JUDGMENT OF THE COURT

The appeal is dismissed with costs to the respondent of $15,000 together with reasonable disbursements to be fixed, if necessary, by the Registrar.

REASONS
(Given by Blanchard J)
Introduction
[1]       Dollars & Sense Finance Ltd (D & S), an Auckland-based finance company, agreed to lend Rodney Nathan $245,000 to assist him to purchase shares in a business. One of D & S’s conditions of loan was that Rodney’s parents should provide security for Rodney’s liability to repay that loan by executing a memorandum of mortgage to D & S over the parents’ jointly owned residential property at Kerikeri. The Auckland solicitor for D & S, Mr Thomas, arranged delivery to Rodney in Whangarei of a package containing the documents for Mr and Mrs Nathan to sign. Mr Thomas seems to have believed at that time that both of them lived in Kerikeri. In fact, they had been separated for many years and Mrs Nathan lived in Gisborne. Rodney procured his father’s signature on the documents, including the mortgage, but, knowing that his mother, the respondent Rerekohu Nathan, was unlikely to agree to give the mortgage, he forged her signature.
[2]       Rodney sent the documents, executed but unwitnessed, back to Mr Thomas. Mr Thomas returned them to Rodney for the witnessing to be done. Rodney arranged for a female friend to sign the documents as witness (or at least in the case of Mrs Nathan, an apparent witness) and in that condition Mr Thomas received the documentation again along with the duplicate certificate of title which Rodney, at the request of Mr Thomas, had uplifted from his father. Mr Thomas, who was at all relevant times unaware of the forgery, made no investigation of the circumstances of the “witnessing”. He proceeded to register the memorandum of mortgage under the Land Transfer Act 1952 and the net proceeds of the loan were disbursed.
[3]       When the business failed and Rodney did not meet his repayment obligations, D & S sought to exercise its power of sale. Mr and Mrs Nathan resisted. Mr Nathan alleged that he had been the victim of undue influence or unconscionable conduct which infected the claim of D & S. However, Mr Nathan died before the matter came to trial and his interest in the property was extinguished in favour of Mrs Nathan by way of survivorship.[1] Any need to continue to maintain his defences thus ceased without the questions he raised concerning the conduct of Rodney and D & S ever being determined.
[1]Wright v Gibbons (1949) 78 CLR 313 at p 328 and Hinde, McMorland & Sim, Land Law in New Zealand, (looseleaf),…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Nathan v Dollars & Sense Ltd

Details

AGLC: Nathan v Dollars & Sense Ltd [2008] NZSC 20
Case: [2008] NZSC 20
Decision Date: 8 April 2008

CaseChat Overview and Summary

Dollars & Sense Finance Limited (D&S) appealed against a decision of the Court of Appeal to the Supreme Court of New Zealand, arguing that the Court of Appeal had erred in holding that D&S's registration as mortgagee of a property was defeasible on the basis that Rodney Nathan, son of the property owners, had committed fraud in forging his mother's signature on the mortgage documentation. Rodney had been acting as an agent for D&S in obtaining signatures on the mortgage documentation. The Supreme Court dismissed the appeal. Rodney's forgery was within the scope of his agency for D&S, which meant that D&S bore responsibility for the fraud. The forgery was a material part of enabling D&S to become registered as mortgagee, and by registering the forged document D&S obtained the status of legal mortgagee. D&S sought to retain that advantage by means of retaining its registration and exercising a power of sale under the mortgage. The Supreme Court held that where a third party was affected by the agent's forgery, a principal should not be allowed to deny the agency in order to take the benefit of the registration of the forged document.

Orders