenses and payments legal or otherwi se which the Bank or any attorney of the Mortgagor herein appointed may incur sustain make be put to pay or be liable to pay in connection with - \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Than follow 8 sub-clauses of which the relevant two are as follows: \par \par {\pntext\pard\plain\s19 \b\i\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \hich\af0\dbch\af0\loch\f0 (vi)\tab}}\pard\plain \s19\ql \fi-720\li1440\ri720\widctlpar{\*\pn \pnlvlbody\ilvl0\ls9\pnrnot0 \pnlcrm\pnstart6\pnindent360\pnsp120\pnhang {\pntxtb (}{\pntxta )}}\aspalpha\aspnum\faauto\ls9\adjustright\rin720\lin1440\itap0\pararsid16416100 \b\i\f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 { \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The preparation completion enforcement and protection of this security; \par }\pard\plain \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi-720\li1440\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (vii)\tab The exercise or attempted exercise of any right power authority or remedy conferred on the bank or any attorney of the Mortgagor under or by virtue of this security or by statute; \par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li1440\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and in relation to any actions or pr oceedings arising out of or concerned with any of the above matters or any other matter connected with this security and whether or not the Debtor or the Mortgagor are parties thereto shall}{ \fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 include not only all legal costs charges disbursements and expense s incurred by the Bank against which the Mortgagor or the Debtor may by any order of any court be liable to indemnify the Bank but also notwithstanding any such order or any}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 order of any court under which the Bank would not otherwise be entitled to recover the same all legal costs charges disbursements and expenses which the Bank has paid or may pay to its solicitors or to any other person including the Debtor and the Mortgagor and in the case of payments to the Bank\rquote s solicitors on a solicitor and own client basis.\'94}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 As the Court of Appeal observed, this clause by its terms authorizes the Bank to debit the mortgagor with costs charges and expenses of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 an unspecified amount over}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 an indefinite period of time.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank contended that it was entitled to retain the disputed monies, about $138,000.00, even though the Bank\rquote s legal manager deposed that the costs}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of defending the company\rquote s claim could amount to about $47,000.00 only even if the matter}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 proceed as far as the Supreme Court. \par }\pard \s20\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The company, on the other hand, claimed immediate entitlement to all the disputed}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 monies, arguing that the mortgage had been discharged by registration of the transfer of the hotel property under the mortgagee\rquote s sale, and by payment}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 with interest of the advances which the mortgage had secured. \par }\pard \s20\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On 18}{ \f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 June 1996, to implement the consent order}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 made in relation to the proceeds of the insurance policy on 12}{\f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 June 1996, the company issued}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 an originating summons against the Bank for an order that the Bank \'93forthwith discharge and release assignment of Fire Policy\'85\'85\'85\'94 on the ground that the company\rquote s debt to the Bank had}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 been fully satisfied.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On 30}{\f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 August 1996}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Sadal J. ruled that as}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Bank had been fully paid it should discharge the policy, and made orders that it \'93discharge and release assignment\'94 thereof.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Incidental orders were made for the payment}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of a portion of the disputed moneys into Court to abide the outcome of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 claims by two third parties, but}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the order in that respect is}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 irrelevant to these proceedings.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On 5}{ \f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 September 1994 the trial Judge amended the order by adding a}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 statement that}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 policy \'93is hereby deemed to be discharged.\'94 \par }\pard \s20\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank appealed to the Court of Appeal against the orders of 8}{ \f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 August 1996 and 5}{\f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 September 1996.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The appeal was dismissed.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal was critical of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 aspects of the orders which the company had sought at trial, and of the terms in which orders were made.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Those criticisms are not material to the outcome of this appeal.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The effect of the orders of the trial Judge, upheld by the Court of Appeal, is that the company had an immediate entitlement to payment of the whole of the disputed monies. \par }\pard \s20\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s20\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal considered that the company\rquote s entitlement to the}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 disputed monies was resolved by the application of s.81 of the Property Law Act (Cap.130) which provides: \par }\pard \s20\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 \fs20\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'9381.}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The purchase}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 money arising from the sale by the mortgagee of any mortgaged property shall be applied as follows: \par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par {\pntext\pard\plain\b\i\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \hich\af0\dbch\af0\loch\f0 (a)\tab}}\pard \ql \fi-720\li1440\ri720\widctlpar{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0\pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxtb (}{\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin720\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 first, in payment of the expenses of and incidental to}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 sale}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and consequent on the default; \par }\pard \ql \li0\ri720\widctlpar{\*\pn \pnlvlcont\ilvl0\ls0\pnrnot0\pndec }\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par {\pntext\pard\plain\b\i\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \hich\af0\dbch\af0\loch\f0 (b)\tab}}\pard \ql \fi-720\li1440\ri720\widctlpar{\*\pn \pnlvlbody\ilvl0\ls8\pnrnot0\pnlcltr\pnstart1\pnindent360\pnsp120\pnhang {\pntxtb (}{\pntxta )}}\aspalpha\aspnum\faauto\ls8\adjustright\rin720\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 secondly,}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 payment of the moneys which are due}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or owing under the mortgage; \par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \ql \fi-720\li1440\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (c)\tab thirdly,}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 payment}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 subsequent}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgages}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or encumbrances, if any, in the order of their respective priorities; and \par }\pard \ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par {\pntext\pard\plain\b\i\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \hich\af0\dbch\af0\loch\f0 (d)\tab}}\pard \ql \fi-720\li1440\ri0\widctlpar{\*\pn \pnlvlbody\ilvl0\ls6\pnrnot0\pnlcltr\pnb1\pni1\pnstart4\pnindent360\pnsp120\pnhang {\pntxtb (}{\pntxta )}}\aspalpha\aspnum\faauto\ls6\adjustright\rin0\lin1440\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 fourthly,}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 surplus,}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 if}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 any,}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 shall}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 be}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 paid}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to}{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgagor}{\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 .\'94 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\i\fs24\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard\plain \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 \f59\fs24\lang1033\langfe5129\cgrid\langnp1033\langfenp5129 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal held that the Bank\rquote s contingent future}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 costs of defending}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the proceedings}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 against it}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 were not monies due or owing}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under the mortgage within the meaning of s.81 (b) as the monies were not \'93}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 presently due and}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 owing.\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Accordingly the company was entitled to payment of the surplus from the sale under s.81 (d).}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Similar considerations, the Court said,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 also applied in respect of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the insurance settlement. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In respect of the insurance settlement, the Court of Appeal held that there was an additional reason for concluding}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that the}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 money should be released forthwith to the company.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank relied on clause 6 of the Schedule of covenants and conditions}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 implied in mortgages by s.68 of the Property Law Act. Clause 6 provides: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93(6)}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That in the even t of the said buildings and erections or any of them being destroyed or damaged by fire, all moneys received by the mortgagee under any insurance in respect of any such destruction or damage shall be applied, at his sole option, either in or towards rebui l ding or repairing the buildings and erections so destroyed or damaged, or in or towards payment of the principal, interest and other moneys for the time being covered by the security; notwithstanding that the same or any of them may not have accrued due u nder the terms of the mortgage: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Provided that, if the mortgagee applied the said moneys in or towards payment of the principal and other moneys as aforesaid, the mortgagor shall have the right to pay off the whole amount remaining due under the mortgage at any time within two months after the application of the said moneys has been made.\'94}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It was}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 common ground that in}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the circumstances which had occurred, the option of re-instatement was not available.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Further, the option of applying the proceeds of the policy to the payment of principal and interest was not available as the principal and interest had already been repaid from the proceeds of the sale.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The application of clause 6 of the Schedule, in the opinion of the Court of Appeal, therefore turned}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 on whether the contingent future costs of defending the action against the Bank were within the words \'93}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 other moneys for the time been covered by the security; notwithstanding that the same or any of them may not have accrued}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 due under the terms of the}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgage.\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal rested its decision on the qualification in clause 6 that the moneys in payment of which the proceeds of the policy may be applied are qualified by the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 words \'93covered by the security.\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal considered that whilst clause 23 of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgage was wide enough to impose on the company an obligation to}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 pay the Bank\rquote s costs of defending}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the proceedings against it, that obligation was no longer }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93covered by}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the security\'94,}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 because }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93security\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in clause 6 of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Schedule means the mortgaged property for the time been charged.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the instant case the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgaged property was no longer}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 charged.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It had been sold and released from the mortgage.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In reaching this conclusion the Court of Appeal referred}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to the judgment of Isaacs J. (with whom Knox CJ and Starke J. concurred) in }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Royal Insurance Co. Ltd. v}{\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 . }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Mylius }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1926]}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 38 CLR 487 at p.489}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as establishing that where the mortgagees insured}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 tangible securities against the risk of fire \'93as mortgagees\'94,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 they insured, not their debt, but their security, and that they}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 insured, not as mere creditors but as holders of the security.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal than expressed its conclusion as follows: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93 The emphasis is on the property as tangible security for the debt, and we think that the word is used in this sense in clause 6, so that \'93moneys for the time being covered by the security\'94}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mean moneys in respect of which the mortgaged property is for the time being charged.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 But since that property has been sold, there is no money \'93covered by the security\'94, and therefore nothing under clause 6 towards which the Bank could apply the proceeds.}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 All it has left covering the mortgagor\rquote s obligations under clause 23 of the mortgage is the latter\rquote s personal covenant, in respect of which it can sue for debt when the stated contingencies happen and the amount has been ascertained. \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 For these reasons we think Sadal J\rquote s, orders regarding payment of the money should stand.\'94}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Before this Court the Bank contends that the Court of Appeal erred in its interpretation of the phrase }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93covered by the security}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'94 in clause 6 of the Schedule, and should have held that the policy, and the proceeds thereof, were part of the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgaged property, ie. part of the }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93security\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 constituted by the mortgage.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 This contention addresses the first two questions certified by the Court of Appeal. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank also contends}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that on the proper construction of clauses 5 and 25 of the mortgage, the Bank is entitled}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to retain all the insurance proceeds (in addition to the sum $13,143.91 remaining from the proceeds of sale) towards the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 anticipated costs of defending the action against the Bank.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 This contention addresses the third question certified}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by the Court of Appeal. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The company opposes the appeal, contending that the reasons of the Court of Appeal are correct.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Central to the company\rquote s case is}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the submission that the mortgage was discharged by the transfer of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the hotel premises to the purchasers}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under the mortgagee\rquote s power of sale on 13}{\f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 December 1994.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The company submits that clause 23 of the mortgage ceased to operate from that date.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The company submits that to conclude otherwise would be unreasonable, and would give}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 clause 23 a meaning which makes it a clog on the equity of redemption. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Part of the difficulty which arises in this case is that both the expression } {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93security\'94,}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and \'93}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgage\'94 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 are not terms of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 art which have a single precise}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 legal meaning.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 They are expressions often used generally in ordinary speech to convey a variety of meanings.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The intended meaning}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in a particular case must be ascertained from the context in which the expression is used.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The expressions can be used in a way that gives to each of them}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 a similar meaning, but this is not necessarily so.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In \'93}{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 S}{ \b\f0\lang2057\langfe5129\langnp2057\insrsid16416100 ykes and Walker, The L}{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 aw of Securities}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'94 (5}{ \f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Ed) at p.3 the authors}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 say that the general concept of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 security involves a transaction whereby a person}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to whom an obligation is}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 owed by another person}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 called the \'93debtor\'94 is afforded in addition to the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 personal promise of the debtor to discharge}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the obligation, rights exercisable against some property of the debtor in order to enforce the discharge of the obligation.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 They go on to observe, however, that whilst the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 general concept involves a transaction, strictly speaking the security is not the transaction; it is the interest or}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 aggregation of rights which arise from the transaction.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Such an interest involves rights available against property, real or personal, not merely against a person.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 However in a particular case, a security may involve no more}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 than the acceptance of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 a personal}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 obligation by a surety;}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 see}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Redgrave v. Redgrave}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (1951) 82 CLR 521 at p.530, and }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Independent Television}{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Authority and Associated}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Rediffusion}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Ltd. v. Inland Revenue Commissioners}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1961] AC 427 at 439, 442. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The word }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93mortgage\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 is normally used to mean a conveyance of land or an assignment of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 chattels as security for the payment of a debt}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or the discharge of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 some other obligation for which it is given: see }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Santley v. Wilde}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1899] 2 Ch.474,}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bevham Investments Pty Ltd v. Belgot Pty Ltd}{\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 .}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (1982) 149 CLR 494 at 499 and }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Downsview Nominees Ltd. v. First City Corporation Ltd}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 . [1993] 1NZLR 513 at 521.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In clause 6 of the Schedule the word refers to the deed or other instrument which}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 creates the interest or aggregation of rights which}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 constitute the security. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In}{\b\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bevham Investments}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 , the majority of the High Court of Australia, at 499 say:}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid16416100\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the context of a mortgage}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or charge security is constituted}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by the specific appropriation}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of property to the satisfaction of a debt or obligation which becomes a}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 primary charge on the property\'94 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It will be noted that in}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 this passage, the expression \'93mortgage or charge\'94 is used to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 describe the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 instrument which}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 constitutes the transaction, and \'94security\'94 is used to describe the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 rights thereby created and available against the property. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Against these general observations we turn to the terms of the memorandum of mortgage}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 executed by the company.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 By the charging clause in the opening provisions, the company \'93}{ \b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 DOTH HEREBY MORTGAGE TO THE BANK}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'94 all the estate and}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 interest in the land on which the hotel was constructed,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 identified by}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 certificate of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 title reference.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The mortgage is \'93}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 for the purposes of securing to the Bank the payment in the manner hereinafter mentioned of the moneys}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 hereinafter}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 described\'85\'85\'85.\'94 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Then follow seven recitals which describe at length the moneys the payment of} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 which is secured.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Those moneys include past and future advances.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 They include all moneys which the Bank may have become liable to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 pay on behalf of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the debtor by reason of the Bank having entered into any bond or indemnity or guarantee on behalf of the mortgagor.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That the mortgage is for purposes that include future and contingent liabilities is}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 made even clearer by recital (f) which expressly includes all moneys which the mortgagor \'93 whether directly or indirectly or contingently or otherwise\'94 hereafter may become liable to pay to the Bank under any document or}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 negotiable or other instrument.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Of direct importance to this case, the security is also for the purpose of (recital (e)): \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93(e)\tab also all}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 moneys which the Bank is or shall be entitled to debit and charge to any account of the\'85\'85\'85\'85\'85\'85\'85 Mortgagor \'85\'85\'85\'85\'85\'85 whether under any}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 security or document now or hereafter held by the Bank from or relating to the}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'85\'85\'85\'85.Mortgagor\'85\'85\'85\'85\'85\'85..}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under the conditions or provisions herein contained or otherwise\'94 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 All of the moneys}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 so described and interest thereon intended to be secured by}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgage are defined as }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93the moneys hereby secured.\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Then follow 41}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 numbered paragraphs}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 which set out the terms and conditions of the mortgage.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 These terms and conditions are to be read in conjunction with the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 statutory}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 provisions in the Property}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Law Act (Cap. 130) relating to mortgages.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In this respect reference has already been made to s.68 of the Property Law Act which, subject to a limitation still to be mentioned, provides}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that in}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 every mortgage of land}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 there shall be implied}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the covenants powers and conditions as set forth in the Schedule.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 6 of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Schedule is set out earlier in these reasons and is critical to the d}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 ecision of the Court of Appeal.}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It is important to note that the implication of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 covenants}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 powers and conditions in the Schedule}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 s.68 is subject to the limitation expressed in s.68 namely}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93except in}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 so far as}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 same}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 are}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 varied}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or negatived in the mortgage.\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 33 of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgage provides that}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the covenants}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 powers and provisions}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 implied in mortgages by virtue of any statute for the time being in force \'93 shall for the purpose hereof be negatived or varied so far only as they are inconsistent with the terms and provisions hereof\'94.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The effect of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 clause 33}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 is not addressed by the parties in their submissions.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Importantly, it has}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the effect that the terms implied by the Schedule cannot operate to reduce the security interest otherwise granted to the Bank by the terms of the mortgage. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Reference has a lready been made to clause 23 of the mortgage which by its terms authorises}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Bank to debit and}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 charge}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the account of the mortgagor with the costs of defending the action against the Bank. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clauses 5 and 25 of the mortgage, which are central to the questions now}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 before this Court, deal with the question of insurance.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 They deal comprehensively with the obligation on the mortgagor to insure}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and with the settlement of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 insurance claims}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in the event of loss of damage. The submissions of the parties assume that there are no other relevant}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 obligations or rights in respect of these matters arising}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 under covenants and conditions and powers implied by s.68 and the Schedule of the Property Law Act, in particular under clauses 2 and 3 of the Schedule.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We adopt}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that assumption which appears to be correct.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 5 and 25 relevantly provide: \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'935.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 THAT}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgagor will ensure and keep insured \'85\'85\'85\'85\'85.. the mortgage premises\'85\'85\'85 \'85\'85}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 for the full insurable value in some insurance office approved by the Bank and in the name of the Bank and will punctually}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 pay}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 all premiums and sums necessary for effecting and keeping up every such insurance and will forthwith hand to the Bank every policy and receipt relating thereto and every such policy \'85\'85\'85\'85\'85\'85\'85. shall be held by the Bank}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as a}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 further security for the payment of the moneys hereby secured. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'9325.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 THAT}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in the event of loss or damage to the mortgage premises or any part thereof}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 from any cause covered by Insurance\'85\'85\'85\'85\'85\'85.. the Bank alone}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 shall have full power to make enforce settle and compromise all claims in respect of Insurance or for compensation and to sue for}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 recover receive and give discharges for all moneys payable by virtue thereof whether the Insurance be in the name of the Bank of the Mortgagor or both\'85\'85.. And if notwithstand ing the foregoing provisions any moneys payable under any policy of insurance either any part of the mortgaged premises shall come into the hands of the Mortgagor before a final discharge of these presents shall have been given to the Mortgagor such money s}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 shall be held by the Mortgagor in trust for the Bank and shall be paid to the Bank upon demand.\'94 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It is necessary to refer also to clause 27 which the company relies upon}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as supporting its argument that the mortgage was discharged}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 on completion of the sale of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the hotel property.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 27 provides: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'9327.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 THAT}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 these presence shall be a}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 continuing security and shall not be}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 considered wholly or partially discharged}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by the payment at any time hereafter of the}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 moneys hereby}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 secured or by any settlement of account or by any other matter or thing whatsoever and shall}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 apply to the present or any future balance of the moneys hereby secured until a final discharge hereof has been given to the mortgagor.\'94}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It is convenient to consider the first two questions certifie d by the Court of Appeal together.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The terms of clauses 5 and 25 of the mortgage in essential respects are}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 similar to the insurance provisions considered by}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Privy Council in }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Colonial Mutual}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 General Insurance Co. Ltd. v. ANZ Banking Group (New Zealand) Ltd}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 . [1995] 3 NZLR 1(The CMG case).}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In that case}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the respondent bank was a second mortgagee.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The mortgaged property was destroyed by fire.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The fire insurance policy was in the name of the mortgagor and the first mortgagee.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 After discharging the liability to the first mortgagee, the insurer paid the balance for the proceeds of the policy to the mortgagor. }{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The second mortgagee claimed that it had a charge on those moneys, and sued the insurer.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Lord Hoffman, delivering}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Opinion of the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Judicia}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 l Committee, said at pages 4-5:}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93 The purpose of a covenant for insurance is to ensure that if the value of the security should be depreciated by the occurrence of a fire or other insurable risk, the proceeds of the policy will provide a fund to make up the shortfall.}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Th is purpose can be achieved only if the covenant gives the mortgagee an interest by way of charge, and no more than an interest by way of charge, in the proceeds.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Standard insurance covenants contain various provisions designed to ensure that the mortgagee will be able to retain control of the insurance policy and its proceeds.}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Insisting that the mortgagee have the right to approve or nominate the}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 insurer, take custody of the insurance policy, be shown receipts for premiums\'85\'85\'85. are some of the cumulative tec hniques used for this purpose.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 So is the requirement that the insurance be effected in the name of the mortgagee.}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 But all these provisions are, in Their Lordships\rquote view, intended to protect the mortgagee\rquote s interest by way of charge over the proceeds of the policy rather than to create it.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That such an interest exists is a fundamental assumption of the covenant.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It cannot be destroyed by the mortgagor\rquote s failure to comply with one or other of the protective terms. \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 If the policy is effected in the name of the mortgagee, he is entitled in law to payment of the proceeds.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 But his interest remains by way of charge to secure the mortgage debt and he will be accountable to subsequent mortgagees or the mortgagor for any surplus.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 If the policy is effected in the name of the mortgagor, the mortgagee still has an interest by way of charge in the proceeds. How as a matter of legal analysis does this interest take effect?}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Necessarily by way of assignment.}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 A charge on a fund belonging at law to someone else operates as a partial equitable assignment\'85\'85\'85..\'94 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the fire insurance policy was taken out in the names of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Company as owner and the Bank as mortgagee.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The policy was therefore relevantly effected in the name of the mortgagee for the mortgagee\rquote s insurable interest.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Strictly, no question of assignment arose as the policy was already in the name}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Bank.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In so far as the orders made in the High Court required the release of the assignment of the policy, the orders were in that respect misconceived.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 However nothing turns on the point.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Further, as the Court of Appeal pointed out, there was no need in the circumstances for the High Court to direct that the Bank discharged the policy.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Rights and obligations under the policy were at an end once the claim on the policy was settled.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case, the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 provisions of clause 5 of the mortgage go further than}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the corresponding}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 provisions of the mortgage under consideration in the CMG case.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 There, the implied covenants, and the expressed terms of the mort gage required the mortgaged property to be insured in the name of the Bank,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 for the policy to be held by the Bank, and for the Bank alone}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to have power to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 settle and recover a claim against the insurer.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The combination of those provisions gave rise to a charge over the proceeds of the insurance.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case,}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 clause 5 for the mortgage goes further and provides that the \'93}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 policy\'85\'85\'85\'85. shall be held by the Bank as a further security for the payment of}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the moneys hereby}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 secured.\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In short, by an express term in the mortgage, the policy was part of the property constituting the security created by the mortgage.} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The mortgage is not confined to the grant of an interest by way of security against the real property on which the hotel was built.} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 32 of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgage extends the security to include besides buildings and fixtures \'93tanks ranges stoves, engines pumps}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 plant and machinery now or}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 hereafter}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 on the land hereby mortgaged and they shall be considered part of the mortgaged premises\'94 .}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 5 is another instance were the security includes}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 property that is not real property. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 If}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 clause 6 of the Schedule had the meaning ascribed to it by the Court of Appeal, the conclusion that the mortgage by its terms includes the}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 policy}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as part of the security would lead to the further conclusion that the mortgage for that reason alone had varied or negatived}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the terms otherwise to be implied }{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 under clause 6 of the Schedule.}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 However, we do not think that, properly understood, clause 6 of the Schedule has the meaning given by the Court of Appeal.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clause 6 provides for the application of the insurance moneys \'93}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in or towards payment of the principal, interest and other moneys for the time been covered by the security, notwithstanding that the same or any of them may not have accrued due under}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 terms of the mortgage\'85\'85\'85 .. .\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal observed }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that \'93security \'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 must mean something different from }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93mortgage}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'94 which is used elsewhere in the clause clearly as a reference to the mortgage contract itself.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 So far we agree.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The reference to the }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93terms of the mortgage\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in clause 6 is plainly a reference to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the terms of the mortgage instrument itself.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The reference to }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93security\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 on the other hand is a reference to the interest or aggregation of rights available to the mortgagee against the property described in mortgage.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case that property includes not only the real property}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 comprising the land on which the hotel was built, but also the personal property described in clause 32,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and the insurance policy.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We do not t hink that the judgment of Isaacs J. in }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Royal Insurance Co. Ltd. v. Mylius}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to which the Court of Appeal made reference, leads to any different conclusion.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The point made by Isaacs J. was that when mortgagees insured tangible securities against fire, they}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 insure their security not the debt owed to them.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That principle} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 holds}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 good whether the tangible securities are real property or personal property.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal reached the conclusion which it did on the premise that the mortgaged property for the time been charged}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 was only the real property.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That premise was not correct as the mortgage also created a security interest in the policy. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We have already observed that clauses 5 and 25 have an effect that would vary or negate the application of the words in clause 6 of the Schedule on which the decision of the Court of Appeal is based.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the course of oral argument we drew Counsels\rquote attention to clause 30 of the mortgage which provides for the manner of disposition of moneys, including insurance moneys, rece ived by the Bank under various protective provisions of the mortgage.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It is unnecessary to recite clause 30.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It would appear to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 surplant the provisions of clause 6 on which the Court of Appeal relied relating to the option to apply moneys in reduction of the amount secured by the Mortgage.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Counsel of the Bank accepted that clause 30 had this effect.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Thus it seems that the point under clause 6 of the Schedule on which so much time has been spent was not actually raised by the terms of the Bank\rquote s mortgage. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We return to the first and second questions certified by the Court of Appeal.} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 For the reason just identified these questions are hypothetical.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The questions posed about clause 6 of the Schedule would arise only in the absence of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 express terms and conditions of a mortgage which vary or negate the implied conditions.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 An answer to the first two questions certified should await such a case,\tab although we have in the course of reaching our conclusion on the present case, addressed}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the meaning of the word }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93security\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in clause 6. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We turn now to the third question which has been certified.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That question}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 is one concerning the construction of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 a mortgage instrument between the Bank and a customer.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the ordinary case the construction of an inter parties contract is unl ikely to give rise to a question of significant public importance.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 However the mortgage used by the Bank is a standard one widely used throughout Fiji, and the construction of these clauses has importance well beyond the two parties to the litigation.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 For }{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 this reason we will address it.}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Company\rquote s}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 argument that}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgage was discharged by the completion of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgagee sale of the hotel property, and that clause 23 thereafter became }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93inoperable,\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and ceased to have application, cannot be accepted.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The provisions of clause 27 of the mortgage}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 do not support this conclusion.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On the contrary,}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the clause indicates that the mortgage continues to remain in force until final discharge is given by the Bank.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank has not given a final discharge.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 On the contrary,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Bank maintains that the mortgage transaction is still on foot.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The sale of the hotel premises had the effect of}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 releasing that part of the property which comprised the security granted by the mortgage, but it did not discharge the mortgage in th e sense that the rights and}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 obligations of the parties under the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 various terms and}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 conditi}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 ons of mortgage came to an end.}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Even if there had been a disposal}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 sale or otherwise}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by the Bank}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of all the property over which the security has been created,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that would not bring the operation of a clause 23 to an end.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 A similar issue was considered}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 by the Court of Appeal }{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bristol & West plc v. Bartlett}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [2002] 4 All ER 544.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It was held that the sale after repossession}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of the mortgage property by the mortgagee did not have the effect that the balance of the money advanced by the mortgagee that remained after crediting the proceeds of sale were no longer money}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 secured by the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgage.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The counsel for the mortgagees had}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 argued that once the mortgage property was sold, the mortgage was discharged and the unpaid moneys were no longer \'93moneys secured by a}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgage or other charge on property\'94.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The argument was based,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in part, on s.35 (1) of the Land Registration Act}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 1925 [U.K.].}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That section is to an effect similar to s.68 of the Land Transfer Act (Cap.131) which provides that upon presentation of a}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 form of discharge signed by the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 mortgagee discharging the land from the whole or part of the moneys secured by the mortgage, the Registrar shall make an entry on the register noting the discharge.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Upon the entry being made the land}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93 shall cease to be subject to or liable for such principal sum or other moneys.\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The presentation of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the transfer of the hotel property signed by}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the mortgagee in this case led to an entry}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 on the reg ister which freed and discharged the land from all liability on account of the mortgage; (}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 see}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 s.72 of the Land Transfer Act). \tab The Court of Appeal in }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bristol & West}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 held that the effect of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 a notation on the register cancelling the mortgage merely had the effect of releasing the land from the mortgage entry,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 but \'93}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 accrued rights arising under the deed of mortgage are not affected\'94(at para. [15]). \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case, clause 23 continued to}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 operate after the mortgagee sale of the hotel property.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 However, it will be noted}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 that the Court of Appeal said that the relevant provisions of the mortgages under consideration in }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bristol & West}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 continued to operated in respect of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93accrued rights.\'94} {\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In that case the relevant rights had accrued at the time of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the default leading to the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 exercise of the power of the sale.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the present case there is a question whether the rights which the Bank now}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 seeks to enforce under clause 23 had }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 accrued}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 at the date when the company claimed an immediate entitlement to the money, at the latest on 18}{\f0\lang2057\langfe5129\super\langnp2057\insrsid12217295\charrsid16416100 th}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 June 1996 when the originating summons the subject to these proceedings was issued. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank in its written submissions seeks to answer this question by arguing that the Bank had incurred, and was liable to pay, costs to its solicitors for def ending the action against it as soon as the proceedings were issued by the mortgagor, even although the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 quantum of that liability had yet to be determined.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We are unable to accept that argument.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The contract between the Bank and its solicitors would not be an entire contract for a pre-determined sum.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Rather, the Bank\rquote s solicitors would}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 become entitled to costs as and when the relevant work is performed, and accordingly the Bank has no right to debit those costs under recital}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (e) and clause 23}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 of the mortgage until it is called upon to pay its solicitors. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The liability against which the Bank seeks to hold the disputed}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 moneys is a contingent future liability.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 It is contingent because the costs,}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or much of them, may never be incurred.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 For example, the company might discontinue the proceedings or}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the proceedings might be brought to a}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 premature end by a}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 summary judgment.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The estimate of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 potential future costs placed before the trial Judge was in the sum of $47,000, being $15,000 for a three day trial, $12,000 in the event of an appeal to the Court of Appeal and a further $20,000 in the event of an appeal to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the Supreme Court.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Even if the matter proceeded to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 trial there may be no appeal, and a second appeal to the Supreme Court could only occur with leave.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The qu estion therefore arises: how does a mortgagor obtain a discharge of a mortgage from a mortgagee where the mortgage secures future contingent liabilities?}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 That question is posed by the facts of this case, and it would arise where a bank takes a mortgage ove r property to secure a guarantee or a performance bond which will mature in the future.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The answer is essentially a practical one.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The contingent future liability must be valued, and sufficient money or other security put up to cover that value.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Naturally enough the mortgagee will have to accept the valuation as adequate before agreeing to discharge the mortgage, and mortgagees would be anxious to avoid arguments over value with mortgagors. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Property Law Act provides the mortgagor with certain rights of redemption in ss.72 and 73 and envisages that redemption can occur regardless of the type of liability against which the property is secured.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The proviso to clause 6 of the Schedule earlier set out also envisages that the mortgagor in a case where the clause applies will have an absolute right to redeem within two months.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Again, the exercise of these rights may require contingent future liabilities to be quantified. \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Once it is recognised that a future contingent liability can be valued, thus enabling redemption and discharge, the company\rquote s argument that clause 23 of the mortgage is a clog on the equity of redemption disappears.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The clause does not \'93}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 prevent or impede redemption\'94 }{ \i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Fairclough v. Swan Brewery Co. Ltd.}{ \f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 1911-1913 All ER Rep. 397 at 399) if the liability can be valued and paid out or otherwise secured. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The difficulties of valuing future liabilities}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 are overcome by the widespread practice by banks and financial institutions of inserting in mortgages and similar security documents a clause like clause 21 in the present mortgage which reads: \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93}{ \b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 THAT}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 a certificate signed by for or on behalf of any Manager stating the amount of the moneys hereby secured and the date mentioned in any such certificate shall be conclusive evidence against the Mortgagor tha t the amount so stated is the amount of the moneys due by the Mortgagor under these presents at the date mentioned in the said certificate and is the amount of the moneys hereby secured as at such date.\'94 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Clauses of this kind have been upheld by the Courts.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Dobbs v. National Bank of}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Australia Ltd.}{\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (1935) 53 CLR 643 at 651-652 the High Court of Australia said: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid16416100 {\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93\'85\'85\'85\'85\'85 the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness.}{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The clause means what it says, that a certificate of the balance due to the bank by the customer shall be conclusive evidence of his indebtedness to the bank.\'94 \par }\pard \s21\ql \li0\ri720\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Dobbs}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 case has been followed by the Court of Appeal in England in}{\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bache a Co.}{\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (}{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 London) Ltd. v. Banque Vernes et Commerciale de Paris SA}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1973] 2 Lloyds Rep 437, and in New Zealand in }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 ANZ Banking Group (NZ) Ltd. v. Gibson}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1981] 2 NZLR 513 at 524. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Court of Appeal i n this case said it was unreasonable for the Bank to hold $138,000 against a remotely possible future liability of $47,000.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Plainly that stance}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 was very unreasonable, and it is probably the reason why this case has gone so far through the Courts.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The course which the Bank should have taken was to issue a certificate under clause 21, and to have released the}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 balance over the amount so fixed to the company. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 As it was, the trial judge was confronted with an unreasonable stance by the Bank, and}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 was}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 not}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 directed to the real question that needed to be resolved, namely what was the amount of the \'93}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 moneys}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 hereby secured}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'94 within the meaning of the mortgage.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 There}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 was argument before the Court of Appeal about how this situation came about.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The question was decided against the Bank.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 No ground of appeal entitles us to revisit the question even although counsel for the Bank urged us to find that what happened before the High Court}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 was not the Bank's fault.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We mention this as we think it bears on the question of the costs of the appeals in this Court and in the Court of Appeal.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The Bank should not recover the costs of these appeals and should continue to suffer the burden of the costs orders made by the trial judge. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The answer to the third question certified by the Court o f Appeal, for the above reasons, is that the Bank was entitled to retain sufficient of the disputed moneys to cover the amount of the }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93moneys hereby secured\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as defined by the mortgage, but no more. The }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93moneys hereby secured\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 would include the liability of the Company arising under clause 23 of the mortgage. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We do not consider s.81 of the Property Law Act requires a different conclusion.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 By its terms the section applies only to }{ \b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \lquote }{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 purchase money\rquote }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 arising from the sale of mortgaged property, but even if the section can be extended to an insurance recovery, as the Court of Appeal held, we do not think the section mandates that the disputed money was due to the company.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 First, under s.81(b) money must be applied in payment of the moneys which are }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93due }{\b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 or}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 owing.\'94}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The requirement is not one limited to the payment of moneys }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93due }{\b\i\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and}{\b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 owing\'94.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 The difference is important.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 A liability to pay money arising under clause 23 is a liability which renders money \'93owing\'94 even if not then due.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Secondly, the obligation arising under s.81(d) to pay surplus money to the mortgagor is subject to equities otherwise arising.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Thus, if the surplus is money that is caught by the terms of the mortgage as part of the security, it will not be payable to the mortgagor}{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 .}{ \b\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Hope v. Hope}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 [1977] 1 NZLR 582 and }{ \b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Bhasin v. Elite Lifestyles}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Ltd.}{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 (1990) 1 NZ Conv C 95-077. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We have been informed from the Bar Table that pursuant to the orders of the trial judge, and other orders of the High Court, the Bank has already paid to or on account of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the company all the disputed moneys.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Other information in the Record Book suggests that}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the company is presently insolvent.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In these circumstances any order of}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 this Court}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 in}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 relation}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 to}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 disputed}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 moneys}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 is}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 not}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 likely to have any practical consequence.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Nonetheless the Bank is entitled to have its legal rights appropriately recognised. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \fi720\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 In the events which have happened there is no longer any utility in varying the orders of the trial judge which were upheld by the Court of Appeal, and in any event those orders also affected other parties who are not before this Court.}{ \f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 We think the justice of the situation will be met by varying the order of the Court of Appeal as follows: \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 1.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Add a declaration that at all times material to these proceedings the}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 sum of $13,143.91 bein g the balance of the sale price of mortgaged property and the sum of $125,000 being the proceeds of an insurance policy were part of the security under memorandum of Mortgage No. 171120 for moneys falling within the description }{ \b\i\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \'93moneys hereby secured\'94}{\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 as defined in the said mortgage. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 2.}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Set aside the order that the appellant pay $1,500 costs of the appeal to the respondent}{\f0\lang2057\langfe5129\langnp2057\insrsid16416100 }{ \f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 and in lieu order that there be no order for costs in the Court of Appeal. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\ql \li720\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Subject to these variations to the order of the Court of Ap peal, this appeal should be dismissed with no order as to costs. \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par }\pard \s21\qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5921375 {\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Hon. Justice Daniel V. Fatiaki \par }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 President of Supreme Court \par }\pard \s21\qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5921375 {\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid5921375 \par }\pard \s21\qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5921375 {\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Hon. Justice Jai Ram Reddy \par }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Judge of Supreme Court \par }\pard \s21\qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5921375 {\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid5921375 \par }\pard \s21\qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5921375 {\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Hon. Justice John von Doussa \par }{\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 Judge of Supreme Court \par }\pard \s21\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid16416100 {\b\f0\ul\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Solicitors: \par }{\b\f0\lang2057\langfe5129\langnp2057\insrsid12217295\charrsid16416100 \par Messrs. Young and Associates, Lautoka for the Appellant \par Valenitabua, S.R. Esquire, Suva for the Respondent \par }}