SMITH v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD [1996] NSWCA 584

SMITH v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD [1996] NSWCA 584

The 'all moneys' clause in the mortgage debenture was intentionally and deliberately wide and particular. There was no claim of unfairness or ambiguous intent. On the proper construction of that clause, it secured the Bank's contingent liability under its guarantee, so the appellant, having paid under the guarantee, was subrogated to the Bank's rights as a secured creditor against YDSI.

Parties
Appellant: Smith; First Respondent: Australia and New Zealand Banking Group Ltd; Second Respondent: Mr Binet (the liquidator); Third Respondent: Yusen Daley Smith International Pty Ltd (In Liquidation)
Jurisdiction
Australia
Judgment Date
05 February 1996
Procedural Posture
Appeal / Decision on Appeal
Outcome
Appeal allowed
Legal Topics
All Moneys Clause, Construction of Security Instruments, Subrogation, Continuing Security in Mortgages, Interpretation of Contractual Terms
Mortgages Banking and Finance Contract All Moneys Clause Construction of Security Instruments Subrogation Continuing Security in Mortgages Interpretation of Contractual Terms

Case Brief

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Parties

Smith

Appellant

Australia and New Zealand Banking Group Ltd

First Respondent

Mr Binet (the liquidator)

Second Respondent

Yusen Daley Smith International Pty Ltd (In Liquidation)

Third Respondent

Procedural Posture

Appeal / Decision on Appeal

Legal Issues

  1. 1 Proper approach to the construction of an 'all moneys' clause in a mortgage debenture
  2. 2 Whether such clauses are to be given their full literal meaning or read down
  3. 3 Whether the appellant is subrogated to the bank's rights as a secured creditor after paying out a guarantee

Ratio Decidendi

The 'all moneys' clause in the mortgage debenture was intentionally and deliberately wide and particular. There was no claim of unfairness or ambiguous intent. On the proper construction of that clause, it secured the Bank's contingent liability under its guarantee, so the appellant, having paid under the guarantee, was subrogated to the Bank's rights as a secured creditor against YDSI.

Court Disposition

Appeal allowed

Orders

  • Appeal upheld
  • Orders of Young J in the Equity Division of the Supreme Court set aside