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Snapshot

  • The Court of Appeal has unanimously rejected a lender’s attempts to enforce its mortgage in circumstances where a faxed payment direction sent to the lender’s solicitors was found to be unauthorised
  • The decision is a clear warning to solicitors acting for lenders, not only on prudent conveyancing practice, but also on the need to properly draft their mortgages in accordance with the Real Property Act

The Court of Appeal has unanimously rejected a lender’s attempts to enforce its mortgage in circumstances where a faxed payment direction sent to the lender’s solicitors was found to be unauthorised.

In Perpetual Trustees Victoria Ltd v Cox [2014] NSWCA 328 the evidence, although inconclusive, strongly suggested that the broker forged a drawdown request sent to the lender’s solicitor. The money was transferred, as per the direction, to a bank account under the broker’s control.

The decision is a clear warning to solicitors acting for lenders, not only on prudent conveyancing practice, but also on the need to properly draft their mortgages.

While the profession apparently has received the message regarding the nullification of indefeasibility by reliance on “all monies” clauses, this case shows that the courts give no points for ineffectual attempts to address the issue with poor drafting.

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