Cass Comm Ltd v Dominick & Anor [2000] QDC 191

DISTRICT COURT OF QUEENSLAND [2000] QDC 191 PARTIES: CASS COMM LIMITED (Applicant) v. BRETT CHARLES DOMINICK (First Respondent) and LEANNE DOMINICK (Second Respondent) BRETT CHARLES DOMINICK AND LEANNE DOMINICK (Applicant) v. CASS COMM LIMITED (Respondent) FILE NO/S: Application No. 86 of 2000 DIVISION: Chamber application DELIVERED ON: 24 May 2000 DELIVERED AT: Maroochydore HEARING DATE: 15 May 2000 JUDGE: K S Dodds DCJ ORDER: Order in terms of paragraph 1 and 2 of the application of Cass Comm Limited. Order the application of Brett Charles Dominick and Leanne Dominick filed on 10 May 2000 be dismissed. Order Brett Charles Dominick and Leanne Dominick pay the costs of Cass Comm Limited of and incidental to both applications to be assessed. CATCHWORDS: TORRENS SYSTEM - FRAUD – appct holder of registered mtge obtained by fraud – appct not party to fraud – sought orders for possession of mtged land – resp sought orders that mtge was nullity – wh indefeasible title acquired by registration of forged mtge COUNSEL: A E Lyons for the applicant P W Hackett for the respondent SOLICITORS: Messrs Astills Solicitors for the applicant Thompson McNichol Lawyers for the respondent -- 1 of 6 -- 2 [1] In this matter there were two applications. The first in point of time was an application by Cass Comm Limited for: ß a declaration that Cass Comm Limited is entitled to possession of land, Lot 91 on Crown Plan B9603 County Canning Parish Bribie, being the land the subject of Bill of Mortgage registered number 702766266 (the mortgaged land). ß an order that Cass Comm Limited recover from Brett Charles Dominick and Leanne Dominick (the Dominicks) an/or that the Dominicks deliver up to it possession of the mortgaged land. [2] The second in point of time was an application by the Dominicks for: ß a declaration that registered bill of mortgage 702766266 over the mortgaged land is a nullity. ß a declaration that the Dominicks interest in the mortgaged land is not affected by the said registered bill of mortgage. ß an order directing the Registrar of Titles to cancel the entry on the title deed for the mortgaged land in respect of the said mortgage. [3] The mortgaged land is owned by the Dominicks. They are the registered proprietors of it. A dwelling house is erected upon it. [4] Cass Comm Limited is the holder of a registered mortgage of the mortgaged land. The Dominicks are the purported mortgagors. The mortgage was executed by the purported mortgagors on 25 May 1998. The money secured by the mortgage ($122000) was drawn down on 2 June 1998. The mortgage was registered on 3 July 1998. There has been default under the mortgage in that moneys due have not been repaid since June 1999. Failure to pay the moneys due under the mortgage is an event of default under the mortgage (Clause 17.2 of the mortgage terms). Clause 17.6 of the mortgage empowers the mortgagee at any time following the occurrence of an event of default to enter, seize, take possession of, manage and use the mortgaged property. -- 2 of 6 -- 3 [5] For the purposes of the application, it may be accepted that the mortgage is a forgery. The Dominicks swear they did not sign it or any of the other documents executed at about the same time. Their purported signatures and the signature of the witness to the signatures were apparently forged by the brother of Brett Charles Dominick. He has been sentenced to imprisonment for that forgery and for the fraud involved in obtaining the money secured by the mortgage. [6] Although Cass Comm Limited became mortgagee by an assignment of the mortgage from another company, Advance Investment Finance No.2 Pty Ltd, it is not in the position of a subsequent purchaser for value. Provision of the money secured by the mortgage, the execution of the mortgage to Advance Investment Finance No.2 Pty Ltd and the assignment of that mortgage to Cass Comm Limited, all occurred in the one transaction. [7] On or about 26 November 1999, notice of exercise of power of sale was sent to each of Brett Charles Dominick and Leanne Dominick by prepaid registered post. By letter dated 22 February 2000, demand was made of Brett Charles Dominick and Leanne Dominick that they deliver up possession of the mortgaged land to Cass Comm Limited. They have not done so. [8] Section 72 of the Land Title Act 1994 (the Act) provides that a lot or an interest in a lot may be mortgaged by registering an instrument of mortgage for the lot or interest. Section 73(1)(a) provides that an instrument of mortgage must “be validly executed”. Section 74 provides that a registered mortgage of a lot or an interest in a lot operates only as a charge on the lot or interest for the debt or liability secured by the mortgage. Section 78 sets out the powers and liabilities of a registered mortgagee. One such power is to obtain possession of a mortgaged lot by a proceeding in a court of competent jurisdiction: section 78(2)(c)(i). [9] Sections 184 and 185 of the Act deal with matters of indefeasibility. Section 184(1) provides: “A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests”. There is an exception in the case of fraud by the registered proprietor: section 184(3)(b). No suggestion of fraud by Cass Comm Limited, or any agent for it, is made. -- 3 of 6 -- 4 [10] Section 185 of the Act provides for exceptions to the benefit of section 184(1). None apply here. [11] Cass Comm Limited submitted that it was the registered proprietor of an interest in the mortgaged land. That title was indefeasible so long as it was not a party to the forgery or the uttering of the forged documents. The Dominicks submitted that since their signatures on the mortgage and on the deed of assignment were forgeries the mortgage and the assignment were nullities. Cass Comm Limited could not obtain an indefeasible title by its registration of a purported mortgage which was a nullity. [12] In Breskvar v. Wall (1971) 126 CLR 376, Barwick CJ said at 385: “So long as the certificate is unamended it is conclusive and of course when amended it is conclusive of the new particulars it contains. The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formally had or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor. Consequently a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the course or reason for which the instrument is void. The affirmation by the Privy Council in Frazer v. Walker (1967) 1 AC 569 of the decision of the Supreme Court of New Zealand in Boyd v. Mayer etc of Wellington (1924) NZLR 1174 now places that conclusion beyond question”. -- 4 of 6 -- 5 [13] Windeyer J concurred. At 400, he said “the doctrine of indefeasible title arising by registration was seen as the very essence of the Torrens system from its beginning. In the present case the decision of the Privy Council in Frazer v. Walker recognises that the registered proprietor has the legal property in the land subject only to equities and such interests as the Act expressly preserves”. Owen J also concurred with the judgment of the Chief Justice. Menzies J at 397 said: “It must now be recognised that in the absence of fraud on the part of a transferee or some other statutory ground of exception, an indefeasible title can be acquired by virtue of a void transfer”. [14] In Vassos v. State Bank South Australia (1993) 2 VR 316, the factual situation was somewhat similar to the present case. Signatures of two of the tenants in common of Torrens system land were forged on a mortgage and guarantee by the third tenant in common. A substantial sum of money was obtained. The mortgage was over the land owned by the three tenants in common. The mortgagee was not a party to the fraud and registered the mortgage. The two innocent tenants in common brought proceedings for a declaration that the mortgagee’s title was defeated by the forged mortgage. Hayne J held that the title that the mortgagee obtained on registration of the forged mortgage could not be defeated on the ground of fraud if the mortgagee was not a party or privy to that fraud. Unless the mortgagee has engaged in the fraud, the mortgagee acquired an indefeasible title by registration. [15] In Grgic v. Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, the son of the owner of Torrens system land and the son’s wife were in possession of the title deed to the land. They went to the bank with a person impersonating the owner of the land. There bank officers witnessed the forged signature of the owner of the land to a mortgage and certified the dealing correct for registration for the purposes of the Real Property Act 1900 (NSW). It was held that the attestation and certification by the bank officers did not amount to fraud for the purposes of section 42 of the Act. At 222 in the judgment of Powell JA, His Honour said “a person who presents for registration a document which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he honestly believes it to be a genuine document which can be properly acted upon”. -- 5 of 6 -- 6 [16] Counsel for the Dominicks referred me to Sykes EI & Walker S, The Law of Securities 5th ed The Law Book Company Limited, Sydney, 1993 at p298-99 where the author discusses forgery and its effect on the indefeasibility of the register where registration is achieved by forged documentation. Reference is made to Gibbs v. Messer (1891) AC 248 and Clements v. Ellis (1934) 51 CLR 217. [17] The author goes on in the following pages to discuss the later decisions of Breskvar v. Wall and Frazer v. Walker and recognises that those two decisions have over taken Gibbs v. Messer and Clements v. Ellis. The author refers also to Chasfild Pty Ltd v. Taranto (1991) 1 VR 225 where Gray J considered that the Victorian act provided for an exception to the principle in Breskvar v. Wall in the case of fraud. In Vassos, Hayne J considered this view was not correct. [18] Despite that it appears the signatures of the Dominicks on the mortgage were a forgery and that it appears their signatures on the deed of assignment were also a forgery making the assignment a nullity, it seems to me that I am bound to hold that Cass Comm Limited has acquired the status of a registered proprietor of the mortgaged land by registration of the mortgage. There is no suggestion it was involved in the forgery or the uttering of the mortgage documents. [19] Order in terms of paragraphs 1 and 2 of the application of Cass Comm Limited. Order the application of Brett Charles Dominick and Leanne Dominick filed on 10 May 2000 be dismissed. Order Brett Charles Dominick and Leanne Dominick pay the costs of Cass Comm Limited of and incidental to both applications to be assessed. -- 6 of 6 --