Perpetual Trustees Victoria v English [2009] NSWSC 478

The husband forged the wife’s signature. The Court had to decide whether or not the lender would succeed by virtue of the indefeasibility of title or fail completely. Justice Simpson undertook a very thorough examination of the law, which will be very useful in future cases. In summary, he noted that there were two tests. Firstly, did the lender foolishly use an “all monies” mortgage, if not, then success was assured.

Where the amount of the debt is specified in the body of the mortgage (or in a document expressly incorporated in the mortgage), then s 42 confers indefeasibility, even where the “debt” arises from a forgery.

If the lender did foolishly use an “all monies” mortgage, there is still some hope of salvation if one of the co-owners genuinely signed the mortgage. However, this depends on the drafting of the mortgage:

Each case must be determined in the light of its own contractual provisions, it seems to me that the trend is to impose a strict level of proof on the mortgagee to establish that the mortgage is to be seen as security for a debt created by a forgery. If it can, then indefeasibility follows.

Sadly, for the lender in this case, the mortgage was extremely poorly drafted, and it failed. Bransgroves Lawyers continually warns lenders not to use all monies mortgages. However despite the raft of recent cases Perpetual Trustees Victoria Limited v Tsai [2004], Printy v Provident Capital Limited [2007], Chandra v Perpetual Trustees Victoria Ltd [2007], Yazgi v Permanent Custodians Limited [2007], Perpetual Limited v Costa [2007], Perpetual Trustees Victoria Limited v Ford [2008], Perpetual Trustees Victoria Ltd v Van den Heuvel [2008], Vella v Permanent Mortgages [2008], Provident Capital v Printy [2008] CA, Perpetual Trustees Australia v Richards [2008], Australian Regional Credit v Mula [2009], Perpetual Trustees Victoria v Ann-Marie Menzies [2009] lenders continue to use them.

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