Indefeasibility Under Attack, Part 2: Forged ´All Obligations´ Mortgages

The recent Court of Appeal decision of Westpac Banking Corporation v Clark (Unreported, CA 172/06, [5 September 2008]) goes some way to answering a technical but important issue on indefeasibility with significant ramifications for corporate lenders in New Zealand.

Background

The case involved a fraudster forging identity documents and entering into a loan agreement and mortgage with Westpac recording a debt secured by an 'all obligations' mortgage. The all obligations mortgage was over a property not owned by the fraudster, deceiving both Westpac and the solicitor acting for both parties.

The solicitor provided a solicitor's certificate and undertaking to Westpac that he would register the mortgage promptly. However, the solicitor only attempted to register the mortgage nine weeks after the loan was advanced by Westpac, in breach of his undertaking. The Registrar refused to register the mortgage as Westpac had by that stage notified the Registrar of