Southage v Vescovi [2014] VSC 141

The husband forged the wife’s signature on a mortgage over an investment property owned by the wife.

For reasons unexplained the lender waited two years to register its mortgage. When it tried to the wife obtained an injunction. Had the mortgage been registered and properly drafted the lender would have been able to enforce its security and the wife would have been entitled to compensation from the Torrens Assurance Fund.

The lender conceded the documents were forged following uncontested evidence given by a solicitor that a certificate, allegedly signed by him as confirmation that he had given advice to the wife about the mortgage and had witnessed her signature, was itself a fabrication by some other unidentified person.

As a consequence, the lender further conceded:

  1. first, its claim for an order that the Registrar of Titles register the Williamstown mortgage must fail;

  2. secondly, Ms Vescovi’s claim for a permanent injunction must succeed; and

  3. thirdly, its claim for recovery of the $285,000 under the mortgage (or associated loan documentation) must fail.

Part of the money stolen from the lender by the husband was used as a deposit on the family home which was registered in the wife’s name. The lender sought to claw back at least that from the wife on the grounds of unjust enrichment.

The wife argued that all changes to her position were made on the faith of receipt of the deposit. That was because she only agreed to be nominated purchaser on the contract to buy the family home on the basis of a belief that a deposit had been paid from the financial resources of her husband. As a result, accepting the mortgage, taking the transfer, paying the price and fees, occupying the house, and ultimately selling it, were all consequential steps taken ‘on faith of the receipt’.

The court found for the wife commenting:

By the time the wife came to know that the stolen money had funded most of the deposit on her home, she no longer retained any of the value inherent from it. Ultimately, the wife changed her position by disposing of the very asset in which the value of the loan had been invested, receiving nothing in return. By the time it came to her attention that the loan had funded the deposit, the retained ‘value’ was nothing more than a memory of having owned and lived in the property…. Given that she did not retain any benefit from the loan when first informed the lender had funded the deposit, is it just that the wife be ordered to make restitution for having once received it? In my opinion, in all the circumstances of this case, the answer is no.

Click here to read the full judgment

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