Perpetual v Barghachoun [2010] NSWSC 108

In this case the borrower alleged that any signature purporting to be his on the loan agreement and mortgage was a forgery or had been obtained by fraud. In addition, the borrower alleged that while he was in Westmead Hospital recovering from an operation an agent of the lender attended his hospital bed with a co-debtor who may at that time have procured the signatures on the mortgage and loan. However, the representations alleged to have been made at that time would not have put the lender on notice that something was amiss.

The Court granted summary judgment against the borrower on the grounds that had there been a forgery, indefeasibility would apply. Thus, the mortgage bound the land even if everything the borrower said was true. However, the loan would not bind the borrower in his personal capacity if the fraud did occur. Accordingly, judgment for possession was entered, but judgment for a monetary amount was not. If the borrower was truly defrauded he could now seek compensation under the Torrens Assurance Fund.

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