PATELIS v SANDER

The appeal in Patelis v Sander concerns the interpretation of a section of the Real Property Act 1886 (SA), specifically section 69, and the subsequent indefeasible title of a registered proprietor of land. The appellant, who was a victim of forgery, sought to strike out a particular paragraph of the respondent’s defence, which argued that the appellant had broken the chain of causation by selling the mortgaged properties. The District Court Master declined the appellant’s application, and the appellant now appeals this decision. The central legal issue revolves around the interpretation of section 69 of the Act, and whether the registration of a forged mortgage confers an indefeasible title on the lender as an innocent third party.

The court considered whether the Master erred in his application of the test for striking out pleadings. The court found that the Master correctly applied the test, which is whether the pleading disclosed no reasonable ground of defence and whether the contentions of the defendant were arguable. The court also examined the Master’s consideration of the relevant authorities and concluded that the Master did not err in his analysis of the conflict between the South Australian and Federal Court decisions on the interpretation of section 69. The court found that the Master’s conclusion that the defendant’s arguments were genuinely arguable was not erroneous. However, the court did find an error in the Master’s finding that the appellant had pleaded that she relied on legal advice before selling the properties, as this was not pleaded in the statement of claim. The court held that the Master’s finding was based on an inference that was not the only, or even the most likely inference available on the facts.

The court allowed the appeal on the narrow ground that the Master erred in finding that the appellant had pleaded reliance on legal advice. The court did not find any other errors in the Master’s decision and held that the defendant’s position was reasonably arguable. The court noted that any matters currently unpleaded could be addressed in supplementary pleadings. The court did not make any orders as to costs.