Westpac Banking Corporation v Clark - [2008] NZCA 346

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA172/06
[2008] NZCA 346
BETWEENWESTPAC BANKING CORPORATION

Appellant

ANDALAN JOHN CLARK

Respondent

Hearing:29 May 2007 and 9 April 2008

Court:Glazebrook, Robertson and Arnold JJ
Counsel:M M B van Ryn and M V Robinson (on 29 May 2007) and

R B Stewart QC and M V Robinson (on 9 April 2008) for Appellant
A C Challis for Respondent

Judgment:5 September 2008 at 10.00 am

JUDGMENT OF THE COURT

A The appeal is dismissed.
BThere are no costs orders.

____________________________________________________________________
REASONS OF THE COURT
(Given by Glazebrook J)
Table of Contents
Para No

Introduction  [1]
Issues  [7]
Are Westpac’s lending practices relevant?  [12]
Did Westpac contribute to its loss by alerting the Registrar
as to possible fraud?  [16]
Could the Registrar have refused to register the mortgage
had it been presented earlier?  [19]
Would Westpac have enforced its mortgage?  [21]

Was there any amount secured by the mortgage?   [25]
Should we accept the Scott thesis?  [29]
The Australian decisions  [33]
Commentaries on the Australian decisions  [39]
Were the terms of the forged loan agreement incorporated
into the mortgage?  [44]
TERMS OF “FENECH” MORTGAGE AND LOAN AGREEMENT                  [45]
WAS THE LOAN AGREEMENT INCORPORATED?  [54]
WERE THE AUSTRALIAN CASES WRONGLY DECIDED ON THIS
POINT?  [63]

Does the LTA deem the loan agreement terms to be incorporated
into the mortgage?  [67]
Is there a valid distinction between a fixed sum mortgage and
an “all obligations” mortgage regarding reference to
outside sources?  [75]
Would the policy of the LTA as to compensation be overridden?         [77]
Are there policy reasons for not applying the Australian cases?         [84]
Summary  [90]

Result and costs  [91]
Introduction
[1]       Westpac agreed to lend $180,400 to a person calling herself Marie Antoinette Fenech on the security of a mortgage over a Remuera property purportedly owned by her. “Ms Fenech” instructed Mr Clark to act for her and Mr Clark was also instructed to act as Westpac’s solicitor on the transaction. “Ms Fenech” was not an existing client of Mr Clark’s.
[2]       Mr Clark arranged execution of the mortgage and accompanying loan agreement by “Ms Fenech” and, after satisfying himself of her identity from her passport, witnessed her signature on the mortgage. He also arranged all the usual searches of the title of the Remuera property. The search of the title showed that the property was registered in the name of Marie Antoinette Fenech. Mr Clark also received from “Ms Fenech” a Tower certificate of insurance showing Marie Antoinette Fenech as the insured and Westpac as the first mortgagee.
[3]       On 30 September 2005, Mr Clark provided a solicitor’s certificate and undertaking to Westpac. Relevantly for this appeal, he undertook to lodge the mortgage for registration “promptly”. Westpac advanced the money to “Ms Fenech” on 4 October 2005 in reliance on Mr Clark’s certificate and undertakings. “Ms Fenech” has made no payments of either interest or principal on the loan.
[4]       Mr Clark took…

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.

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Details

Case: [2008] NZCA 346
Decision Date: 5 September 2008

CaseChat Overview and Summary

Westpac Banking Corporation sought an appeal against a decision of Associate Judge Christiansen refusing summary judgment. Westpac sought summary judgment against Mr Alan John Clark for breach of an undertaking to register a mortgage over a Remuera property. Westpac claimed to have advanced money to a person calling herself Marie Antoinette Fenech, secured by the mortgage. Mr Clark was instructed to act as Westpac’s solicitor on the transaction. Westpac claimed that Mr Clark failed to register the mortgage promptly, which meant Westpac was not able to rely on the doctrine of indefeasibility of title and thus had no enforceable security. The appeal was dismissed. The Court found that Westpac was not entitled to summary judgment because the Associate Judge had identified an issue of causation of loss that required exploration at a full trial. Westpac had not taken adequate steps to prevent fraud in making the loan, but that was not relevant to the appeal. Westpac could not have allowed Mr Clark to attempt to register the mortgage without alerting the Registrar to the possibility of fraud. The Registrar would not have refused to register the mortgage had it been presented earlier. Westpac would have enforced its mortgage, and the true registered proprietor would have been entitled to compensation. Westpac’s argument that the mortgage secured nothing was rejected because the terms of the loan agreement were not incorporated into the mortgage. The Australian cases were wrongly decided on this point. The Land Transfer Act 1952 did not deem the loan agreement terms to be incorporated into the mortgage. The Court rejected Westpac’s submission that there was no valid distinction between a fixed sum mortgage and an “all obligations” mortgage. Westpac’s submission that the policy of the LTA as to compensation be overridden was also rejected. There were no policy reasons for not applying the Australian cases in New Zealand.

Orders