This was a construction loan. The developer was placed into liquidation when the property market turned. There was a default under the mortgage. The claim for possession as against the developer was undefended however an investor sought to be joined to the proceedings claiming a prior interest in one of the units. All other units have been sold.
The investor asserted that he made an oral agreement with the developer which entitled him to the unit and that the lender was on notice of his interest prior to registering their mortgage.
Justice Kirby found that even if the agreement had been reached with the developer, the lender would not have consented to such an arrangement and would not have loaned if they knew there was a prior claim to the unit. The investor’s claim therefore did not defeat the lender’s indefeasibile title.