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Tycho Pty Ltd v Trustworthy Nominees Pty Ltd[2021] QSC 95

Tycho Pty Ltd v Trustworthy Nominees Pty Ltd[2021] QSC 95

SUPREME COURT OF QUEENSLAND

CITATION:

Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors [2021] QSC 95

PARTIES:

TYCHO PTY LTD ACN 010 154 944

(first plaintiff)

RAYMOND LESLIE VINCENT

(second plaintiff)

v

TRUSTWORTHY NOMINEES PTY LTD

ACN 005 092 624

(first defendant)

REGISTRAR OF TITLES

(second defendant)

STATE OF QUEENSLAND

(third defendant)

TYCHO PTY LTD ACN 010 154 944

(first defendant by counterclaim)

COLLECT 2 PTY LTD ACN 609 158 607

(second defendant by counterclaim)

MARK MADAFFERI

(third defendant by counterclaim)

MICHAEL AJZENSZTAT and MYER JERUZALSKI

(trading as AJZENSZTAT JERUZALSKI & CO)

(first third party)

FRASER LAWYERS PTY LTD ACN 165 251 543

(second third party)

FILE NO/S:

BS No 1546 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

7 May 2021

DELIVERED AT:

Brisbane

HEARING DATE:

19 April 2021

JUDGE:

Davis J

ORDERS:

  1. Declarations are made against the first defendant that:
  1. (a)
    each of the documents pleaded in paragraphs 21(a) to (g) and (i) to (m) of the amended statement of claim filed on 3 April 2018 are void and of no force or effect;
  1. (b)
    the signature on the mortgage having dealing number 718071834 purporting to be that of the second plaintiff (for the first plaintiff);
  1. (i)
    is not the signature of the second plaintiff; and
  1. (ii)
    was not signed by a person with the authority of either the first plaintiff or the second plaintiff to do so;
  1. (c)
    the first plaintiff did not execute the mortgage.
  1. The second defendant cancel the mortgage having dealing number 718071834 registered on the title to each of the following lots:
  1. (a)
    lot 3 on Registered Plan 170920, Title Reference 16137223; and
  1. (b)
    lots 1 to 22 on Group Titles Plan 2987, Title Reference 18327029 to 18327050 respectively.
  1. The claim against the third defendant is dismissed.
  2. Neither the third defendant by counterclaim nor the first third party are bound by the judgment given in favour of the plaintiffs against the first and second defendants.
  3. The first defendant pay the plaintiffs’ costs, including any reserved costs, of the proceeding including the application.
  4. Otherwise, there be no orders as to costs.

CATCHWORDS:

REAL PROPERTY – TORRENS TITLE – INDEFEASIBILITY OF TITLE – EXCEPTIONS TO INDEFEASIBILITY – FRAUD OR FORGERY – AGAINST REGISTERED PROPRIETOR – where the first plaintiff, Tycho Pty Ltd (Tycho), and the second plaintiff, Raymond Leslie Vincent (Mr Vincent), seek summary judgment against the first defendant, Trustworthy Nominees Pty Ltd (Trustworthy), and the second defendant, the Registrar of Titles – where Mr Vincent is the sole director of Tycho – where Tycho is the registered proprietor of 23 lots of land at Maryvale near Warrick – where, in May 2017, Tycho entered into contracts with Irongrown Corporation Pty Ltd (Irongrown) to sell the land in Maryvale – where there exists a document purporting to be a mortgage by Tycho encumbering 21 of the 23 lots to Trusthworthy – where Mr Vincent denies signing the purported mortgage – where the plaintiffs and defendants conceded that the mortgage is a forgery – where fraud is an exception to indefeasibility  except where registration is obtained by an innocent third party – where AJ Lawyers, the first third party, and Mark Madafferi (Mr Madafferi), the third defendant by counterclaim, seek exemption from being bound by any determination as between Tycho and Trustworthy as to the validity of the mortgage – where AJ Lawyers and Mr Madafferi submit that, if the mortgage is found to be a forgery, then an issue estoppel may arise and seek orders preventing that occurring – where Tycho seeks orders requiring the Registrar of Titles to correct the register and remove the mortgage – where, in the alternative, Tycho seeks compensation from the third defendant, the State of Queensland, if the mortgage is not removed from the register – whether the purported mortgage is a forgery – whether Trustworthy breached s 11A(2) of the Land Title Act 1994

Evidence Act 1977, s 92

Land Title Act 1994, s 11A, s 184, s 185, s 187

Supreme Court Rules, O 18, O 18A, O 19

Uniform Civil Procedure Rules 1999, r 204, r 292, r 293, r 295, r 430, r 658

Agar v Hyde (2000) 201 CLR 552, followed

Blair v Curran (1939) 62 CLR 464, cited

Breskvar v Wall (1971) 6 CLR 376, followed

Deputy Commissioner of Taxation v Ahern (No 2) [1998] 2 Qd R 158, followed

Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, followed

Dey v Victorian Railways Commissioners (1949) 78 CLR 62, followed

Financial Wisdom Ltd v Newman (2005) VR 72, cited

Frazer v Walker [1967] 1 AC 569, followed

General Steel Industries Inc v Commissioner for Railways

(NSW) (1964) 1 CLR 5, followed

Gray v Morris [2004] 2 Qd R 118, followed

Kuligowski v Metrobus (2004) 220 CLR 363, cited

Pilcher v Rawlins (1872) LR 7, Ch App 259, cited

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, cited

R v Darby (1982) 148 CLR 668, cited

Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5, cited

COUNSEL:

G Dietz for the plaintiffs and the first defendant by counterclaim

C Van der List for the first defendant

D D Keane for the second and third defendants

P Ahern for the third defendant by counterclaim

S R Lumb for the first third party

G W Stirling for the second third party

No appearance by the second defendant by counterclaim

SOLICITORS:

Moore Lawyers for the plaintiffs and the first defendant by counterclaim

Cooper Grace Ward for the first defendant

G R Cooper Crown Solicitor for the second and third defendants

Christopher William Legal for the third defendant by counterclaim

King & Wood Mallesons for the first third party

Carter Newell Lawyers for the second third party

No appearance by the second defendant by counterclaim

  1. [2]
    The plaintiffs apply for summary judgment against the first and second defendants in proceedings that also now involve three defendants by counterclaim and two third parties.

Background

  1. [2]
    Tycho Pty Ltd (Tycho), the first plaintiff, is a company whose sole director is Raymond Leslie Vincent, the second plaintiff.  Tycho is the registered proprietor of 23 lots of land at Maryvale near Warwick.  A tourist business operates from the land. The land was legitimately encumbered by way of mortgage to the Commonwealth Bank.
  1. [3]
    In May 2017, Tycho entered into contracts with Irongrow Corporation Pty Ltd (Irongrow) to sell the land.  By terms of the contract, a deposit of $256,500 was released to Tycho and was paid to the Commonwealth Bank to clear the mortgage.
  2. [4]
    A document exists purporting to be a mortgage by Tycho of 21 of the 23 lots which purports to encumber the land to Trustworthy Nominees Pty Ltd (Trustworthy), the first defendant.  That document came into existence on about 10 May 2017.
  3. [5]
    The purported mortgage bears a signature above the typed words “Mortgagor’s signature”.  There is no name written below or near that signature which might identify who wrote it.  That signature, though, purports to be witnessed by Mark Adam Freer described as “Commissioner for taking affidavits in the Supreme Court of South Australia”.  Mr Freer is a retired solicitor.
  1. [6]
    Mr Freer swore a statutory declaration in which he explained that the signature of the witness is in fact his signature.  He explains in his statutory declaration that there was suspicious activity by persons known to him as Buckby, Oxlade, Warmings and some others.  The circumstances under which the mortgage was signed and witnessed by him are described in the statutory declaration as follows:

“18.  On the 10th May 2017, and 17th May 2017, a man I know and ‘ANDY’ who is OXLADES administrative assistant contacted me and said the documents were ready. I met ANDY and signed the documents given to me. These documents were the VINCENT loan agreement and other associated documents.

  1. I have never met VINCENT, nor have I spoken to him and he was not in my presence at any stage with the documents.
  2. Once the loan documents were signed, ANDY took them from me and flew to Melbourne where he hand delivered them to the lawyers for the lender. OXLADE paid for this flight.”
  1. [7]
    Mr Madafferi, the third defendant by counterclaim, takes objection to the admission into evidence before me of Mr Freer’s statement.  I will return to that issue shortly.
  2. [8]
    Mr Vincent who, as previously observed, is the sole director of Tycho, denies signing the purported mortgage.  Expert handwriting evidence suggests the signature is not his and therefore corroborates his denial.
  3. [9]
    On the strength of the purported mortgage, Trustworthy advanced money to Irongrow, Collect 2 Pty Ltd (the second defendant by counterclaim) and Mark Madafferi (the third defendant by counterclaim).
  4. [10]
    As against the Registrar of Titles (the second defendant), Tycho seeks orders correcting the register and removing the mortgage.  As against the State of Queensland (the third defendant), Tycho seeks compensation if the mortgage is not removed from the register.[1]
  5. [11]
    Both of the third parties are firms of solicitors.  It is alleged by Trustworthy that it instructed Ajzensztat Jeruzalski & Co (AJ Lawyers), the first third party, to prepare loan and security documents to advance sums to Tycho and secure the loan over the land.  Fraser Lawyers, the second third party, seemingly acted as agents for AJ Lawyers.  It is alleged that if Trustworthy did not obtain a mortgage supported by the protection of indefeasibility which registration gains, then the lawyers are to blame.  
  6. [12]
    There are extensive pleadings but it is unnecessary to descend to any further detail.  As between the plaintiffs and defendants, it is common ground that the mortgage is a forgery.  In the ordinary course, Irongrow would obtain funds to purchase the land and the financier would advance the money and take a mortgage over the land to secure the advance.  Here, it appears that rogues have defrauded Trustworthy by fraudulently securing an advance purportedly to Tycho on the security of the purported mortgage and then dissipating those funds.  As is usually the case where a rogue has intervened, one party must bear the loss.  Here, that will be either Tycho or Trustworthy, unless Trustworthy can defray the losses onto other parties.  
  7. [13]
    Tycho brings an application for summary judgment.  There is no opposition to that application by the first defendant.  The Registrar of Titles does not oppose orders correcting the register.
  8. [14]
    The State of Queensland is only sued in the alternative to the principal relief sought against Trustworthy and the Registrar.  If the mortgage falls, then the State is effectively released from the proceedings and does not seek costs.  
  9. [15]
    The real dispute is between the first defendant and the defendants by counterclaim and the third parties.  However, the first third party (AJ Lawyers) and the third defendant by counterclaim (Mark Madafferi) do not wish to be bound by any determination as between Tycho and Trustworthy that the mortgage is a forgery.

The issue estoppel point

  1. [16]
    Ms Ahern of Counsel, who appeared for Mr Madafferi, sought an order that her client was not bound by any judgment given in favour of the plaintiffs.  As part of that submission, she objected to the admission into evidence of Mr Freer’s statutory declaration.  Mr Freer did not swear an affidavit in the proceedings.  As later explained, Mr Freer’s statutory declaration is exhibited to an affidavit of Mr Vincent which is read on the current application.
  2. [17]
    Mr Freer’s statutory declaration is clearly a statement for the purposes of s 92 of the Evidence Act 1977 and is therefore, prima facie, admissible.  Section 92 provides:

“92  Admissibility of documentary evidence as to facts in issue

  1. (1)
    In any proceeding (not being a criminal proceeding) where direct oral evidence of a fact would be admissible, any statement contained in a document and tending to establish that fact shall, subject to this part, be admissible as evidence of that fact if—
  1. (a)
    the maker of the statement had personal knowledge of the matters dealt with by the statement, and is called as a witness in the proceeding; or
  2. (b)
    the document is or forms part of a record relating to any undertaking and made in the course of that undertaking from information supplied (whether directly or indirectly) by persons who had, or may reasonably be supposed to have had, personal knowledge of the matters dealt with in the information they supplied, and the person who supplied the information recorded in the statement in question is called as a witness in the proceeding.
  1. (2)
    The condition in subsection (1) that the maker of the statement or the person who supplied the information, as the case may be, be called as a witness need not be satisfied where—
    1. (a)
      the maker or supplier is dead, or unfit by reason of bodily or mental condition to attend as a witness; or
    2. (b)
      the maker or supplier is out of the State and it is not reasonably practicable to secure the attendance of the maker or supplier; or
    3. (c)
      the maker or supplier can not with reasonable diligence be found or identified; or
    4. (d)
      it can not reasonably be supposed (having regard to the time which has elapsed since the maker or supplier made the statement, or supplied the information, and to all the circumstances) that the maker or supplier would have any recollection of the matters dealt with by the statement the maker made or in the information the supplier supplied; or
    5. (e)
      no party to the proceeding who would have the right to cross-examine the maker or supplier requires the maker or supplier being called as a witness; or
    6. (f)
      at any stage of the proceeding it appears to the court that, having regard to all the circumstances of the case, undue delay or expense would be caused by calling the maker or supplier as a witness.
  2. (3)
    The court may act on hearsay evidence for the purpose of deciding any of the matters mentioned in subsection (2)(a), (b), (c), (d) or (f).
  1. (4)
    For the purposes of this part, a statement contained in a document is made by a person if—
    1. (a)
      it was written, made, dictated or otherwise produced by the person; or
    2. (b)
      it was recorded with the person’s knowledge; or
    3. (c)
      it was recorded in the course of and ancillary to a proceeding; or
    4. (d)
      it was recognised by the person as the person’s statement by signing, initialling or otherwise in writing.”
  1. [18]
    The statement is sought to be proved as a statement by Mr Freer through the evidence of Mr Vincent.  Mr Vincent says in his affidavit:

“39.  On 20 July 2017, I was informed by Stokes Moore, and I believe, that they received from Mr Freer a statutory declaration apparently made by Mr Freer in the form of one made under the Oaths Act 1867 (Qld) at Modbury, in the State of South Australia, before Marie Clair Davis, a Justice of the Peace for South Australia (JP #32255). A copy of that statutory declaration, provided to me by Stokes Moore, appears at pages 269 to 272 of the Bundle.

  1. The Statutory Declaration states that:
  1. (a)
    Mr Freer had ceased practice as a solicitor in September 2016;
  2. (b)
    on 10 May 2017 and 17 May 2017, Mr Freer signed a ‘loan agreement and other associated documents’ concerning me in the presence of a person known to Mr Freer as ‘Andy’;
  3. (c)
    Mr Freer was threatened personally if he did not sign the said documents as a witness to my purported signature;
  4. (d)
    Mr Freer had never met, nor spoken with me;
  5. (e)
    I was not in Mr Freer’s presence at any stage with the said documents; and
  6. (f)
    once Mr Freer had signed the said documents, they were taken from him and retained by ‘Andy’.”
  1. [19]
    Mr Ashley John Moore, the plaintiffs’ solicitor, swears that he was a legal practitioner and director of Stokes Moore Pty Ltd.  Stokes Moore were the solicitors for the plaintiffs.  Another legal practitioner and director, Mr James Stokes, had carriage of the transaction between Tycho and Irongrow.  Mr Moore assumed carriage of the litigation on behalf of Tycho and opened a separate litigation file.  He then left Stokes Moore to begin his own practice.
  1. [20]
    In relation to Mr Freer’s statement, Mr Moore swears this:

“10.  I have searched the Litigation File for any records recording communications Stokes Moore had with Mr Freer.  I have located the following documents:

  1. (a)
    an email received by Mr Stokes on 18 July 2017 from Mr Freer;
  2. (b)
    a copy of the Statutory Declaration referred to in paragraph 39 of Mr Vincent’s Affidavit (Statutory Declaration); and
  3. (c)
    an email sent by Mr Stokes to Ms Natasha Ness Wilson (whom I am told by Mr Vincent, and I verily believe, is Mr Vincent’s sister-in-law) on 22 July 2017 at 10.10pm.
  1. On the basis of the fact that those documents were contained on the Original File as having been received and sent by Stokes Moore, I verily believe the contents of those documents to be true.”
  1. [21]
    The application for summary judgment is brought under Part 2 of Chapter 9 of the Uniform Civil Procedure Rules 1999 (UCPR).  Rule 292 provides as follows:

“292 Summary judgment for plaintiff

  1. (1)
    A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
  2. (2)
    If the court is satisfied that—
    1. (a)
      the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
    1. (b)
      there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”

  1. [22]
    Rule 295 is:

“295 Evidence

  1. (1)
    In a proceeding under this part, evidence must be given by affidavit unless the court gives leave.
  2. (2)
    An affidavit may contain statements of information and belief if the person making the affidavit states the sources of the information and the reasons for the belief.
  3. (3)
    A party to an application under this part who intends to rely on a document must—
    1. (a)
      exhibit the document to an affidavit; or
    1. (b)
      identify in an affidavit the provisions relied on to the extent the party is able to identify them.
  4. (4)
    A person who makes an affidavit to be read in an application under this part may not be cross-examined without the leave of the court.”
  1. [23]
    Rule 430, which is not contained in Chapter 9, provides:

“430 Contents of affidavit

  1. (1)
    Except if these rules provide otherwise, an affidavit must be confined to the evidence the person making it could give if giving evidence orally.
  2. (2)
    However, an affidavit for use in an application because of default or otherwise for relief, other than final relief, may contain statements based on information and belief if the person making it states the sources of the information and the grounds for the belief.

Note—

For an application because of default, see chapter 9 (Ending proceedings early), part 1 (Default).

  1. (3)
    On assessment, all or part of the costs of an affidavit not complying with these rules or unnecessarily including copies of or extracts from documents may be disallowed.”
  1. [24]
    In order for a hearsay affidavit to be admissible as to the proof of what is sworn on hearsay, the fact of the belief by the deponent must be sworn as must the sources upon which the belief is founded.  The source material itself must be admissible.[2]  Mr Vincent’s affidavit clearly does not render Mr Freer’s statutory declaration admissible.  There is no evidence from Mr Vincent proving that Mr Freer made the statutory declaration.  He does nothing more than summarise the contents of the document.
  1. [25]
    Mr Moore’s affidavit does swear to material from which it perhaps could be deduced that Mr Freer did make the statutory declaration.  However, much of the declaration itself is in inadmissible form.  Some of it, for instance, is clearly made on hearsay.  Even if it were proved that the document is a statement of Mr Freer, s 92 would not admit hearsay statements by Mr Freer.
  2. [26]
    Even if Mr Freer’s statutory declaration was admissible under s 92 of the Evidence Act, Ms Ahern did not waive the conditions of s 92(1)(a) and the plaintiffs have not sought to prove any of the matters prescribed by s 92(2).
  3. [27]
    Ms Ahern has made out the objection.  As against Mr Madafferi, Mr Freer’s statement is not admissible.
  4. [28]
    However, the plaintiffs and defendants have made tactical decisions that the statement comes into evidence as between them.  
  5. [29]
    Mr Freer’s statement, together with Mr Vincent’s evidence that he did not sign the purported mortgage, and the evidence of the expert handwriting opinion, forms a solid body of evidence upon which it could be concluded that the first defendant has “no real prospect”[3] of avoiding a finding that the purported mortgage is a forgery.  It is also easy to conclude that there “is no need for a trial” of that issue.[4]  Ms Ahern’s and Mr Lumb’s concern is that, if in the proceeding of which their clients are a party (the current application), a finding is made that the purported mortgage is a forgery, an issue estoppel arises preventing them from contesting that fact in the proceedings between Trustworthy and the various defendants by counterclaim and third parties.[5]
  1. [30]
    There is nothing new or novel with evidence being admissible against one party to a proceeding and not another.  If, for instance, a defendant to the proceeding admitted (out of court) forging the document, the person to whom that admission was made could give evidence of the admission.  The admission is admissible against the party making it as an exception to the hearsay rule.[6]  The admission would not be admissible against other parties.  That may contribute to different results in the litigation for different parties.  An extreme example is R v Darby.[7]  It cannot be that an issue estoppel could arise in circumstances like this where Ms Ahern has successfully objected to the evidence upon which findings are then made against another party.
  1. [31]
    Rule 204 of the UCPR provides:

“204 Extent third party bound by judgment between plaintiff and defendant

In a proceeding, the court may make an order or give a direction about the extent to which a third party is bound by a judgment between a plaintiff and a defendant.”

  1. [32]
    Mr Lumb relies on that rule and seeks an order that summary judgment against the defendants does not raise an issue estoppel as against his client.
  2. [33]
    Mr Madafferi is not a third party but is a defendant by counterclaim and there appears to be no rule equivalent to r 204 which applies to him.  Ms Ahern though points to r 658(1).  It is in these terms:

“658 General

  1. (1)
    The court may, at any stage of a proceeding, on the application of a party, make any order, including a judgment, that the nature of the case requires.
  2. (2)
    The court may make the order even if there is no claim for relief extending to the order in the originating process, statement of claim, counterclaim or similar document.”
  1. [34]
    In my view, the rule is wide enough to permit an order that Mr Madafferi is not bound by the judgment given in favour of the plaintiffs against the defendants.  An order should be made because, if Mr Freer’s statutory declaration is excluded from the case against Mr Madafferi, there would be no sufficient basis to summarily decide the issue against him.  A trial is necessary and therefore it would be unjust if he was denied that trial on that issue because other parties were content to have Mr Freer’s statutory declaration admitted in their cases.

Application for summary judgment

  1. [35]
    The UCPR revolutionised civil procedure.  Both the UCPR and its predecessor, the Supreme Court Rules (SCR) provided for the granting of summary judgment.[8]
  1. [36]
    In relation to the regime under the UCPR, two principles have emerged:
    1. (a)
      The words of rr 292 and 293 must be applied.  The defendant must have “no real prospect of successfully defending … the plaintiff’s claim” and “there is no need for a trial” if judgment is to be achieved by a plaintiff.[9]
    2. (b)
      In applying the test, regard must be had to the fact that an order for summary judgment denies the party suffering the order from putting its case and so an order should only be made in the clearest of cases.[10]  This was always the case under the SCR.
  2. [37]
    Here, there are two issues.  The first is whether the purported mortgage is a forgery.  For the reasons already explained, the first defendant has no reasonable prospect of defending that allegation.  Indeed, it does not try to do so.  There is clearly no need for a trial on that issue.
  3. [38]
    The second issue arises under the Land Title Act 1994.  The Land Title Act is the latest legislation enshrining the Torrens system in Queensland.  The common law system, whereby title to land was established through a chain of title leading to the entity ultimately asserting ownership,[11] was abolished in favour of a system of “title by registration”.  It is not a system of “registration of title”.[12]  Fraud is an exception to indefeasibility but the intervening fraud does not affect the title of an innocent third party who obtains registration.[13]  
  4. [39]
    Section 184 encapsulates indefeasibility.  It provides:

“184 Quality of registered interests

  1. (1)
    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.
  2. (2)
    In particular, the registered proprietor—
    1. (a)
      is not affected by actual or constructive notice of an unregistered interest affecting the lot; and
    1. (b)
      is liable to a proceeding for possession of the lot or an interest in the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot.
  3. (3)
    However, subsections (1) and (2) do not apply—
    1. (a)
      to an interest mentioned in section 185; or
    1. (b)
      if there has been fraud by the registered proprietor, whether or not there has been fraud by a person from or through whom the registered proprietor has derived the registered interest.”
  1. [40]
    The exceptions to indefeasibility are contained within s 185.  Of particular significance is s 185(1A) which provides as follows:

“185 Exceptions to s 184

…

  1. (1A)
    A registered proprietor of a lot (the relevant mortgagee) who is recorded in the freehold land register as a mortgagee of the lot or an interest in the lot does not obtain the benefit of section 184 for the relevant mortgagee’s interest as mortgagee if—
  1. (a)
    the relevant mortgagee—
  1. (i)
    in relation to the instrument of mortgage or amendment of mortgage, failed to comply with section 11A(2); or
  2. (ii)
    in relation to a transfer of the instrument of mortgage, failed to comply with section 11B(2); and
  1. (b)
    the person who was the mortgagor under the instrument of mortgage or amendment of mortgage was not the person who was, or who was about to become, the registered proprietor of the lot or the interest in a lot for which the instrument was registered. …”
  1. [41]
    But for s 185(1A), a mortgagee (not itself guilty of fraud) who innocently registers a forged mortgage, still obtains title in the land via the mortgage and, prima facie, has the protection of indefeasibility. 
  2. [42]
    Section 185(1A) mentions s 11A, which is in these terms”

“11A Original mortgagee to confirm identity of mortgagor

  1. (1)
    This section applies to—
    1. (a)
      the mortgaging of a lot or an interest in a lot; and
    1. (b)
      an amendment of a mortgage mentioned in paragraph (a).
  2. (2)
    Before the instrument of mortgage or amendment of mortgage is lodged for registration, the mortgagee under the instrument (the original mortgagee) must take reasonable steps to ensure the person who is the mortgagor under the instrument is identical with the person who is, or who is about to become, the registered proprietor of the lot or the interest in a lot.
  1. (2A)
    For subsection (2), a person is the mortgagor under an instrument of mortgage or amendment of mortgage if the person executes the instrument as mortgagor, including, if the instrument is an electronic conveyancing document, through a subscriber digitally signing the instrument under the Electronic Conveyancing National Law (Queensland).
  1. (2B)
    Also, for subsection (2), a person is the mortgagor under an instrument of mortgage or amendment of mortgage if the instrument is an electronic conveyancing document and the person signs, as mortgagor, a document that under the participation rules under the Electronic Conveyancing National Law (Queensland)—
  1. (a)
    is required as a supporting document for the instrument of mortgage or amendment of mortgage; and
  2. (b)
    is required to be kept by the original mortgagee.
  1. (3)
    Without limiting subsection (2), the original mortgagee takes reasonable steps under the subsection if the original mortgagee complies with practices included in the manual of land title practice under section 9A(2)(c) for the verification of identification of mortgagors.
  2. (4)
    The original mortgagee must, for 7 years after the instrument is registered, and whether or not there is registered a transfer of the interest constituted by the mortgage—
    1. (a)
      keep, in the approved form, a written record of the steps taken under subsection (2); or
    1. (b)
      keep originals or copies of the documents and other evidence provided to or otherwise obtained by the original mortgagee in complying with subsection (2).

Maximum penalty—20 penalty units.

  1. (5)
    The registrar may, whether before or after the registration of the instrument, and whether or not there has been registered a transfer of the interest constituted by the mortgage, ask the original mortgagee—
    1. (a)
      to advise the registrar about the steps taken by the original mortgagee under subsection (2); and
    1. (b)
      to produce for the registrar’s inspection the written record mentioned in subsection (4)(a) or the originals or copies mentioned in subsection (4)(b).
  2. (6)
    The original mortgagee must comply with a request under subsection (5) unless the original mortgagee has a reasonable excuse.

Maximum penalty—20 penalty units.

  1. (7)
    This section applies to an instrument of mortgage only if it is executed after the commencement of this section.”
  1. [43]
    Tycho cannot prove fraud against Trustworthy.  Therefore, to defeat the mortgage it must prove the prerequisites of s 185(1A), namely that there was a breach by Trustworthy of s 11A(2).
  2. [44]
    Trustworthy pleads that it took the following steps.

“35A. It says that prior to entering into the Transaction, in or about March 2017, it engaged AJL, as apparently competent solicitors, to act on its behalf in respect to the Transaction, and to use reasonable care to obtain an indefeasible title with respect to the Mortgage.

  1. 35B.
    Further, prior to entering into the Transaction, in or about early April 2017, upon the advice of its Victorian solicitors, it agreed to the retaining of apparently competent Queensland solicitors, Fraser Lawyers, to advise it with respect to what was required under the laws of Queensland for it to obtain an indefeasible title with respect to the Mortgage.
  1. 35C.
    Further, it says that it appears from documents made available to it date by AJL that prior to entering into the Transaction, AJL as solicitors on behalf of Trustworthy obtained or were provided with loan documentation with respect to a loan apparently made to Tycho Pty Ltd by Collect 2 Pty Ltd ACN 609 158 607, which documentation included:
  1. (1)
    a copy of Mr Freer’s practising certificate as a Category A legal practitioner under the Legal Practitioners Act 1981 (SA) for the period from 1 July 2016 to 30 June 2017; and
  2. (2)
    a copy of the main page of Mr Freer’s valid Australian passport;

which it appears AJL as agent for Trustworthy may have had regard to in respect of forming a belief as to the genuineness of Mr Vincent’s signature with respect to the documents referred to at paragraph 21 of the SOC.”

  1. [45]
    Fraser Lawyers pleads.

“6.  As to paragraph 28 of the third party statement of claim, Fraser Lawyers:

  1. (a)
    Denies the allegations because, for the reasons pleaded in paragraphs 6(b) - 6(i), below the allegations are untrue;
  2. (b)
    Blake Fraser of Fraser Lawyers was contacted by telephone by Rochelle Robinson of AJL on around 2 May 2017 (the 2 May 2017 telephone conversation);
  1. (c)
    During the 2 May 2017 telephone conversation:
    1. (i)
      Ms Robinson said words to the effect that AJL acted on behalf of a private lender and wished to engage Fraser Lawyers to:
    1. A.
      Prepare a draft mortgage in respect of the proposed loan; and
    1. B.
      Lodge the executed mortgage;
    1. (ii)
      Mr Fraser agreed to Fraser Lawyers providing the services outlined in 6(c)(i) above and provided a quotation of $2,200 including GST to perform those services;
  2. (d)
    On 4 May 2017, Ms Robinson sent an email to Mr Fraser, which stated, relevantly:

‘Attached please find the following:-

  1. Valuation Report on security property;
  2. Company search of Trustworthy Nominees Pty Ltd being the mortgagee/lender (our client);
  3. Company search of Tycho Pty Ltd.

Could you please prepare the necessary mortgage and associated loan documentation as soon as possible.’

  1. (e)
    After receiving the above email on 4 May 2017, Mr Fraser telephone Ms Robinson (the 4 May 2017 telephone conversation) and:
    1. (i)
      Said words to the effect that Fraser Lawyers could not prepare the associated loan documentation for the quoted amount of $2,200 including GST; and
    1. (ii)
      Mr Fraser and Ms Robinson agreed that the services provided by Fraser Lawyers to AJL would be limited to those services outlined in paragraph 6(c)(i) above;
  2. (f)
    On around 8 May 2017, Mr Fraser telephoned Ms Robinson (the 8 May 2017 telephone conversation) and:
    1. (i)
      Informed her that there was an existing caveat and mortgage lodged over the title to the land, which would need to be removed prior to the Mortgage being registered;
    1. (ii)
      Mr Fraser and Ms Robinson agreed that a settlement would be required in order to attend to the above matters and that Mr Fraser would arrange for a settlement agent to attend that settlement on AJL’s behalf;
  3. (g)
    On 8 May 2017, Ms Robinson sent an email to Mr Fraser, which stated, relevantly:

‘Attached please find letter to mortgagor/borrower, together with loan and ancillary documentation.

Please note that the following documents are required to be submitted to the mortgagor/borrower in duplicate:-

  1. Mortgage;
  2. Credit Code Agreement;
  3. Loan Agreement;
  4. Debenture Charge.

Please let me know when the documents have been printed out and are ready for collection by the mortgagor/borrower.

…

I am in the process of obtaining our client’s authority for you to sign the actual Mortgage. I will provide that to you in due course.’

  1. (h)
    On 9 May 2017, Ms Robinson sent an email to Mr Fraser enclosing an authority to Fraser Lawyers authorising Mr Fraser to sign the mortgage on behalf of Trusthworthy;
  2. (i)
    Says that, in the premises pleaded above:
    1. (i)
      AJL acted for Trustworthy in relation to the loan to Tycho;
    1. (ii)
      Fraser Lawyers was retained to provide legal services to AJL;
    1. (iii)
      The provision of legal services by Fraser Lawyers to AJL was for the purpose of assisting AJL to provide legal services to Trustworthy;
    1. (iv)
      Fraser Lawyers was retained to perform the following services:
    1. (A)
      Prepare a draft mortgage in respect of the proposed loan;
    1. (B)
      Execute the mortgage on behalf of the mortgagee, pursuant to a written authority;
    1. (C)
      Attend the settlement of the loan transactions;
    1. (D)
      Lodge the executed mortgage;
  1. (v)
    Accordingly, Fraser Lawyers:
  1. (A)
    Was retained to provide a specific set of legal services to AJL, in order to assist AJL to act for Trustworthy;
  2. (B)
    Was not retained on behalf of Trustworthy in respect of the matters outlined above or at all;
  3. (C)
    Was  not engaged to perform the legal services pleaded in subparagraphs 28(1) to 28(4) of the third party claim statement of claim but rather was engaged to perform the services set out in the subparagraph (iv) above.”
  1. [46]
    AJ & Co pleads.

“14. As to paragraph 14 of the Third Party Notice, AJL denies that it failed to take reasonable steps as alleged therein and believes the allegations are untrue because the following matters constitute the taking of reasonable steps:

 (a)  perusing the following apparently genuine documents:

  1. (i)
    the documents listed in paragraph 21 of the statement of claim;
  1. (ii)
    a copy of the practising certificate of Mark Freer (Mr Freer), the witness to the purported signatures on the relevant documents;
  2. (iii)
    a copy of the passport of Mr Freer;
  3. (iv)
    a copy of the driver’s licence of Mr Vincent;
  4. (v)
    a copy of the passport of Mr Vincent; and

 (b)  retaining Fraser Lawyers, an apparently competent legal firm practising in the State of Queensland, to carry out the retainer (as defined in paragraph [44] below).”

  1. [47]
    Section 11A(3) refers to the “Manual of Land Title Practice”.  The manual sets out steps that a witness should take to ensure that the person signing the document is who he or she purports to be.  What is contemplated is that the documents are executed by the person in the presence of the witness and the witness verifies the identity of the person by reference to identification documents which bear both the photograph and signature of the person.  The obligation under s 11A is upon the mortgagee, whereas the manual places the obligations upon the witness.  It must be that if the mortgagee, through the witness, has complied with the manual, then the mortgagee has complied with its obligations and obtains the protection by s 11A(3).
  2. [48]
    Mr Dietz, who appears for Tycho, accepts that s 11A(3) gives protection to a mortgagee, but does not impose an obligation.  In other words, if the mortgagee complies with the manual, then the mortgagee has discharged the obligations under s 11A(2).  However, if the mortgagee fails to comply with the manual, it does not follow necessarily that the mortgagee has failed to take the reasonable steps required by s 11A(2).  The taking of steps other than those identified by the manual may discharge the onus.
  3. [49]
    However, Mr Dietz submits that the requirements prescribed by the manual can be used as one consideration as to what “reasonable steps” are for the purpose of s 11A(2).  That submission ought to be accepted.
  4. [50]
    Here, the witness, Mr Freer, was not acting on behalf of Trustworthy, but purportedly on behalf of Tycho.  That is made clear by the documents.  The identification documents seen by Mr Freer (and which were in the possession of AJ & Co) are poor copies and do not bear Mr Vincent’s signature.  There is no basis upon which Trustworthy could have been satisfied that Mr Freer had taken steps to properly identify the signatory to the mortgage.  In the present application, Trustworthy does not contend to the contrary.
  5. [51]
    There should, therefore, be summary judgment for Tycho against Trustworthy.
  6. [52]
    By s 187 of the Land Title Act:

“187 Orders by Supreme Court about fraud and competing interests

  1. (1)
    If there has been fraud by the registered proprietor or section 185(1)(c), (d), (e), (f) or (g) or (1A) applies, the Supreme Court may make the order it considers just.
  2. (2)
    Without limiting subsection (1), the Supreme Court may, by order, direct the registrar—
    1. (a)
      to cancel or correct the indefeasible title or other particulars in the freehold land register; or
    2. (b)
      to cancel, correct, execute or register an instrument; or
  1. (c)
    to create a new indefeasible title; or
  2. (d)
    to issue a new instrument; or
  3. (e)
    to do anything else.”
  1. [53]
    I have found that s 185(1A) applies.  That finding justifies declarations in terms of paragraph 1(a) of the amended application[14] and also gives rise to the discretion to make orders under s 187(2).  
  2. [54]
    As previously explained, the real dispute is between Trustworthy, the defendants by counterclaim and the third parties.  It is appropriate to make orders that the judgment against Trustworthy does not bind either Mr Madafferi or AJ & Co.

Costs

  1. [55]
    It is agreed between the plaintiffs and the Registrar of the Titles and the State of Queensland that there should be no order as to costs as between them.
  2. [56]
    The plaintiffs are entitled to their costs against Trustworthy.  That includes the costs of this application and any reserved costs.
  3. [57]
    The costs of all other parties should be reserved.

Orders

  1. [58]
    I make the following orders:

 1.  Declarations are made against the first defendant that: 

  1. (a)
    each of the documents pleaded in paragraphs 21(a) to (g) and (i) to (m) of the amended statement of claim filed on 3 April 2018 are void and of no force or effect;
  2. (b)
    the signature on the mortgage having dealing number 718071834 purporting to be that of the second plaintiff (for the first plaintiff);
  1. (i)
    is not the signature of the second plaintiff; and
  2. (ii)
    was not signed by a person with the authority of either the first plaintiff or the second plaintiff to do so;
  1. (c)
    the first plaintiff did not execute the mortgage.
  1. The second defendant cancel the mortgage having dealing number 718071834 registered on the title to each of the following lots:
  1. (a)
    lot 3 on Registered Plan 170920, Title Reference 16137223; and
  2. (b)
    lots 1 to 22 on Group Titles Plan 2987, Title Reference 18327029 to 18327050 respectively.
  1. The claim against the third defendant is dismissed.
  2. Neither the third defendant by counterclaim nor the first third party are bound by the judgment given in favour of the plaintiffs against the first and second defendants.
  3. The first defendant pay the plaintiffs’ costs, including any reserved costs, of the proceeding including the application.
  4. Otherwise, there be no orders as to costs.

Footnotes

[1] Land Title Act 1994, Part 9, Division 2, subdivision C.

[2] Deputy Commissioner of Taxation v Ahern (No 2) [1998] 2 Qd R 158 at 163.

[3] Rule 292.

[4] Rule 292.

[5] Blair v Curran (1939) 62 CLR 464 at 531, Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597, Kuligowski v Metrobus (2004) 220 CLR 363 at 373 and particularly Financial Wisdom Ltd v Newman (2005) VR 72 at [30] and Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5 at 8-9.

[6] For a statement of the rule, see Heydon, Cross on Evidence, Australian Edition, LexisNexis, paragraph [33425].

[7] (1982) 148 CLR 668.

[8] UCPR, rr 292 and 293, SCR, O 18, O 18A, O 19.

[9] Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at 234 and 237, Gray v Morris [2004] 2 Qd R 118 at [46].

[10] Agar v Hyde (2000) 201 CLR 552 following cases decided under earlier regimes such as Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 1 CLR 5.

[11] Pilcher v Rawlins (1872) LR 7, Ch App 259.

[12] Breskvar v Wall (1971) 6 CLR 376 at 385.

[13] Frazer v Walker [1967] 1 AC 569 and Breskvar v Wall (1971) 6 CLR 376.

[14] Which identifies the mortgage and associated documents.

Close

Editorial Notes

  • Published Case Name:

    Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors

  • Shortened Case Name:

    Tycho Pty Ltd v Trustworthy Nominees Pty Ltd

  • MNC:

    [2021] QSC 95

  • Court:

    QSC

  • Judge(s):

    Davis J

  • Date:

    07 May 2021

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Agar v Hyde (2000) 201 CLR 552
2 citations
Jump To
Cite 1 - (2000) 201 CLR 552
Cite 2 - (2000) 201 CLR 552
Blair v Curran (1939) 62 C.L.R., 464
2 citations
Jump To
Cite 1 - (1939) 62 C.L.R., 464
Cite 2 - (1939) 62 C.L.R., 464
Breskvar v Wall (1971) 6 CLR 376
3 citations
Jump To
Cite 1 - (1971) 6 CLR 376
Cite 2 - (1971) 6 CLR 376
Cite 3 - (1971) 6 CLR 376
Deputy Commissioner of Taxation v Salcedo[2005] 2 Qd R 232; [2005] QCA 227
2 citations
Jump To
Cite 1 - [2005] 2 Qd R 232
Cite 2 - [2005] 2 Qd R 232
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
2 citations
Jump To
Cite 1 - (1949) 78 CLR 62
Cite 2 - (1949) 78 CLR 62
Financial Wisdom Ltd v Newman (2005) VR 72
1 citation
Jump To
Cite 1 - (2005) VR 72
Frazer v Walker (1967) 1 AC 569
2 citations
Jump To
Cite 1 - (1967) 1 AC 569
Cite 2 - (1967) 1 AC 569
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 1 CLR 5
2 citations
Jump To
Cite 1 - (1964) 1 CLR 5
Cite 2 - (1964) 1 CLR 5
Gray v Morris[2004] 2 Qd R 118; [2004] QCA 5
2 citations
Jump To
Cite 1 - [2004] 2 Qd R 118
Cite 2 - [2004] 2 Qd R 118
Kuligowski v Metrobus (2004) 220 CLR 363
2 citations
Jump To
Cite 1 - (2004) 220 CLR 363
Cite 2 - (2004) 220 CLR 363
Pilcher v Rawlins (1872) LR 7, Ch App 259
2 citations
Jump To
Cite 1 - (1872) LR 7, Ch App 259
Cite 2 - (1872) LR 7, Ch App 259
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
2 citations
Jump To
Cite 1 - (1981) 147 CLR 589
Cite 2 - (1981) 147 CLR 589
Queen v Darby (1982) 148 CLR 668
2 citations
Jump To
Cite 1 - (1982) 148 CLR 668
Cite 2 - (1982) 148 CLR 668
Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5
2 citations
Jump To
Cite 1 - (1997) 42 NSWLR 5
Cite 2 - (1997) 42 NSWLR 5
Thomas J in Deputy Commissioner of Taxation v Ahern [1998] 2 Qd R 158
2 citations
Jump To
Cite 1 - [1998] 2 Qd R 158
Cite 2 - [1998] 2 Qd R 158

Cases Citing

Case NameFull CitationFrequency
Tycho Pty Ltd v Trustworthy Nominees Pty Ltd (No 2) [2021] QSC 302 3 citations
1

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