The bank lent over $10 million to a one-time multimillionare, Mr Matthew Perrin, ex-CEO of the clothing store Billabong, on the security of the matrimonial home solely in his wife’s name. A highly successful public float of the Billabong company had seen the worth of the husband’s shareholding increased to tens of millions of dollars and three years later he left the company and invested in a number of overseas ventures, which brought about his financial ruin. Less than a year after the bank loans were granted, Mr Perrin was bankrupt and had repaid nothing. The wife claimed that the mortgages and guarantees in her name were forged by her husband and she was unaware of the transactions and applied for an order under section 187 Land Title Act 1994 (Qld) for their removal from the register. The bank sued the wife to recover the monies under the guarantee and sought a declaration that the mortgages were enforceable on the following three alternative bases:
- the wife did sign the documents;
- the husband had express or implied authority to sign documents on the wife’s behalf; or
- the wife ratified the transactions arising from the forged documents.
The husband took delivery of the mortgage and guarantee to be signed by his wife and his wife’s law firm delivered the certificate of title held for her to the husband. The husband delivered the signed documents, witnesses by the husband’s brother and their solicitor and the certificate of title to the bank. The wife claims that she became aware of the forgeries when her husband told her that he was ‘broke’ and had ‘forged his wife’s signature and mortgaged the house’. Prior to that, she transferred $10m from the family trust account to her own account because she thought a separation was likely. The court did not believe the wife that she only found out about the forgeries after the transfer of money to her account and found it more probable that the transfer was done after she learnt of her husband’s financial misfortune. However the court did believe the wife that she did not sign the documents or approve the transactions. The court found that the husband had gone to extraordinary lengths to forge a power of attorney purportedly signed by the wife by superimposing her signature from a school document. The court also found that the wife never signed a power of attorney.
The court noted that while the wife bore the onus of proving the forged mortgage documents, being an exception to the indefeasibility of the bank’s registered mortgages, the bank bore the onus of proving the guarantees were not forged because without the guarantee, the mortgages secure nothing.
The court accepted that the husband’s signatures on the documents were forged, taking account of the dissimilarities between the disputed signatures and specimen signatures, the difficulties in their marriage and the husband’s financial difficulties and the fact she would not likely sign away the family home, being the only substantial asset in her name.
The court found that the husband did not have implied authority because that requires the parties’ consent. The fact the wife left the husband free to manage the business assets in no way indicated that he could deal with the matrimonial home, let alone put at risk her own personal solvency.
The court also found that the wife had not ratified the transactions, because a forgery is incapable of ratification because the husband did not purport to act on his wife’s behalf. In any case, the court found that the wife did not show an intention to adopt the transactions.
The court held that the wife had the benefit of section 185(1A) of the Land Title Act 1994 (Qld) which denies indefeasibility to the bank where the mortgage was not executed by the registered proprietor.
The court also found that the bank had no equitable mortgage arising from the delivery of the certificate of title to the bank because it was delivered without the wife’s authority.
The court ordered the mortgages be removed from the register under section 187. The court refused to import any condition attaching to their removal which encumbered the wife’s interest in the home, because there was no legal basis to do so when the bank had no indefeasible title.