In the Bankrupt Estate of Murphy, Cheryl Ann Donnelly, Max Christopher v Commonwealth Bank of Australia [1996] FCA 858

CATCHWORDS BANKRUPTCY - bankrupt previously employed by respondent bank - bankrupt and her husband had executed mortgage in favour of respondent bank - bankrupt subsequently dismissed for misappropriation of funds - property of bankrupt sold - bank claimed to be secured in respect of loan and misappropriated funds under an "all moneys" clause in the mortgage. MORTGAGES - "all moneys" clause - banker/employee mortgage - whether clause wide enough to secure moneys misappropriated during employment after the date of the mortgage - proper approach to construction - whether restricted to debts of the same type or character as the original debt secured - guidelines for construction. Estoril Investments Pty Ltd v Westpac Banking Corporation [1993] 6 BPR 13,146; discussed. Australia and New Zealand Banking Group Ltd v Comer (1993) 5 BPR 11,748; discussed. GWH Pty Limited v Commonwealth Bank of Australia (Unreported, 14 December 1994, Young J); discussed. Re Modular Design Group Pty Ltd (Receiver and Manager appointed) (In Liq) (1994) 35 NSWLR 96; discussed. Burke v State Bank of New South Wales (1995) 37 NSWLR 53; discussed. Fountain v Bank of America National Trust & Savings Association (1992) 5 BPR 11,817; discussed and followed. Smith v Australia and New Zealand Banking Group Limited (5 February 1996, unreported, Kirby P, Priestley and Sheller JJA); discussed and followed. Re Clark's Refrigerated Transport Pty Ltd [1982] VR 989; referred to. Jageev Pty Limited v State Bank of New South Wales (No 2) (Unreported, 23 August 1996, Sperling J); not followed.

IN THE BANKRUPT ESTATE OF CHERYL ANN MURPHY; MAX CHRISTOPHER DONNELLY v COMMONWEALTH BANK OF AUSTRALIA

NB3116 of 1995

HILL J SYDNEY 26 SEPTEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE ) No. NB 3116 of 1995 STATE OF NEW SOUTH WALES )

IN THE BANKRUPT ESTATE OF CHERYL ANN MURPHY BETWEEN: MAX CHRISTOPHER DONNELLY Applicant AND: COMMONWEALTH BANK OF AUSTRALIA LIMITED Respondent

CORAM: HILL J PLACE: SYDNEY DATED: 26 SEPTEMBER 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application be dismissed. 2. The trustee to pay the costs of the respondent to the application.

THE COURT DECLARES THAT:

1. The mortgage executed by Anthony Gerard Murphy and Cheryl Ann Murphy in favour of the Commonwealth Bank of Australia, No. Y960611, dated 19 October 1988, operates to secure to the Bank repayment by Ms Murphy of the amount of $57,952.94 owing to the Bank. Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE ) No. NB 3116 of 1995 STATE OF NEW SOUTH WALES )

IN THE BANKRUPT ESTATE OF CHERYL ANN MURPHY BETWEEN: MAX CHRISTOPHER DONNELLY Applicant AND: COMMONWEALTH BANK OF AUSTRALIA LIMITED Respondent

CORAM: HILL J PLACE: SYDNEY DATED: 26 SEPTEMBER 1996

REASONS FOR JUDGMENT

Mr Donnelly ("the trustee"), is the trustee of the bankrupt estate of Cheryl Ann Murphy ("Ms Murphy") who became a bankrupt on presentation of her own petition on 15 December 1995. On 19 December 1988, Ms Murphy and her husband executed a mortgage under the Real Property Act 1900 over property owned by them in favour of the Commonwealth Bank of Australia Limited ("the Bank"), the respondent. At the time Ms Murphy was employed with the Bank. The front page of the mortgage proclaims that the mortgage has been entered into: "... for the purpose of securing to the Bank the payment of all moneys mentioned in the Memorandum filed in the Land Titles Office as Number T340042." The Memorandum No. T340042 provides relevantly that the provisions contained in it are deemed to be incorporated in the memorandum. Paragraph A of the Memorandum is in the following terms: "The Mortgagor hereby COVENANTS with the Bank AND it is HEREBY AGREED AND DECLARED as follows: - The Mortgagor will at such time or times and in such manner as may at any time and from time to time be agreed in writing between the Mortgagor and the Bank and in the absence of any such agreement on demand pay to the Bank:- 1. All moneys (including moneys advanced by way of loan for fixed term or provided by way of overdraft) now or hereafter to become owing or payable to the Bank by the Debtor and the Mortgagor or either of them either alone or on joint or partnership account or on any other account whether as principal or surety; also 2. All moneys which the Bank shall pay or become liable to pay to for or on account of the Debtor and the Mortgagor or either of them either alone or jointly with any other person and either by direct advances or by reason of the Bank accepting or indorsing or paying or discounting any order draft cheque promissory note bill of exchange or other engagement whether such order draft cheque promissory note bill of exchange or other engagement shall have matured or not or by entering into any bond indemnity or guarantee or otherwise incurring liabilities for or on behalf of the Debtor and the Mortgagor or either of them; also 3. All moneys which the Bank shall lend or pay or become liable to lend or pay or may have advanced or may advance the payment or repayment of which the Debtor and the Mortgagor or either of them has guaranteed or may hereafter guarantee to the Bank; also 4. All moneys which the Bank shall lend pay or advance or become in any way liable to lend pay or advance to for or on the credit or for the accommodation or otherwise on the account of the Debtor or to for or on account of the Mortgagor or to for or on account of any other person upon the order or request or under the authority of the Debtor and the Mortgagor or either of them; also 5. All moneys with which the Bank shall be at liberty to debit and charge the account of the Debtor and the Mortgagor or either of them under the covenants conditions or provisions herein contained; also 6. All moneys payable or to become payable to the Bank for discounts stamp duties postages commissions charges exchanges re-exchanges and expenses according to the usage and course of business of the Bank; also 7. All moneys which the Debtor and Mortgagor or either of them have or has agreed or shall hereafter agree to pay to the Bank whether as principal or surety; also 8. Interest on all such moneys as aforesaid or on so much thereof as shall for the time being be due or remain unpaid at the rate or respective rates agreed upon in writing if any and in the absence of any such agreement then without prior or other notice to the Debtor or the Mortgagor at the prevalent rate charged or chargeable by the Bank for the time being or from time to time to its other customers on the like account such interest to be deemed to accrue from day to day and to be computed from the time or respective times of such moneys being lent provided paid or disbursed or becoming due; also 9. Interest on such interest as aforesaid by way of compound interest computed at such time or times and from time to time as the Bank shall think fit at the said rate or respective rates agreed upon if any or if not then at the said rate for the time being or from time to time charged as aforesaid Provided always (a) that interest on which interest shall have become so payable shall not be deemed thereby or by the inclusion of interest with principal in any balance carried forward or account stated or otherwise than as hereinafter provided to have become capitalised or added to principal, but (b) the Bank by express entry to that effect in its books and without the necessity of giving notice to the Debtor or the Mortgagor may at any time and from time to time and as from such date as the Bank shall determine capitalise and add to the principal all or any interest on which interest shall have become so payable, and (c) any such accumulations by way of compound interest or addition to principal may be continued and made notwithstanding that as between the Bank and the Debtor or as between the Bank and the Mortgagor the relation of banker and customer may have ceased and notwithstanding the death bankruptcy or winding-up of the Debtor or the Mortgagor and notwithstanding any other matter or thing until all moneys hereby secured shall have been paid and satisfied (all of which moneys liabilities and interest as aforesaid are intended to be secured by this Mortgage and are hereinafter referred to as the moneys hereby secured)" A separate Memorandum additionally formed part of the mortgage in which the mortgagor covenanted with the Bank in the following terms: "The Mortgagor will at such time or times and in such manner as may at any time and from time to time be agreed in writing between the Mortgagor and the Bank and in the absence of any such agreement on demand pay to the Bank: 1. All moneys (including moneys advanced by way of loan for fixed term or provided by way of overdraft) now or hereafter to become owing or payable to the Bank by the Debtor and the Mortgagor or either of them either alone or on joint or partnership account or on any other account whether as Principal or surety; also 2. All moneys which the Bank shall pay or become liable to pay to for or on account of the Debtor and the Mortgagor or either of them either alone or jointly with any other person and either by direct advances or by reason of the Bank accepting or indorsing or paying or discounting any order draft cheque promissory note bill of exchange or other engagement whether such order draft cheque promissory note bill of exchange or other engagement shall have matured or not or by entering into any bond indemnity or guarantee or otherwise incurring liabilities for or on behalf of the Debtor and the Mortgagor or either of them; also 3. All moneys which the Bank shall lend or pay or become liable to lend or pay or may have advanced or may advance the payment or repayment of which the Debtor and the Mortgagor or either of them has guaranteed or may hereafter guarantee to the Bank; also 4. All moneys which the Bank shall lend pay or advance or become in any way liable to lend pay or advance to for or on the credit or for the accommodation or otherwise on the account of the Debtor or to for or on account of the Mortgagor or to for or on account of any other person upon the order or request or under the authority of the Debtor and the Mortgagor or either of them;..." At some stage between May and November 1995 Ms Murphy stole money from the Bank. In saying this I do not use the verb "stole" in any technical sense. What Ms Murphy did, apparently, was to forge signatures of customers of the Bank who had term deposits and withdraw moneys from these accounts which she then used for her own purpose. At least on some occasions the money was used to obtain bank cheques from the Bank. The amount which Ms Murphy stole from the Bank is $57,952.94. The funds so stolen have not been recovered. In November 1995 Ms Murphy was dismissed from the Bank's employment. In December 1995 contracts were exchanged for the sale of the property the subject of the Bank's mortgage. Notwithstanding the bankruptcy, the contracts were executed by Ms Murphy and her husband. The trustee, however, permitted the transaction to proceed to settlement. On settlement the Bank claimed to be secured, not only in respect of moneys owing to it which had been the subject of ordinary loan transactions to Ms Murphy and her husband, but also the sum of $57,952.94 which Ms Murphy had misappropriated. By agreement between the parties the sum of $57,952.94 was on completion paid into a separate account pending the determination by the Court as to whether the Bank is entitled to treat its mortgage as securing the repayment to it of the moneys which Ms Murphy had misappropriated.

The question for decision is one of construction of the mortgage. For the Bank it is submitted that the misappropriated funds are moneys which, after the date of the mortgage, became owing or payable to the Bank by Ms Murphy being one of the persons described as "the Mortgagor" in the mortgage, so that the moneys fell within cl A.1. of the Memorandum No. T340042, or cl A.1. of the separate Memorandum forming part of the mortgage, both of which are in identical terms. There is no suggestion in this case that the Bank has been guilty of unconscionable conduct or that the mortgage entered into in the form in which it was contains a provision which is in some way unfair or unjust. Rather, the trustee submits that the great width of the all moneys clause should be read down so as not to include moneys becoming owing to the Bank as a result of criminal activity on the part of one of the mortgagors who happened also to be an employee. Particular reliance was placed upon some decisions of Young J in the Supreme Court of New South Wales, containing what his Honour described as "guidelines" to the approach of courts in construing all moneys clauses. The guidelines adopted by his Honour emanate from Nelson G and Whitman D, Real Estate Finance Law (2nd ed, 1988) at 900-2, an American text. The guidelines are summarised by Young J in Estoril Investments Pty Ltd v Westpac Banking Corporation [1993] 6 BPR 13,146 at 13,151-2 as follows:

"(1) The mortgage will only secure advances made or debts incurred in the future if the past debts are identified. (2) Only debts of the same type or character as the original debt are secured by the mortgage. (3) A dragnet clause will often cover future debts only if documents evidencing those debts specifically refer back to the clause. (4) If the future debt is separately secured it may be assumed that parties did not intend that it also be secured by the dragnet mortgage. (5) The clause is inapplicable to debts which were originally owed by the mortgagor to third parties and which were assigned to or purchased by the mortgagee. (6) If there are several joint mortgagors only future debts on which all of the mortgagors are obligated or at least of which all were aware will be covered by the dragnet clause. (7) Once the original debt has been fully discharged, the mortgage is extinguished and cannot secure further loans. (8) If the mortgagor transfers the land to a third party, any debts which the original mortgagor incurs thereafter are not secured by the mortgage. (9) If the real estate is transferred by the mortgagor advances subsequently made to the transferee are not secured by the mortgage even if the transferee expressly assumed the mortgage." It is proposition (2) which was of concern in Estoril and is of concern in the present case. The proposition has support in some United States decisions which are summarised by Young J in Estoril.

His Honour's view, that there was a need to read down wide all moneys clauses, was repeated in Australia and New Zealand Banking Group Ltd v Comer (1993) 5 BPR 11,748 at 11,758, where his Honour said: "It seems to me that the way courts approach these very wide all obligations mortgages is to read them down so that the wide words have some operation but do not include situations that would never have been contemplated by the ordinary mortgagor by the use of the words. So ordinarily if there are a series of wide words in a mortgage and no drawing attention to what particular circumstances those wide words might envisage, they will ordinarily not be wide enough to cover the situation where the bank has taken an assignment of a debt owed by the customer to someone else. Nor would I think they would ordinarily include the situation where the customer has been interested in business A but to the knowledge of the bank has sold business A to a third person and that third person still operating business A later opens an account with the bank." The final and most recent decision of Young J upon which the trustee relies is GWH Pty Limited v Commonwealth Bank of Australia (unreported, 14 December 1994). The mortgage in that case was in the same form as the present mortgage. The issue was whether an all moneys clause in a mortgage which factually had been granted initially to secure a bill discount facility could be used by the bank to secure irrevocable credits granted by the bank in favour of Lloyds of London at the request of the mortgagor. Young J held that the obligation to indemnify the bank in respect of any payment it had to make to Lloyds of London fell within the all moneys clause in Memorandum T340042 notwithstanding Guideline 2. His Honour's reasons, which are relied upon by the trustee in the present case, are expressed in the judgment as follows: "(1) The words that are used in memorandum T340042 are, on one reading of them, sufficiently wide to cover any money that might at any time, for any reason be or become owing to the bank by GWH or Insurance Brokers. It is unnecessary to set out the concatenation of words in the printed document because that is their net effect if read without the understanding that the cases have applied over the years. In both the United States of America and New South Wales the way in which such mortgages have been expressed has come up for considerable judicial comment. It is undoubted that the all moneys mortgage is a significant instrument in commercial circles, and it has a significant part to play in commercial reality. On the other hand, if one permits clauses that have been called in some of the American decisions, `Anaconda clauses' to have an effect beyond that which ordinary people of commerce would have thought they meant at the time when the mortgage was entered into, great commercial harm can be caused. These matters were analysed by the Supreme Court in Kansas in Emporia State Bank and Trust Co v Mounkes 519 P(2d) 618, (1974) (Kansas Supreme Court), particularly p 620-622. The courts in the United States, and latterly in this State, have adopted the view that: `Completely unrestricted enforcement of such clauses would tend to reduce the borrower to the status of economic serf ....' (Akamine & Sons v American Securities Bank 440 P(2d) 262,267 (1972) (Hawaii)) and the clauses should be approached in a definite way.

That thinking has been applied in the Court of Appeal in Fountain v Bank of America National Trusts and Savings Association (1992) 5 BPR 11817 and in various decisions in this Division, such as my decision in Estoril Investments Pty Ltd v Westpac Banking Corporation (1993) 6 BPR 13146 and decisions of Santow J in Thomas v Silvia (1994) 14 ACSR 359, 446 and Burke v State Bank of New South Wales Ltd, 17 October 1994, as yet unreported. Santow J at p 23 of the last-mentioned case pointed out that in the United States widely drawn all moneys clauses have tended to be read down to achieve the result set out in Estoril as if guidelines obtained from the various decided cases were actual presumptions, whereas in the United Kingdom clear words of wide ambit have not been read down; for instance see Re Rudd & Son Ltd (1986) 2 BCC 98955. Santow J said in that case that whilst there is no general notion of a contra proferentem rule against the mortgagee; cf Paul v Westpac Banking Corporation (1987) 4 BPR 9578, where ambiguity is present, or where the language is not wholly clear, especially where printed forms are given to lay persons, then one applies the guidelines from the New South Wales and American decisions." As Young J observes in the passage cited above, Santow J, also of the Supreme Court of New South Wales, has followed the approach of Young J. In Re Modular Design Group Pty Ltd (Receiver and Manager appointed) (In Liq) (1994) 35 NSWLR 96, his Honour found an all moneys clause inapplicable to permit an assignee of a bank to whom guarantees and equitable mortgages had been assigned, to claim security in respect of moneys owing at the time of the assignment by the mortgagor to the assignee. In reaching that conclusion his Honour took the view that at the time the all moneys clause was agreed to by the parties, it was not in contemplation that it operate in the way suggested on an assignment. Specifically his Honour approved the nine guidelines from Nelson & Whitman which had been adopted by Young J. The most recent decision of Santow J is to be found in Burke v State Bank of New South Wales (1995) 37 NSWLR 53. In that case a husband and wife had mortgaged their house as security for a guarantee given to a bank of a loan that had been made to their son. The mortgage contained an all moneys clause. Subsequently they signed further documents, the contents of which were not disclosed to them, acknowledging that the loan had been increased. An issue in the case was whether the all moneys clause should be construed so as to extend to the subsequent unauthorised advances. Santow J held that it should not. In so doing his Honour set down (at 70-72) a number of propositions. In summary his Honour accepted that the guidelines were generally applicable in Australia, albeit that the resolution of a particular case depended upon the construction of the individual mortgage. A liberal interpretation of a widely drawn mortgage should, however, in his Honour's view, be questioned where such an approach would yield absurdities. It is his Honour's fifth proposition which has the greatest relevance in the present case. His Honour said (at 72):

"`... If there is an all monies mortgage the Bank will not be able to claim it is secured to a debt that neither party could sensibly say as at the date of the time the mortgage was taken it was contemplated should be included in the wide words': see Australia & New Zealand Banking Group Ltd v Cromer (1993) 5 BPR 11,748, cited by Young J in Williams v State Bank of New South Wales (7 April 1993, unreported) at 9. In that case, a wife had (with her husband) given a guarantee over the jointly owned family home and was held not to be liable for a loan made without her knowledge to her husband to on-lend to a third party, at a time when the amount originally secured under the mortgage had been repaid. This was notwithstanding that the mortgage was in the form where it operated not only on the original loan but also, as paraphrased by Young J, secured `all monies which might be advanced by the Bank to the mortgagors or any of them at any time'[.] Young J, while deciding the case on a different basis, observed that despite this wide wording `it may well be able to be argued as a matter of construction' that her interest was not affected." Since the present case was argued, judgment has been delivered by Sperling J in Jageev Pty Limited v State Bank of New South Wales (No 2) (23 August 1996, unreported). The issue in that case was whether a mortgage containing an all moneys clause should be held to secure to the mortgagee interest by way of damages for failure of the mortgagor to indemnify the mortgagee bank against its liability to make a payment under a guarantee. It was held that the all moneys clause did not extend to secure those damages. Sperling J accepted that on a literal reading of the mortgage it would cover a liability of any kind owed to the Bank. However his Honour held, on the basis of the cases to which reference has already been made in this judgment, that there were well settled limits on the proper construction of all moneys clauses. Particularly in his Honour's view, there was an expectation, which should govern the interpretation of the mortgage, that a mortgage taken by a bank would be confined to liabilities arising from the banking business so that the to the extent to which the liabilities were not so confined, the width of the all moneys clause would need to be read down. In a passage which presumably was written without knowledge of the facts of the present case, his Honour said: "... assuming a bank made a home loan to an employee and a term loan for the purchase of a car and household goods, all secured by mortgage. If the employee embezzled money from the bank, would an `all monies' clause be construed to cover the liability to refund the stolen moneys? I think not." With the greatest respect to his Honour, I would call in question both the proposition that the law is presently well settled and indeed that all moneys clauses should be read down in the manner in which his Honour suggests. One must ask what is the basis for such a proposition of law. One could perhaps understand that an all moneys clause should be construed contrary to the interests of the bank which profered it, at lease in the event of ambiguity. However, the New South Wales Court of Appeal has held that the contra proferentem rule has no application to the interpretation of an all moneys clause in a bank mortgage: cf Hall v Westpac Banking Corporation (1987) 4 BPR 9578. Once the possible application of the contra proferentem rule is put to one side, then there is no principle of common law that requires a clause in a bank mortgage to be construed in any way differently from any other document. The task of construction is to give effect to the intention of the parties as reflected in the language used. However, no doubt context and circumstances are relevant to the task. A search for "presumed or expectation intention" will invariably involve mere speculation. How one ascertains the expectation of the parties to a bank mortgage, other than from the language they have used, I do not understand. If one were to cross-examine the draftsperson of an all moneys mortgage, that draftsperson would, no doubt, in his or her answer make it clear that the clause was drafted as it was so as to ensure that the bank was covered in all possible situations which could arise, whether arising out of the banker and customer relationship or otherwise. The customer would probably have no view on the matter at all, being prepared to accept whatever provisions the banks put up in order to obtain the finance which the bank offers. Why then should not the language used be determinative of the issue?

The only possible explanation for applying a special rule of construction to the interpretation of an all moneys mortgage is the fact that a bank is a party to it. But that is no principle of law, it is principle of prejudice. Any injustice may be relieved by an application made under the Contracts Review Act 1980 (NSW) or equivalent legislation in other States. However, despite what was said by Sperling J in Jageev, the guidelines posited by Young J and adopted by Santow and Sperling JJ have not received enthusiastic endorsement from the New South Wales Court of Appeal. Fountain v Bank of America National Trust and Savings Association (1932) 5 BPR 11,817, concerned a clause in a mortgage which required the mortgagor to furnish additional security if required by the bank to secure his obligations to the bank "whether contingent, future, or otherwise" and "including those arising under successive transactions". Subsequent to the mortgage the bank made a loan to a company which was guaranteed by the mortgagor. The mortgagor claimed not to be required to provide further security on the basis that the clause should be construed as limited to the transaction the subject of the original mortgage, a view which had prevailed before Young J. The Court of Appeal, by majority (Gleeson CJ and Kirby P, Meagher JA dissenting), rejected the mortgagor's argument. The principle to be adopted clearly appears from the judgment of the Chief Justice, with whom Kirby P agreed, in the following passage (at 11,819 - 11,820). It is not a principle which should attract any controversy. However, it does not necessarily lead to the conclusion that the Bank must fail in the present case: "I would accept the submission made by senior counsel for the appellant that the provision of cll 3 and 4 are not at large. They must be confined in their operation by reference to the context in which they appear and by reference to the commercial purpose which they were intended to serve. The critical question, it seems to me, is whether, on the true construction of the document and in the events that have occurred, the transaction of 1981 and the obligation that existed in 1981 were within the purview of cll 3 and 4 of the 1976 agreement." The New South Wales Court of Appeal again approached the question of construction of an all moneys clause in Smith v Australia and New Zealand Banking Group Limited (5 February 1996, unreported, Kirby P, Priestley and Sheller JJA), again on appeal from Young J. At first instance Young J had formulated his own guidelines for the proper approach of an Australian court derived from the American guidelines, to which reference has already been made. Specifically his Honour said (as quoted by the Full Court at 3): "One of the general rules of construction of all money mortgages or guarantees is that, if there was an existing liability at the time when the mortgage was entered into, one normally expects that this will be identified and not just left to be included in the all moneys clause. Another guideline is that unless there is some indication of the facts and circumstances to the contrary, one normally expects the parties' intention to be that once the original debt for which the charge was given is paid, then the charge becomes extinguished and is not available as the source of a security for a liability which crystallises after that date." The correctness of these two guidelines formed a substantial issue in the appeal. Priestley JA, with whose reasons Sheller JA agreed, treated the question as simply one of construction of the relevant security. His Honour said (at 11): "I see no reason why ANZ would have had any intention to restrict the extremely widely drawn words of its mortgage debenture in the way required by Young J's first guideline. The words are very wide; they are very particular; to my mind very obviously deliberately so. YDSI at no time claimed they were unfair. There was no hint that they were not in accordance with the parties' agreement. The word rectification was not mentioned.... I can see no reason for construing the words in a sense other than I think they were intended to bear and which in ordinary meaning they did bear." Kirby P, after setting out the two suggested guidelines of Young J, referred to a number of cases, most of which have been discussed above, in which all money clauses have been confined. His Honour then distanced himself from a view that the courts read down such clauses out of sympathy for borrowers and continued (at 5-6): "I have no quarrel with the `guidelines' which Young J identified in this and earlier cases. However, they only take a court so far. In the end, it is necessary for the person construing the mortgage to give meaning to the `all moneys' clause having regard to the actual language used, as construed in context and for the purposes, of the agreement between the parties. There is competing authority in this country and overseas, which supports the proposition that courts should simply give the wide words of an `all moneys' clause their ordinary meaning and are not authorised to confine those words by considerations of fairness, unequal bargaining power or sympathy for borrowers' vulnerability etc ... This approach is frequently underpinned by recognition of the fact, as Mahoney JA pointed out in Hall & Anor v Westpac Banking Corporation ... (unreported, Court of Appeal (NSW), 8 September 1987, p4 that: `Traditionally a mortgage document is drawn to cover a multitude of possible events.' When I turn to the task of giving meaning to the `all moneys' clause in the present case, I am in agreement with the conclusion which Priestley JA has reached. It was not suggested that the `all moneys' clause or the conduct or [sic] the Bank in relation to its security it [sic] was in any way unfair, misleading or deceptive. ... The availability, now, of legislation which is protective of consumers of commercial credit is reason for avoiding any lingering judicial temptation to adopt a construction of the `all moneys' clause which is unduly strained and narrow. Parliament has provided means of relief for such cases. The common law and equity provide other means. No such exemption was sought, or would have been appropriate, in this case." The question of construction of the all moneys clause in the present case is one to be determined in accordance with the law of New South Wales. Thus a judge of this Court should follow a decision of a single judge of the Supreme Court of New South Wales, not just as a matter of comity but also to ensure consistency of law, unless he or she is convinced that a decision of a judge of a State Court is clearly wrong. That will be a rare case. It is vital to the administration of justice that questions of construction arising in both State and Federal Courts be decided uniformly, irrespective of the Court in which the matter falls to be heard. The difficulty in the present case is that the New South Wales Court of Appeal has, despite the comments of Sperling J, hardly given a ringing endorsement to what has been said by Young J. It must, however, be acknowledged that their Honours have fallen somewhat short of saying that the approach to interpretation advocated by his Honour was wrong. I think that following Smith, I should treat the guidelines suggested by Young J as not requiring me to read down the all moneys clause if its language actually covers the situation. The guidelines find no real support in the actual reasons of the members of the Court of Appeal. I proceed then upon the following principles which, I think are accepted law in New South Wales. 1. There is no principle of law that an all moneys clause should be read down merely because it is to be found in a document prepared by a bank. In particular there is no contra proferentem rule to be adopted: cf Hall v Westpac Banking Corporation (1987) 4 BPR 9578. 2. A bank mortgage is traditionally drawn to cover a multitude of possible situations and intended to secure the bank as effectively as possible. The question is whether the situation falls within the contemplation of the clause as written. 3. Particularly, notions of fairness, justice or reasonableness are matters relevant to questions which might arise under the Contracts Review Act, or in equity where unconscionability is suggested. They are not notions as such relevant to the question of construction. 4. An all moneys clause is to be construed having regard to the context in which the mortgage came to be executed and by reference to the commercial purpose it was intended to serve. But otherwise the intention of the parties is to be ascertained from the language which they have used.

This having been said, the real question, to paraphrase Gleeson CJ in Fountain, is whether on the true construction of the mortgage and in the events which have occurred, the obligation of Ms Murphy to repay moneys which she had stolen falls within the language of the all moneys clause. In my view it does. The language of the mortgage is quite clear. It is drawn with great width and deliberately so, no doubt to ensure as far as is possible that any moneys owing to the bank are secured, howsoever the obligation may arise. It was no doubt not in contemplation by the Bank, and probably not by Ms Murphy at the time of entering into the mortgage, that she would steal money and in the result come to be in a position where she was required to repay moneys to the Bank. But that can hardly be the test. The real question is whether the language of the mortgage is wide enough to encompass liability to the Bank arising as a result of theft or misappropriation. In my view, it is. The case is not one where the result of a literal application of the language of the mortgage would be to yield absurdity. Nor is the case one where the clause to be construed is itself ambiguous. To read down the extreme width of the present all moneys clause so that it would not apply beyond the initial banking transaction which it secured, would be to treat virtually the whole of para A of Memorandum No T340042 and likewise the separate Memorandum as being redundant. There is no principle of law or construction which requires or permits such a course to be taken. In the course of argument reference was made to the use of the words "on any other account" in the present clause. In my opinion, those words do not refer to "bank account", as was faintly submitted by counsel for the trustee. Rather, they make it apparent that the moneys secured may become payable, not merely jointly with another or because the mortgagor is in partnership with another, but in some other way: cf the remarks of Brooking J in Re Clark's Refrigerated Transport Pty Ltd (in liquidation) [1982] VR 989 at 997. It follows that I would find that the Bank's mortgage extended on its proper construction to include amounts which Ms Murphy became obliged to repay to the Bank as a result of Ms Murphy forging the signature of customers and thus withdrawing moneys from their accounts, notwithstanding that the mortgage was originally entered into on the basis of providing security to the Bank for advances made available to Ms Murphy and her husband. The application of the trustee is accordingly dismissed. In lieu of the relief sought in it I would declare that the Bank's mortgage operated to secure to the Bank repayment by Ms Murphy of the amount of $57,952.94 owing to the Bank. The trustee shall bear the costs of the application. I certify that this and the preceding twenty-three (23) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Hill.

Associate: Date: 26 September 1996 Counsel and Solicitors C Hogg instructed by for Applicant: S R Beverly Counsel and Solicitors M R Aldridge instructed by for Respondent: L E Taylor Date of Hearing: 18 July 1996 Date Judgment Delivered: 23 September 1996