The guarantor claimed she had not signed the mortgage or guarantee. The lender retorted that if the mortgage was forged, the guarantor had nonetheless obtained the benefit of the money through the discharge of an earlier mortgage. The guarantor claimed that that earlier mortgage had also been forged.
Ultimately the Court concluded both mortgages had been forged. However, by virtue of s42 Real Property Act the lender obtained indefeasibility of mortgage title. Nevertheless the question arose as to what the mortgage secured given the deed of guarantee was also forged. The lender was ultimately successful because although the mortgage was an all monies mortgage it secured the obligations of the borrower pursuant to a facility agreement. As the borrower had executed the facility deed pursuant to which the money was loaned, the mortgage secured the full sum owing by the borrower. Had the mortgage stated that it secured all monies owing by the mortgagor or all monies owing under the guarantee only, then the lender would have failed.