The Court held that a clause in a solicitor-drafted deed granting a 'caveatable interest' and consenting to the lodgement and maintenance of a caveat did not, on its proper construction, create an equitable charge over real property, where the clause lacked the language of charge or mortgage, provided no realisation mechanism, and was contrasted within the same instrument with an express requirement for orthodox security from another guarantor. The Great Lands mortgage was declared void against the trustee in bankruptcy under s 121(1) of the Bankruptcy Act because Great Lands failed to establish any element of the s 121(4) good faith defence: in particular, the market value of a mortgage securing liabilities beyond principal (including escalating interest) could not simply be equated with the principal sum advanced, and the transferee's reliance on impressionistic indicators of the transferor's wealth did not discharge the objective inquiry under ss 121(4)(b) and (c) where concrete transactional features — including urgent repeated borrowing requests, shifting security proposals, and absence of due diligence despite legal advice — made the proscribed purpose and insolvency reasonably inferable. IPPL was held entitled to equitable proprietary interests in the surplus funds via a constructive trust ($1,045,246.14) and subrogation to the discharged Credit Suisse mortgage ($280,000).
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