This case involved a forged mortgage. The owner of the mortgaged property discovered that his defacto son-in-law had mortgaged his house to secure several hire-purchase agreements. The hire-purchase agreements were for trucks and trailers for the defacto-son-in-law’s prime mover business.
Claim by the lender for possession of the land
The million dollar question was whether the documents had been drafted in such a way that the indefeasible mortgage secured the debt. His Honour cast doubt on whether the memorandum in such circumstances was incorporated and acquired indefeasibility – calling it a difficult question. This was surprising because the Real Property Act deems referenced memorandums to be set out at length. Moreover the issue – if it exists – has been present in all previously tried cases, such as Yazgi, but has never been considered a live issue. In the event His Honour found it unnecessary to determine the question. This was because the drafting of the memorandum made it clear that only the obligations of the mortgagor were charged and as the mortgagor had signed none of the hire-purchase agreements the mortgage secured nothing. Accordingly the claim against the land failed.
The case then took a rather bizarre turn with the judge considering whether Yerkey v Jones applied, whether there were personal equities, or whether there was fraud which overturned indefeasibility. All this was unnecessary given His Honour had already concluded that the mortgage, being an all monies mortgage and being forged, secured nothing.
Bransgroves Lawyers continually warns lenders not to use all monies mortgages. However despite the raft of recent cases Perpetual Trustees Victoria Limited v Tsai , Printy v Provident Capital Limited , Chandra v Perpetual Trustees Victoria Ltd , Yazgi v Permanent Custodians Limited , Perpetual Limited v Costa , Perpetual Trustees Victoria Limited v Ford , Perpetual Trustees Victoria Ltd v Van den Heuvel , Vella v Permanent Mortgages , Provident Capital v Printy  CA, Perpetual Trustees Australia v Richards  lenders continue to use them.
Claim by lender against the solicitor who witnessed the documents
The lender also cross-claimed against the solicitor under the Trade Practices Act for witnessing a forged mortgage. The solicitor denied witnessing the documents. She claimed that she aborted the signup when the imposters were unable to produce photo identification. However, the judge did not believe her, finding that her signature on the mortgage was genuine. He also disbelieved her when she denied various telephone made to her by the solicitor for the lender.
Reading between the lines, the solicitor seems to have negligently witnessed a mortgage without obtaining photo identification and then tried to cover it up by perjuring herself. She had the documents sent to her home address and therefore may have been moonlighting when she did it. She does not seem to be actually complicit in the fraud; a forged letter purporting to be from her speaks against it. The letter read (errors included):
I advise that independent legal advice on the above lease’s was given to Mr Charles Mula and Mr’s Carmen Mula. I also advice that independent legal advice was given to them in regard’s to morgage documentaion for the collatreral of same lease’s over 70 Polding St Fairfield NSW 2165.
His Honour noted that the font and size of the print in the text of the letter was completely different from the font and size of the signature clause. His Honour then set the lender’s solicitors up for a negligence suit of their own concluding:
In my view, the unusual appearance of the letter would have caught the eye of an experienced solicitor taking care to ensure that the transaction documents were in satisfactory order.
The claim under Trade Practices Act against the solicitor succeeded and the lender’s loss must now be paid by LawCover.