ProLend Solutions No 50 Pty Ltd v Monaco Solicitors Pty Ltd [2026] QCA 68

ProLend Solutions No 50 Pty Ltd v Monaco Solicitors Pty Ltd [2026] QCA 68 (17 April 2026)

Last Updated: 17 April 2026

SUPREME COURT OF QUEENSLAND

| CITATION: | ProLend Solutions No 50 Pty Ltd v Monaco Solicitors Pty Ltd [2026]
QCA 68 |
| PARTIES: | PROLEND SOLUTIONS NO 50 PTY LTD ACN 650 480
014

(appellant/cross-respondent)

v

MONACO SOLICITORS PTY
LTD

ACN 103 138 469

(first respondent/cross-appellant)

AUSHOME
DEVELOPMENTS PTY LTD

ACN 641 727 157

(second respondent) |
| FILE NO/S: | Appeal No 4809 of 2025 SC No 10102 of 2023 |
| DIVISION: | Court of Appeal |
| PROCEEDING: | General Civil Appeal |
| ORIGINATING COURT: | Supreme Court at Brisbane – [2025] QSC 199 (Bradley J) |
| DELIVERED ON: | 17 April 2026 |
| DELIVERED AT: | Brisbane |
| HEARING DATE: | 30 March 2026 |
| JUDGES: | Bond JA, Doyle JA, Henry J |
| ORDERS: | 1. The
appeal is allowed.
2. The
declarations made as Orders 1 and 2, and also Order 7, of the Orders made on 30
September 2025 are set aside.
3. The
Orders made on 9 December 2025 are set aside.
4. It
is declared that on the proper construction of the Amended Deed of Priority made
by the appellant, the first respondent and the
second respondent and bearing
date 13 October 2021, the “First Priority Amount” when that
expression is used in clauses
2.2(a) and 2.2(b), is the sum of the
following:

(a) the principal amounts advanced by the appellant to the second respondent
in the amount of $5,335,714.98; (b) any costs, fees, charges, duties and expenses (including legal expenses)
which are included in the Money Secured by the Mortgage
granted by the second
respondent to the appellant;

(c) the sums paid to the builder or others under the building contract
identified in the Builders Side Deed bearing date 4 June 2021
between the
appellant, the second respondent, Skerman Civil Pty Ltd and Civil and Water
Design Pty Ltd, and the sums paid to the
Logan City Council as infrastructure
charges pursuant to the Charge Notices dated 27 October 2017 identified as
notices 11498152
and 11498183 which are included in the Money Secured by the
Mortgage granted by the second respondent to the appellant;

(d) interest on those amounts as are included in the Money Secured under the
Mortgage granted by the second respondent to the appellant.

1. The proceedings are remitted to the Supreme Court for orders to be made for the distribution, consistent with the above declarations, of the monies held in the controlled money account identified in the Order of 9 December 2025, unless within 7 days the appellant and first respondent agree to a form of such orders to be made by this Court.
2. The first respondent pay the appellant’s costs of the appeal and of the cross appeal, and its costs of the trial. | | CATCHWORDS: | CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the appellant and first respondent each agreed to lend the second respondent sums of money – where the appellant, second respondent and a builder entered into the ‘Step-In Deed’ which authorised the appellant to step into the position of the second respondent to cause the completion of development works – where the appellant and first respondent secured their loans by registered mortgages – where the appellant was the first registered mortgagee – where the parties entered a Deed of Priority governing the rights of priority between the mortgagees – where the second respondent defaulted under both mortgages – where the appellant exercised its step-in rights – where the appellant made payments to the builder under the Step-In Deed and paid infrastructure charges to the local authority – where the primary judge found that those payments did not fall within the First Priority Amount in the Deed of Priority – whether the relevant payments fall within the meaning of ‘First Priority Amount’ under the Deed of Priority Planning Act 2016 (Qld), s 119(12) Property Law Act 1974 (Qld), s 82, s 94

Property Law Act 2023 (Qld), s 126, s 132

Beachquest Pty Ltd v Interstate Mortgage and Investment Pty Ltd [2003] 2 Qd R 586; [2001] QSC 512, cited Mount Bruce Mining Pty Ltd v
Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37,
applied

Sucrogen Australia Pty Ltd v Westpac Banking Corporation [2012] 2 Qd R 175; [2011] QSC 393, cited |
| COUNSEL: | G J Handran KC, with R A Kipps, for the appellant/cross-respondent A P
Cheshire SC for the first respondent/cross-appellant

No appearance for the
second respondent |
| SOLICITORS: | Summer Lawyers (Australia) Pty Ltd for the
appellant/cross-respondent Mills Oakley for the first
respondent/cross-appellant

No appearance for the second respondent |
[1] BOND JA: I agree with the reasons for judgment of Doyle JA and
with the orders proposed by his Honour.

[2] DOYLE JA: This is an appeal from a judgment determining certain
issues affecting the rights of priority between First and Second
Mortgagees. [1] The appellant is the
First Mortgagee, the first respondent is the Second Mortgagee, and the second
respondent is the Mortgagor but
has played no role in the trial or in this
appeal.

Background

[3] The second respondent, Aushome, was the owner of the land which it sought
to develop, intending to have it subdivided into lots
for sale.

[4] Prior to the matters which are directly relevant to this appeal, Aushome
had entered into a Building Contract with a builder to
perform the works
necessary to carry out that development and had granted a related residential
building company an option to purchase
the proposed lots after they had been
created.

[5] On 4 June 2021 the appellant, ProLend, agreed to lend Aushome a figure of
$8,230,877.00 for a term of 8 months with a rate of
interest being either 9.99
per cent per annum, or in the event of default, 18 per cent per annum. The
terms of the loan required
Aushome to prepay a number of significant amounts
which were deducted from the principal sum before it was paid to Aushome. A
written
direction was given by Aushome authorising those payments and further
that a sum of $400,000 be withheld by ProLend for “contingency
costs”.

[6] On the same day, that is 4 June 2021, the first respondent, Monaco,
agreed to lend $2,750,000 to Aushome for a term of 6 months
with an even higher
rate of interest.

[7] On 6 June 2021 ProLend, Aushome and the builder executed a deed described
as “Builder’s Side Deed” but to which
I will refer as the
“Step-In Deed”. Pursuant to the Step-In Deed in certain events
ProLend was authorised to step into
the position of Aushome under its contract
with the builder to cause the development works to be completed.

[8] Each of ProLend and Monaco took mortgages to secure the loans they had
agreed to make. They were both registered on 11 June 2021,
ProLend being, as I
mentioned, the first registered mortgagee (the ProLend Mortgage).

[9] Immediately prior to that occurring ProLend, Monaco and Aushome entered
into a “Deed of Priority” which, as the name
suggests, governs the
rights of priority as between the two Mortgagees and some other matters.

[10] An amended Deed of Priority was entered into and bears the date 13
October 2021 when signed by Monaco. At trial the relevance
of this amended Deed
of Priority was disputed but that has now been resolved. The amended deed is
the relevant Deed of Priority
governing the rights between the parties to this
appeal. It is materially the same as the Deed of Priority as first made, save
that
whereas that document identified the mortgages as documents to be
registered, and the First Priority Amount in the schedule was a
stated figure
(at that time being the same as the Principal Amount in the ProLend Mortgage),
in the amended Deed of Priority the
references are to the Mortgages as
registered, and the First Priority Amount in the schedule was increased by
$200,000. I shall
refer to the deed as amended as the Deed of Priority.

[11] By April 2022 Aushome had defaulted under both Mortgages and the period
under the ProLend loan by which Aushome was to have sold
the land expired on or
about 16 June 2022 “with no sale in prospect”: see R [42].

[12] Accordingly, ProLend exercised its step-in rights, took over and
completed the works. In the course of doing so it paid substantial
sums to the
builder and a sum of $1,925,161.60 to the local authority for
“infrastructure charges” which it was necessary
to pay to secure the
release of the sealed plan of subdivision. The total of these sums is said to
be either $6,304,726.95 or $6,307,861.84:
R [47].

[13] Thereafter, having registered on 22 June 2023 the survey plan, ProLend
commenced selling 69 subdivided lots. It seems safe to
infer from the existence
of the dispute between the parties that the proceeds or anticipated proceeds are
insufficient to pay both
Mortgagees in full, so as to highlight the relevance of
the priorities issues between them. This was confirmed on the hearing of
the
appeal.

[14] As will appear below, there are issues about whether particular sums
(and essentially these are the payments made by ProLend
to the builder under the
Step-In Deed and the infrastructure charges paid to the local authority) are
part of the sum to which ProLend
is entitled to first priority under the Deed of
Priority. It is accepted, however, by Monaco that all these sums are properly
payable
by Aushome to ProLend and that all of them are secured under the ProLend
Mortgage. The issue is whether they are to be paid to ProLend
in priority to
Monaco.

The Declarations Made

[15] The primary judge declared:

“1. On the proper construction of the Amended Deed of Priority made by
the parties, dated 13 October 2021, the ‘First
Priority Amount’
comprises the amount of $8,430,877, plus interest on the sum of $5,335,714.98
and associated costs, fees,
charges, duties, expenses and any other amount that
could be debited to the account of the second respondent under the terms of the
first respondent’s loan, less the amount of $400,000 which the first
respondent withheld from the second respondent for contingency
costs.

1. On the proper construction of the Amended Deed of Priority dated 13 October 2021:
   1. the sums which the first respondent paid to the builder under the building contract and to others, including the local government, after 16 June 2022 to complete the development of the land totalling $6,304,726.95 (or $6,307,681.84) were not interest, costs, fees, charges, duties or expenses or any other amount that could be debited to the account of the second respondent under the terms of the first respondent’s loan;
   2. the first respondent is not entitled to recover the sums in subparagraph (a), or interest on those sums and associated costs, as part of the ‘First Priority Amount’.” The Issues

[16] The grounds of appeal are as follows:

(a) Whether the primary judge erred in holding that payments ProLend made to the
builder under the Step-In Deed and the payments
it made of the infrastructure
charges were not within the First Priority Amount in the Deed of Priority. This
issue of construction
was decided against ProLend at first instance and is the
subject of grounds 1 and 2 of the notice of appeal. (b) Whether the primary judge ought to have found that the payment of the
infrastructure charges was one which did increase the value
of the land held as
security for the two Mortgages. This is the subject of ground 3 of the notice
of appeal. [2] On the hearing of the
appeal, reliance on this as a ground of appeal was not pressed by the appellant.
[17] There is a Cross Appeal by Monaco. All grounds of the Cross Appeal
raise a series of seemingly closely related issues of construction
of the Deed
of Priority as to the limits of the sums for which ProLend is given
prio rity.

The First Mortgage

[18] The loan arrangement between Aushome and ProLend is in the body of the
Mortgage. The formal instrument refers to Schedule A
and some particular key
aspects. The stated Principal Amount of the loan is $8,230,877.00. Schedule A
sets out other terms to which
it is largely unnecessary to refer. On the face
of Schedule A it is clear that the mortgagor is to conduct “Works”
and
to meet milestones for it. The conditions precedent to the loan
include:

(a) Securing bank guarantees from the Builder to secure its performance under
the Building Contract; (b) The execution of that Building Contract; and

(c) The execution of the Step-In Deed between the builder, ProLend and Aushome.
[19] Schedule B is also a part of the Mortgage and provides for the upfront
fees which were deducted before payment to Aushome. It
did not stipulate for a
$400,000 contingency to be withheld, but a “Cheque Direction” signed
by the borrower did instruct
that sum to be “held for contingency
costs”.

[20] The Memorandum of Common Provisions of the Mortgage:

(a) Defined ‘Principal Amount’ to mean “the amount stipulated
in Schedule A as the Principal Amount, whether or
not that amount has in fact
been advanced to the Borrower or at the Borrower’s request...”: cl
1.1. (b) Defined the ‘Secured Money’ as follows:
“(a) The Principal Amount

(b) Interest (c) Outstanding Interest

(d) Fees;

(e) Costs and Expenses including legal Fees;

(f) Money that any Obligor is, or at any time may become, actually or
contingently liable to pay to the Lender for any reason or
on any account
whatsoever

(g) Money the Lender has advanced in connection with this Mortgage, whether or
not that amount has in fact been advanced to the Borrower
or any other Obligor
or at the Borrower’s or any other Obligor’s request, and whether or
not the Borrower or any other
Obligor had knowledge of the advance
...

(i) Money paid by the Lender to any other Person as a result of the exercise by
it of any right or power under this Mortgage, including
but not limited to any
amount paid in accordance with Clauses 4.6, 6.3 and 18.3(h)
...

(k) Any money deemed by the Lender, on reasonable grounds, as necessary for it
to retain so as to provide adequate security for the
Lender’s rights to be
indemnified in accordance with the provisions of this Mortgage and/or for the
Lender’s Legal Fees
in connection with the enforcement of any indemnity
under this Mortgage”. (c) Defined in turn, each of the terms ‘Interest’;
‘Outstanding Interest’; ‘Fees’; ‘Costs
and
Expenses’. ‘Costs and Expenses’ is defined as:
“(a) any costs, expenses, fees, charges and disbursements, including
all Legal Fees incurred by the Lender arising from or in
connection with

...

(ii) the exercise of any rights or powers under this Mortgage, including but not
limited to the taking of any Recovery Action; (iii) any Event of Default;

(iv) the exercise by the Lender of any of its rights arising from any Event of
Default;
...

(c) any Tax, or Taxes, relating to or imposed on the Mortgaged Property that any
Obligor has failed to pay and that the Lender pays;” (d) The words Tax, and accordingly Taxes are defined in cl 1.1, cl 1.2(c) and
(d) to mean:
“‘ Tax ’ means any tax, levy, GST, Rates, land tax,
duties, stamp duties, fees, expenses or charges imposed in any manner whatsoever
by any Government Authority together with any related interest charges,
penalties, fees or other amounts in connection therewith.”

(e) Provides that Aushome agrees to pay the Secured Money (cl 3.1) and that the
land is charged with that payment (cl 2.1). It also
provides that Aushome
promises to observe all of its obligations (including those under the mortgage)
which include, by clause 9.1,
payment of all amounts for which the Mortgagor is
liable as the owner of the land:
“...including but not limited to

(a) Rates levied or charged for or in respect of the Mortgaged Property or by
reason of the grant of this Mortgage; and (b) any Taxes relating to or arising as a result of the Mortgagor’s
ownership of the Mortgaged Property.”

(f) Provides for events of default in broad terms: cl 18. They include in cl
18.2 the following:
“(a) An Obligor fails to pay any Secured Money in accordance with this
Mortgage;

(b) An Obligor fails to comply with any of the Obligations;
...

(z) there is a delay in the timetable approved by the Lender for construction of
the Works and in the Lender’s opinion this
delay is excessive; or (aa) costs for construction of the Works exceed the cost estimate approved by
the Lender, and in the Lender’s opinion, the
excess cost is
material.”
The Monaco Mortgage

[21] It is not necessary to set out the terms of the Monaco Finance Facility
or Mortgage. The finance facility stated the limit as
$2,750,000. It had a
special condition which required the Step-In Deed to be able to be assigned to
it by ProLend and also that
Monaco be satisfied with the Deed of Priority. The
Mortgage is an all monies mortgage: cl 2.02 definition of Money Hereby
Secured.

The Step-In Deed

[22] This deed is between ProLend (identified as the lender), Aushome
(identified as the borrower) and Skerman Civil Pty Ltd and Civil
and Water
Design Pty Ltd (the builder).

[23] By this deed:

(a) The builder consented to the execution of the first mortgage: cl 2. (b) ProLend was given a right to give a step in notice in the event of a default
under the mortgage: cl 5.1. The step-in notice
must amongst other things state
that default has occurred under ‘the Security’: cl 5.2. The giving
of such a notice
was not a default under the Building Contract: cl 5.3.

(c) ProLend (after stepping in) promises to comply with the obligations of
Aushome under the Building Contract, with the qualification
that the obligation
to pay money was only if certified by a quantity surveyor or similar
professional or agreed to by ProLend as
properly payable: cl 5.5(a).

(d) Provided, by cl 5.5(c):
“(c) All money paid by the Lender or an External Administrator under
this clause 5.5 will be taken to be money secured by and
recoverable by the
Lender under the Security, whether or not the Security would but for this clause
have this effect.”

(e) Also provided by clause 6:
“ 6. Direct Payment

Subject to clause 3.2, the Borrower irrevocably authorises and directs the
Lender to pay any of the money that the Lender is obliged
to advance to the
Borrower under the Mortgage for the purposes of paying the Builder, directly to
the Builder on account of money
which the Borrower is due to pay to the Builder
under the Building Contract.”

The Deed of Priority

[24] Clause 2 of the Deed of Priority deals with the regulation of priorities
between the parties to this appeal. It provided relevantly:

“ 2.1. Regulation of Priorities

The priorities as between the Mortgagees both at law and in equity will, for
all purposes (including how the Enforcement Proceeds
are to be distributed) be
determined in accordance with clause 2.2.

2.2 Priority of distribution of Enforcement Proceeds

(a) As between the First Mortgagee and the Second Mortgagee, the First Mortgagee
has priority over the Second Mortgagee until the
First Mortgagee has received
the First Priority Amount. (b) Without limiting (a), the parties agree that the order of priority of
distribution of Enforcement Proceeds shall be as follows:

(i) first to the First Mortgagee in payment of all moneys secured by the First
Mortgagee’s Mortgage up to a total of the amount
of the First Priority
Amount;

(ii) second to the Second Mortgagee in payment of all moneys secured by the
Second Mortgagee’s Mortgage up to a total of the
amount of the Second
Priority Amount;

(iii) third to the First Mortgagee in payment of all moneys secured by the First
Mortgagee’s Mortgage in excess of the First
Priority Amount; and

(iv) fourth to the Second Mortgagee in payment of all moneys secured by the
Second Mortgagee’s Mortgage in excess of the Second
Priority Amount;
and to the extent necessary at law to give effect to the above priorities the
Second Mortgagee postpones the priority and operation
of the Second
Mortgagee’s Mortgage in favour of the First Mortgagee.”

[25] Some of the expressions used in those clauses are defined in clause 1.1
as follows:

“ Enforcement Proceeds means any money which either Mortgagee
receives as a result of exercising its rights under the Mortgage.

...

First Priority Amount means the amount
specified in the Schedule plus interest, costs, fees, charges, duties and
expenses (including legal expenses) and
any other amount which may be debited to
the account under the terms of the First Mortgagee's Mortgage.

...

Second Priority Amount means the amount specified in the Schedule plus
interest, costs, fees, charges, duties and expenses (including legal expenses)
including
any amount paid to the First Mortgagee under the terms of this Deed
and any other amount which may be debited to the account under
the terms of the
Second Mortgagee’s Mortgage.”

[26] The schedule which is referred to identifies the “First Priority
Amount” as $8,430,877.

[27] The Deed of Priority granted Monaco a right to redeem the First Mortgage
(and so remove a prior secured creditor): cl 4.3. If
that is done, ProLend
agreed to assign its rights under the ProLend Mortgage “including the
Tripartite Agreement”: cl
7.1(b). That expression is not defined in the
Deed of Priority but the context of the originally executed Deed of Priority
suggests
it must have been intended to refer to the Step-In Deed.

The Issue of Construction

[28] It is uncontroversial that the approach this Court is to follow in
construing the Deed of Priority is that stated in Mount Bruce Mining Pty Ltd
v Wright Prospecting Pty Ltd (2015) 256 CLR 104, [46]-52, 109, 121.

[29] In that case French CJ, Nettle and Gordon JJ said of the process
(citations omitted):

“46 The rights and liabilities of parties under a provision of a
contract are determined objectively, by reference to its text,
context (the
entire text of the contract as well as any contract, document or statutory
provision referred to in the text of the
contract) and purpose.

1. In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

2. Ordinarily,
   this process of construction is possible by reference to the contract alone.
   Indeed, if an expression in a contract is
   unambiguous or susceptible of only one
   meaning, evidence of surrounding circumstances (events, circumstances and things
   external
   to the contract) cannot be adduced to contradict its plain
   meaning.
   ...

3. Other
   principles are relevant in the construction of commercial contracts. Unless a
   contrary intention is indicated in the contract,
   a court is entitled to approach
   the task of giving a commercial contract an interpretation on the
   assumption ‘that the parties
   ... intended to produce a commercial
   result’. Put another way, a commercial contract should be construed so as
   to avoid it
   ‘making commercial nonsense or working commercial
   inconvenience’.”
   [30] In this case the context includes
   the circumstance that the Deed of Priority was made (at least originally)
   together with the
   granting of the mortgages to both ProLend and Monaco, the
   Principal Sum provided for in the ProLend mortgage being the same dollar
   figure
   as that specified in the schedule to the Deed of Priority, and the entering into
   of the Step-In Deed. Both ProLend and Monaco
   were aware of these features.

[31] As the issue in this appeal concerns the priority between the two
Mortgagees the immediately relevant provision is cl 2.2 of
the Deed of Priority.
ProLend has priority over Monaco until ProLend has received the First Priority
Amount: cl 2.2(a). Then, but
not so as to limit that, cl 2.2(b) deals with the
distribution of Enforcement Proceeds. It contemplates that there might be a
first
and third rung of entitlements in favour of ProLend. Both are described
by use of the expression that the distribution is “in
payment of all
moneys secured by the First Mortgagee’s Mortgage”. Accordingly the
provisions contemplate that those
moneys secured might be divided into those up
to “a total of the amount of the First Priority Amount” and those
“in
excess of the First Priority Amount”.

[32] The core provision, however, is the definition of First Priority Amount.
I have set it out above but it can be seen to have various
components. It
incorporates the dollar amount specified in the Schedule. The only such amount
is (now) $8,430,877.

[33] The structure of the definition is such that to that sum there are to be
added:

(a) interest, costs, fees, charges, duties and expenses (including legal
expenses) which may be debited to the account under the
terms of the First
Mortgagee’s Mortgage. (b) any other amount which may be debited to the
account under the terms of the First Mortgagee’s Mortgage.
[34] As already mentioned, there is no dispute that all of the sums which
were paid to the builder or for infrastructure charges are
accepted as being
owed by Aushome to ProLend and are secured monies under the ProLend Mortgage.
However, it is urged by Monaco that
this does not satisfy the requirement that
they be “any other amount which may be debited to the account under the
terms of
the First Mortgagee’s Mortgage”.

[35] The primary judge accepted that submission. His Honour concluded:

(a) that by exercising its step in rights ProLend “took upon itself any
risk arising from cost overruns or delays in the completion
of the works”:
R [44]. (b) the payments so made were not payments made “by Prolend on
Aushome’s behalf. Once Prolend stepped-in, Aushome was
no longer
responsible to pay the builder and was no longer the person paying the
builder”: R [45].
[36] Of course his Honour is not to be understood as suggesting these
features meant the sums were not payable by Aushome and secured
under the
ProLend Mortgage. They clearly were: first having regard to the Step-In Deed
clause 5.5(c); and secondly having regard
to the wide definition of
‘Secured Money’ in the ProLend Mortgage, especially subparagraph
(f).

[37] But there are aspects of his Honour’s reasoning which cannot be
accepted.

[38] First, ** whilst in one sense, by stepping in ProLend assumed
a risk arising from cost overruns or delays in the completion of the work, that
was a predictable risk. It is enlivened only if the borrower defaults. It can
be expected that there will be some risk to the lender
if it does nothing (and
allows the land to be sold under developed) but also some risk if it steps in to
cause the works to be carried
out. Because of these risks the mortgagee
required that its security extends to payments it might have to make. It is not
a risk
first assumed only when the step-in rights are exercised.

[39] Secondly, ** the effect of ProLend stepping in is not that
Aushome ceases to be responsible to pay the builder. Other provisions allow
ProLend
to require the builder to novate the Building Contract to a third party:
cl 5.4(b)-(f) but that has not occurred here. Clause 5.6
allows ProLend to step
out from the Building Contract whenever it gives the builder a notice and
thereafter neither ProLend nor the
builder owe obligations to the other under
the Building Contract. It would be surprising if the Builder was left with no
obligations
owed to it by Aushome and that is such an uncommercial construction
that it would require clear language to bring that about. Additionally,
cl 6 is
inconsistent with the notation that after ProLend steps in Aushome is freed of
its obligations to the builder as it refers
to Aushome authorising ProLend to
apply any sums it is obliged to advance to Aushome under the Mortgage for
payment to the builder
“on account of money which [Aushome] is due to pay
to the Builder under the Building Contract”.

[40] But these considerations aside, Monaco’s contention remained that
in context the expression “any other amount which
may be debited to the
account under the terms of the First Mortgagee’s Mortgage” does not
include these particular sums
even though they are Secured Money under the
ProLend Mortgage and even though they are payable by Aushome to ProLend.

[41] The matters which are relied on for this construction are related but
are as follows.

[42] First, there is a distinction drawn in the Deed of Priority
between the money secured by the ProLend Mortgage and the First Priority Amount.
This is clear from cl 2.2(b) and to be inferred from the Deed of Priority
not simply referring to the Secured Money as defined in
the ProLend Mortgage to
identify ProLend’s first priority.

[43] Second, that similarly the Deed of Priority differentiates
between two things which are both monies secured by the ProLend Mortgage one
of
which is the First Priority Amount and the other is the entitlement to a third
priority under cl 2.2(b)(iii).

[44] Third ¸ it is urged that the Deed of Priority serves no
purpose, or at least not as a deed governing priorities, if the First Mortgagee
is afforded priority for all sums which are moneys secured under its Mortgage
and such construction makes no commercial sense.

[45] These first three propositions are in substance submissions that the
parties could not be understood to have intended a construction
where the
provision for divergent priorities is otiose because any sum which is part of
the Secured Money under the ProLend Mortgage
is per force of that also one of
the parts of the components of the First Priority Amount. The premise of this
proposition is something
to which I shall return.

[46] Fourthly, ** it is submitted that not all sums which are
Secured Money under the Mortgage can be said to be sums “debited to the
account
under the terms of the [ProLend] Mortgage” within the meaning of
the definition of First Priority Amount. Without seeking
to explore the limits
of this distinction, Mr Cheshire SC for Monaco submitted that sums (such as the
payments to the builder) have
as their source of the obligation on Aushome to
make the payment to ProLend, not the terms of the ProLend Mortgage but some
other
document (the Step-In Deed). Thus, I understand it to be argued the sums
are debited to an account under the Step In-Deed rather
than the ProLend
Mortgage even if by force of being a sum owing under the Step In-Deed they
become part of the Secured Money under
the ProLend Mortgage. I will consider
this approach in principle before turning to consider how it applies to the
infrastructure
charges and also how it applies when read with cl 6 of the Step
In-Deed.

[47] Fifthly, Monaco also urges that the short term nature of both
Mortgage loans meant it was not within the parties’ objective
contemplation
that significant further sums would be needed for or expended upon
the development of the land. But this at best is a neutral consideration.
It
may be that as a result a common sense commercial approach may be to include any
such money expended in the first priority because
it was unlikely to be
substantial. It does not follow that to do so is such an affront to commercial
sense as to be a factor pointing
against the construction urged by ProLend.

[48] These propositions are likely to include some of those the primary judge
had in mind (and adopted) when stating that the sums
paid to the builder and for
the infrastructure charges “were not ... amount[s] that could be debited
to the account of Aushome
under the terms of the Prolend loan”: R
[53].

[49] However, for the following reasons I do not consider that to be the
correct construction.

[50] First, ** when the Deed of Priority was made (and amended) it
is far from clear that the parties were not contemplating that there might never
be a third tier of entitlement for ProLend such that the distribution of
enforcement proceeds would simply reflect the sequence of
the registration of
the Mortgages. That is, the argument that the Deed of Priority may not in fact
operate to regulate priorities
was at least a contemplated likely position.

[51] The First Priority Amount in the schedule (the stated dollar figure) was
never lower than the Principal Amount to be advanced
to Aushome, and by the time
of the amendment to the Deed of Priority it was $200,000 greater than the
Principal Amount. Monaco does
not dispute that in addition ProLend was entitled
to priority for at least interest, costs, fees, charges, duties and expenses
(including
legal expenses) which may be debited to the account under the terms
of the First Mortgagee’s Mortgage; plus something else
(and the scope of
this is in dispute) being any other amounts which would fall within the third
category of sums in the definition
of First Priority Amount on Monaco’s
limited construction.

[52] The ProLend Mortgage required interest to be paid each month, as well as
providing for some prepayments. It was entirely within
contemplation, when the
Deed of Priority was made, and when it was amended, that ProLend could get full
priority for all sums owed
to it.

[53] Second, the Deed of Priority does not merely contain the
cascading provisions for distribution of enforcement proceed as set out in cl
2.2.
Aushome is a party to it as well. It contains clauses which are directed
to matters other than priorities. They include the following:

(a) By clause 2.4, all parties acknowledge and agree that money which is
contingently payable and secured by the Mortgage, for the
purposes of the Deed
of Priority is to be treated as a debt presently ascertained and immediately
payable. (b) Clauses 4.1 and 4.2 prescribe notice
requirements [3] for occurrences of
lending, changes or events of default. In the latter circumstance, cl 4.3
provides for the Monaco to have a right
of redemption of the ProLend
Mortgage.

(c) By cl 4.6 each Mortgagee is given the liberty to provide information to the
other mortgagee in relation to, among other things,
mortgagor, the mortgage and
any debts owing to them. [4]

(d) By cl 7.1 ProLend agrees to assign and transfer its Mortgage (including its
rights under the Step-In Deed) to Monaco through
a Deed of Assignment and
payment of valid consideration. By s 94 of the Property Law Act 1974 (Qld) Monaco would likely have the right to require the ProLend Mortgage to be
transferred to it: Sucrogen Australia Pty Ltd v Westpac Banking
Corporation [2011] QSC 393; [2012] 2 Qd R 175. A like provision is now in s 132 of the Property Law Act 2023 (Qld). But, absent the terms of the Deed of
Priority, this right would not likely extend to the Step-In Deed. The Deed of
Priority
puts this beyond doubt.
[54] Third, ** the language used in the definition of the First
Priority Amount is broadly expressed. It starts with a stated dollar figure:
the
amount specified in the Schedule. The primary judge treated this as
something of a silo and construed the aggregate First Priority
Amount in this
case as being that stated figure (even though ProLend has made actual advances
excluding the payments under the Step-In
Deed and the infrastructure charges of
only $5,335,714.98) plus interest on that lower figure of $5,335,714.98). There
was imbedded
in the stated schedule figure a ‘bonus’ as it was
called below, of the difference of $3,095,162.02: see Order of 9 December
2025.

[55] This is the approach urged by Monaco. But it treats the stated dollar
figure component of the definition of First Priority Amount
as available to
capture sums which are not tethered to the words “which may be debited to
the account under the terms of the
First Mortgagee’s Mortgage” in
the same way Monaco urges those words to be read in relation to the other
categories of
sums referred to in the definition of First Priority Amount.
Linguistically, that it is an unattractive construction. It requires
it to be
concluded the parties set out to draw a fine distinction by use of language
unsuited to achieve that objective.

[56] Fourth, the expression “amounts which may be debited to the
account under the terms of the First Mortgagee’s Mortgage”
does not
seek to identify the source of the obligation or occasion for the expenditure or
for the advancing of money, but merely
that it is something which may be debited
(to Aushome) under the terms of the ProLend Mortgage. The Mortgage does not
contain any
provisions which identify a particular account to which sums
are debited from time to time. There is no provision for a running
total to be
maintained. The terms of the ProLend Mortgage (as is common with many
mortgages) identified an obligation to pay the
Secured Money (Schedule A cl 8(a)
and the common terms cl 3.1-3.5) and that that sum is charged over the land: cl
2.1. As I have
set out above the expression Secured Money is expansively
defined and would capture all of the sums in issue in this appeal. The
language
points to the test of whether an amount is one debited to Aushome under the
terms of the ProLend Mortgage as being whether
the sums can be added to the
Secured Money and thus secured on the land and which under the ProLend Mortgage
Aushome is obliged to
repay it. It follows that when in the Deed of Priority
reference is made to sums debited under the terms of the Mortgages it is
merely
identifying that the Secured Money is augmented and not that the covenant which
gave rise to Aushome’s initial obligations
to pay it can be found in the
ProLend Mortgage.

[57] Fifth, the redundancy of cl 2.2 of the Deed of Priority urged by
Monaco is in any event not made out. Returning to the core provision,
namely
the definition of First Priority Amount, it provides for three components:

(a) the dollar amount specified in the Schedule ($8,430,877); plus (b) interest, costs, fees, charges, duties and expenses (including legal
expenses) which may be debited to the account under the
terms of the First
Mortgagee’s Mortgage; and

(c) any other amount which may be debited to the account under the terms of the
First Mortgagee’s Mortgage.
[58] These three categories are to be read harmoniously. The second and
third are in addition to the first (the word ‘plus’
makes this
clear). To read them harmoniously requires or at least strongly suggests they
deal with different things albeit all amounts
which Aushome must pay to
ProLend.

[59] In my view the first of these is intended to describe something other
than the sums captured in the second and third categories.
For want of a better
description I would describe these payments as advances of principal by way of
loan. This is evident from
the parties having differentiated between a dollar
figure and the other two categories (costs, fees interest and so on). Some
further
(minor) support for this is to be gleaned from the context that when
first executed, the Deed of Priority identified a dollar figure
which matched
the total loan amount of the ProLend Loan. That said, the direct link is broken
by the requirement that some of the
principal was to be withheld as interest
payments and also that the amended Deed of Priority no longer maintained that
symmetry.
But nonetheless, it is still an advance of the principal even if in
this case part of that principal is directed to be applied for
interest (or
other things) and not to progress the works.

[60] As already explained even the stated dollar sum is only given priority
to the extent money has been advanced so as to be debited
to the account for
Aushome under the terms of the ProLend Mortgage. To be given any priority the
sum must first be a sum owed by
Aushome.

[61] But conversely, if a principal sum greater than the stated dollar figure
is advanced to Aushome, the excess cannot be included
in the first category of
the components of the definition of First Priority Amount. It does not fall
into the second category.
To read the definition in a harmonious way the amount
of that excess cannot be caught up in the third category. That is because
it is
not any other amount, but rather an amount of the very kind already
limited by the scope of the first category.

[62] That being so, there do exist circumstances in which the Secured Money
may exceed the First Priority Amount so as to give content
to the stipulation of
the first and third priorities in cl 2.2(b).

[63] Monaco contends that it cannot be concluded this is what business people
would understand the Deed of Priority to mean because
it does no more than is
provided for by the law in s 82 of the Property Law Act 1974 (Qld) (now
in a modified form s 126 of the Property Law Act 2023 (Qld)). [5] That section provided for
when a further advance made by a first mortgagee could be made so as to rank in
priority to a second mortgagee’s
rights. Those circumstances were:

“(a) if an arrangement has been made to that effect with the subsequent
mortgagees; or

(b) if the mortgagee had no notice of such subsequent mortgages at the time when
the further advance was made by the mortgagee; or (c) if the mortgagee’s mortgage imposes on the mortgagee an obligation to
make such further advances.”
[64] I do not believe the Deed of Priority can be said to be futile on the
basis that if no provision was made as to priorities, s 82 of the Property
Law Act 1974 would apply. Clause 2.2 provides for the first priority
encompassing sums about which there may be doubt that they fall within the
meaning of a further advance for the purposes of s 82. That would be so
for some of the amounts which might possibly fall within the third category.
But to avoid any such argument, these
parties have made an arrangement between
themselves as contemplated by s 82: namely the Deed of Priority. Additionally, s 82 (absent the Deed of Priority) contemplates a binary choice: does the
“further advance” have priority or does it not?
By the arrangement
between the parties in cl 2.2 of the Deed of Priority a cascading range of
priorities is provided for. Whatever
might be the rights of Monaco under its
Mortgage, it agrees to defer its rights to those of ProLend for the First
Priority Amount,
but also then for the third tranche available to ProLend under
cl 2.2(b)(iii). Accordingly I do not accept this further contention
made by
Monaco.

Infrastructure Charges

[65] There was a matter I touched on above to which I need to return. If the
construction of Monaco had been accepted and that it
was right to characterise
the source of Aushome’s obligations to repay the amount of the payments to
the builder as being something
outside the ProLend Mortgage, it would have been
necessary to consider whether the same could be said of the infrastructure
charges.

[66] Given the view I have reached as to the construction of the Deed of
Priority it is strictly unnecessary to deal with this. However,
the ProLend
Mortgage obliged Aushome to pay all rates levied or charges for or in respect of
the property: cl 9.1(a); and to pay
all Taxes relating to the property: cl
9.1(b). The Planning Act 2016 (Qld) provides that any infrastructure
charge levied “attaches to the
premises”. [6] The
infrastructure charges accordingly are at least charges for or in respect of the
land. Further the term Tax and Taxes are expansively
defined as set out above
and arguably capture the infrastructure charges. The ProLend Mortgage provides
that Aushome indemnifies
ProLend for all such taxes and charges. Accordingly,
in my view the infrastructure charges would satisfy Monaco’s construction
so as to fall in the scope of the expression (as it urged) of being an amount
which may be debited to the account under the terms
of the First
Mortgagee’s Mortgage.

Summary

[67] In my view the Deed of Priority operates so that the First Priority
Amount would be calculated as the sum of the following:

(a) the amounts advanced by ProLend to Aushome (which the Court was told was
$5,335,714.98); (b) any costs, fees, charges, duties and expenses (including legal expenses)
which are included in the Money Secured by the ProLend
Mortgage;

(c) the whole of the sums paid to the builder and to the council as
infrastructure charges which are included in the Money Secured
by the ProLend
Mortgage;

(d) such interest on those amounts as are included in the Money Secured by the
ProLend Mortgage.
[68] The relief granted below, by Orders made 30 September 2025, should be
set aside. On 9 December 2025 further Orders were made
by the primary judge
reciting an interim arrangement between the parties and ordering the
distribution of the amounts in a controlled
money account as between the
appellant and the first respondent. That order has been stayed. It follows
from my reasons that these
Orders should also be set aside.

[69] Given that the appellant has been successful in my view it ought to have
the costs of the appeal, the cross appeal and of the
trial.

[70] Accordingly, in my view the appropriate orders are:

1. The appeal is allowed.
2. The declarations made as Orders 1 and 2, and also Order 7, of the Orders made on 30 September 2025 are set aside.
3. The Orders made on 9 December 2025 are set aside.
4. It is declared that on the proper construction of the Amended Deed of Priority made by the appellant, the first respondent and the second respondent and bearing date 13 October 2021, the “First Priority Amount” when that expression is used in clauses 2.2(a) and 2.2(b), is the sum of the following:
   1. the principal amounts advanced by the appellant to the second respondent in the amount of $5,335,714.98;
   2. any costs, fees, charges, duties and expenses (including legal expenses) which are included in the Money Secured by the Mortgage granted by the second respondent to the appellant;
   3. the sums paid to the builder or others under the building contract identified in the Builders Side Deed bearing date 4 June 2021 between the appellant, the second respondent, Skerman Civil Pty Ltd and Civil and Water Design Pty Ltd, and the sums paid to the Logan City Council as infrastructure charges pursuant to the Charge Notices dated 27 October 2017 identified as notices 11498152 and 11498183 which are included in the Money Secured by the Mortgage granted by the second respondent to the appellant;
   4. interest on those amounts as are included in the Money Secured under the Mortgage granted by the second respondent to the appellant.
5. The proceedings are remitted to the Supreme Court for orders to be made for the distribution, consistent with the above declarations, of the monies held in the controlled money account identified in the Order of 9 December 2025, unless within 7 days the appellant and first respondent agree to a form of such orders to be made by this Court.
6. The first respondent pay the appellant’s costs of the appeal and of the cross appeal, and its costs of the trial.

[71] At the conclusion of the appeal Mr Handran KC, for the appellant,
indicated ProLend may wish to be heard on costs and in particular
on seeking a
certificate of some nature in respect of the appeal or the first
respondent’s cross appeal. [7] Given the orders made it is unnecessary to make any directions to further deal
with this possibility.

[72] HENRY J: I agree with Doyle JA.

[1] Monaco Solicitors Pty Ltd v
Prolend Solutions No 50 Pty Ltd [2025] QSC 119 (Reasons or R), with Orders
made 30 September 2025 and 9 December 2025.

[2] Correcting for an obvious
error in the notice of appeal.

[3] Service requirements are set
out in clauses 6.1, 6.2 and 6.3.

[4] Though this is already
provided for in the ProLend Mortgage at cl 30.1.

[5] See Beachquest Pty Ltd v
Interstate Mortgage and Investment Pty Ltd [2003] 2 Qd R 586 at
[32]-[33].

[6] Section 118(12) of the Act
when initially enacted but carried forward in s 119(12) of the current Act.

[7] Noting however that the
ability to seek certificates under the Appeal Costs Fund Act 1973 (Qld)
for civil appeals was abolished in 2023.