In this case a financier loaned monies to a borrower secured on property that he jointly owned with another person. The borrower forged the signature of his co-owner and so when the loan went into default the financier sought orders an order pursuant to s 66G of the Conveyancing Act 1919. This section allows for the appointment of trustees for the sale of land and an order vesting the land in the trustees for sale.
The court noted that in a situation where there is a mortgage purportedly signed by husband and wife but with the wife’s signature forged by the husband, the mortgagee nevertheless obtains an equitable mortgage of the husband’s aliquot share an equitable mortgage over the borrower’s share. The court accordingly made an:
- declaration that the borrower granted an equitable mortgage to the lender over the land;
- declaration that the lender is a “co-owner” of the land within the meaning of s 66F of the Conveyancing Act 1919;
- order trustees be appointed trustees to the land pursuant to s 66G of the Conveyancing Act 1919;
- order that the land be vested in such trustees subject to any encumbrances affecting the entirety of the land
- order that the costs and expenses of the sale of the land be met out of the proceeds of sale of the land.
- order that the costs of the lenders costs be paid out of the share of the borrower
- order that the co-owner’s costs be paid out of the proceeds of the sale of the land but without directing out of what portion of the proceeds of the land those costs should be borne.
Order 7 was unusual and was presumably made because the borrower was not in court to argue the issue. However it puts the trustees in an awkward position and courts are not supposed to put trustees in ambiguous positions. Presumably, at great cost, the trustees will seek the guidance of the court.