PERPETUAL TRUSTEES VICTORIA LIMITED v CIPRI & ANOR

CATCHWORDS : MORTGAGE - mortgagees right to order for possession under mortgage where signature of one joint tenant forged by the other joint tenant - estate and interest of mortgagors secured by the mortgage - registered proprietors of land were joint tenants - registered mortgage and loan agreement - both forged by one joint tenant - loan agreement provided for joint and several liability - REAL PROPERTY - effect of registration of forged mortgage - whether any moneys owing under the loan contract secured upon innocent party's interest in property - whether personal equity in favour of the innocent mortgagor arose - whether relief under Contracts Review Act available depended upon establishing that a contract existed between the mortgagee and joint proprietor whose signature was forged on the agreement and mortgage - s.36(11) Real Property Act 1900 - that upon registration a dealing has "the effect of a deed duly executed by the parties who signed it" did not apply as the mortgage was not signed by the first defendant mortgagor

Contracts Review Act 1980 LEGISLATION CITED : Real Property Act 1990 Sydney Water Act 1994 Uniform Civil Procedure Rules 2005

Atwood v Ernest (1853) 138 ER 1449 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Breskvar v Wall (1971) 126 CLR 376 Chandra v Perpetual Trustees Victoria Limited [2007] NSWSC 694 Chen v Song [2005] NSWSC 19 English, Scottish and Australian Bank Limited v Phillips (1937) 57 CLR 302 Frazer v Walker [1967] 1 AC 569 Khan v Hadid [2003] NSWSC 1191 Kitano v Commonwealth (1974) 129 CLR 151 Mercantile Mutual Life Insurance Co Limited v Gosper (1991) 25 NSWLR 32 CASES CITED : Permanent Trustee Company Limited v Frazis [1999] NSWSC 319 Perpetual Trustees Victoria Limited & Anor v Tsai [2004] NSWSC 745 Printy v Provident Capital Limited [2007] NSWSC 287 Provident Capital Limited v Printy [2008] NSWCA 131 PT Limited v Maradona Pty Limited (1992) 25 NSWLR 643 Re Gillie ex parte Cornell (1996) 150 ALR 110 Small v Gray [2004] NSWSC 97 Small v Tomassetti [2001] NSWSC 1112; (2001) 12 BPR 22,253 Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 Vassos v State Bank of South Australia [1992] V Conv R 54-443 White v Tomasel [2004] 2 QdR 438 Yazgi v Permanent Custodians Limited [2007] NSWCA 240; (2007) NSW Conv R 56-195

TEXTS CITED : Law of Torts, R P Balkan & J L J Davis, Lexis Nexis Butterworths [2004]

PARTIES : PERPETUAL TRUSTEES VICTORIA LIMITED v Domenico CIPRI & ANOR

P: A Leopold SC/D F C Thomas COUNSEL : 1D: R W Tregenza Registrar-General: C A Webster

P: Yeldham Price O'Brien Lusk SOLICITORS : 1D: Watson Stafford Registrar-General: Kelvin O'Keefe

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST

PERPETUAL TRUSTEES VICTORIA LIMITED v DOMENICO CIPRI & ANOR

1 HIS HONOUR: These proceedings concern a claim in respect of a loan and a Mortgage. The plaintiff, in particular, seeks an order for possession against the first and second defendants. The first and second defendants are the registered proprietors, as joint tenants, of the premises. 2 The proceedings raise for consideration the operation of the indefeasibility provisions of the Real Property Act 1900 having regard to the fact that the signature of the first defendant on the Loan Agreement and on the Mortgage were forged by his wife, the second defendant. 3 The plaintiff, Perpetual Trustees Victoria Limited ("Perpetual"), by Amended Statement of Claim dated 14 March 2008, seeks an order that the first and second defendants, Domenico Cipri and Sandria Delores Cipri, give possession of premises at Greystanes. 4 Perpetual also seeks an order against the second defendant, Mrs Cipri, that she pay the principal in respect of the loan made by it together with fees, charges, costs, expenses and interest calculated daily and compounded monthly in accordance with a Loan Agreement said to have been made by them on 22 June 2004 (although the Loan Agreement was dated 17 June 2004). 5 In the Plaintiff's Outline of Submissions, dated 30 July 2008, at [65] it is noted that Perpetual does not press the claim for monetary relief in order 2 (incorrectly numbered as order 3 within the Amended Statement of Claim) against Mr Cipri but that it does press that claim against Mrs Cipri. 6 The plaintiff claims against Mrs Cipri in that respect, $657,061.89 said to be owing as at 31 July 2008 together with interest thereafter at the rate of $265.78 per day. 7 In the Amended Statement of Claim, Perpetual pleads that Mr Cipri's signature on both the Memorandum of Mortgage dated 28 August 2003 and the Loan Contract dated 17 June 2004 were forged (paragraph 4 and 11). Perpetual notwithstanding contends that despite the forgery:- "… the registration of the Mortgage conferred upon the Plaintiff an indefeasible interest in the entirety of the Property, on the terms and conditions set out in the Mortgage and subject to the Real Property Act, 1900 (NSW) and the general law." 8 The hearing of the proceedings proceeded upon the basis that Perpetual and Mr Cipri accepted as a fact that the purported signature of Mr Cipri was forged on the Loan Agreement and the Mortgage and the Registrar-General did not seek to contend to the contrary. 9 At the hearing of the proceedings, the plaintiff was represented by Mr Alec Leopold SC who appeared with Mr David F C Thomas of counsel. Mr R W Tregenza of counsel appeared on behalf of the first defendant, Mr Cipri. Mr Cipri was also the cross-claimant in respect of the first and second cross-claims. In the first cross-claim, Mr Cipri claims relief against Perpetual including an order that the Mortgage not be enforced. In the second cross-claim, Mr Cipri claims an order against the Registrar-General of New South Wales for the payment of compensation for any amount he is liable to pay to Perpetual pursuant to the Mortgage or such sum as assessed by the Court. 10 Ms C A Webster of counsel appeared on behalf of the Registrar-General, the cross-defendant on the second cross-claim and also the cross-claimant on the third cross-claim. In the third cross-claim, the Registrar-General seeks an order for indemnity or contribution against Mrs Cipri in respect of any amounts payable by the Registrar-General to Mr Cipri. 11 There was no notice of appearance filed on behalf of the second defendant and she did not appear when called at the hearing of the proceedings. The affidavit of service, sworn by Thomas Pfeifle on 18 December 2006, established that the second defendant was served with the Statement of Claim on 17 December 2006. The affidavit of Chris Cook sworn on 28 March 2008 confirmed service upon the second defendant of the Amended Statement of Claim.

Issues 12 A document entitled Joint Statement of Matters of Fact and Law in Dispute, dated 28 July 2008 and filed on behalf of Perpetual, identified the issues arising on the pleadings in the following terms:- "As between the plaintiff and defendant:- 1. Whether, upon its true construction, the mortgage dated 28 August 2003 ('Mortgage') secures moneys owing by the second defendant to the plaintiff and, if so, what is the quantum of the moneys so secured? 2. Whether, upon its true construction, the plaintiff is entitled to enforce the Mortgage over the whole of the [Greystanes] property … ('Property') and in particular the first defendant/cross-claimant's interest in the Property; 3. If not, against what interest(s) in the Property is the plaintiff entitled to enforce the Mortgage; 4. Whether the plaintiff is precluded from enforcing the Mortgage over the whole of the Property due to: (a) the existence of a personal equity in favour of the first defendant/cross-claimant; or (b) the provisions of the Contracts Review Act 1980 (NSW). As between the second defendant and Registrar-General 5. If either:- the Mortgage secures no debt owed by the second defendant to the plaintiff; or the Mortgage is not enforceable against the whole of the Property, in particular the cross-claimant's interest in the Property the Registrar-General will contend that the cross-claimant has suffered no loss as a consequence of the operation of the Real Property Act, and in consequence is not entitled (on the second cross-claim) to the payment of compensation from the Torrens Assurance Fund."

The defence 13 An Amended Defence was filed on behalf of the first defendant on 23 June 2008. The defence pleads the existence of a personal equity and also calls in aid the provisions of the Contracts Review Act 1980. 14 Paragraphs 2A, 2B and 2D of the Amended Defence filed on behalf of Mr Cipri are in the following terms:- "2A. In relation to paragraph 5 of the Statement of Claim, the registration of the Mortgage conferred such protection as was available to the plaintiff pursuant to Sections 41, 42 and 43 of the Real Property Act 1990 [sic] and in particular indefeasibility of title to the Mortgage subject to such personal equities as may exist between the plaintiff and the first defendant. 2B. In relation to paragraphs 6, 7, 8, 9.1 and 9.2 of the Amended Statement of Claim the first defendant admits that the Mortgage which was registered included the terms as alleged in the said paragraphs of the Amended Statement of Claim but denies that the said terms have any force or effect as a result of the entitlement of the first defendant to have the Mortgage set aside in so far as it charges or otherwise concerns his interest in the land. … 2D. In relation to paragraphs 13, 14 and 15 of the Amended Statement of Claim, the first defendant denies that he was a party to the Loan Contract and assets [sic] that he was at no time obliged to pay the loan pursuant to the terms of the loan contract and otherwise does not admit the paragraphs." 15 Mr Cipri, in paragraph 6 of the Amended Defence, pleaded that he did not sign the Mortgage or the Loan Contract and that his signature on the documents had been forged. 16 In paragraph 8 of his defence, Mr Cipri pleaded that Perpetual is subject to personal equity in his favour making the Mortgage liable to be set aside. 17 In paragraph 9 of the Amended Defence, Mr Cipri in his defence based on the Contracts Review Act pleaded as follows:- "9. To the extent that the registration of the Mortgage pursuant to the Real Property Act, 1990 [sic] achieved for the plaintiff indefeasibility to the purported obligations of the first defendant to the plaintiff purported to be secured by Mortgage ('the Contract'), those obligations constituted a contract between the first defendant and the plaintiff within the meaning of that term in the Contracts Review Act, 1980." 18 Particulars set out in paragraphs 10(a) to (i) in support of the defence that "the Contract" was "unjust" are in the following terms:- "a. The first defendant did not consent to the Contract. b. The signature of the first defendant on the mortgage purporting to be his was not attached by him or with his authority. c. The Contract was entered into without the knowledge of the first defendant. d. The first defendant did not have the benefit of legal or financial advice. e. There was a material inequality of bargaining power. f. The terms of the Contract were not the subject of negotiations between the plaintiff and the first defendant. g. The plaintiff did not personally deal with the first defendant in relation to entering into the Contract. h. The repayment of the monies alleged to have been secured by the Mortgage were not advanced to the first defendant or received by him. i. The first defendant would have been unable to service the repayments."

(1) The first cross-claim 19 In the first cross-claim, Mr Cipri seeks relief against Perpetual in the following terms:- "1. a declaration that the signature of the cross-claimant on Mortgage number 9929948Y is a forgery. 2. a declaration that Mortgage 9929948Y is a nullity in so far as it relates to the cross-claimant. 3. an order that Mortgage number 9929948Y be delivered up and cancelled in so far as it relates to the cross-claimant. 4. an order that the Mortgage number 9929948Y be terminated or otherwise set aside in so far as it relates to the cross-claimant; 5. an order that the Mortgage number 9929948Y not be enforced 6. costs." 20 In the first cross-claim, Mr Cipri contended:-

• Perpetual produced the Certificate of Title for the property to the Registrar-General to obtain registration of the Mortgage without his authority.

• Perpetual was not entitled to produce the Certificate of Title to the Registrar-General to obtain the registration of the Mortgage without his actual authority.

• As a result of its conduct, Perpetual is subject to a personal equity in his favour. 21 In the first cross-claim, Mr Cipri relies upon particulars in the same terms as the Amended Defence in claiming relief under the Contracts Review Act. 22 Perpetual filed its defence to the first cross-claim on 27 April 2007.

(2) The second cross-claim 23 In the second cross-claim against the Registrar-General of New South Wales, Mr Cipri claims the following relief:- "1. an order that the cross defendant pay compensation from the Torrens Assurance Fund to the claim-claimant [sic] - a. by way of an indemnity to the claim-claimant [sic] for any amount he is liable to Perpetual Trustee Victoria Limited pursuant to Mortgage 9929948Y or, alternatively, b. in such sum as may be assessed by the Court; 2. interest pursuant to s.100 of the Civil Procedure Act 2005 3. costs." 24 In the second cross-claim, Mr Cipri repeated the fact that he did not sign the Mortgage and did not authorise anyone to execute it on his behalf or agree to the granting of the charge purportedly comprised in the Mortgage, the loan referred to therein or to the registration of the Mortgage. 25 The relief claimed by Mr Cipri in the second cross-claim is brought in the alternative to the Amended Defence and is relied upon in the event that he is liable to Perpetual for the monies secured by the Mortgage.

(3) The third cross-claim 26 The third cross-claim was brought by the Registrar-General of New South Wales against Mrs Cipri.

27 For the purposes of this cross-claim, the Registrar-General conceded the fraudulent conduct of Mrs Cipri in forging Mr Cipri's signature on the Mortgage.

28 In the event that Mr Cipri was found to be liable to Perpetual for the debt secured by the Mortgage, the Registrar-General acknowledged that Mr Cipri would have suffered loss by reason of Mrs Cipri's fraudulent conduct.

29 Accordingly, if the Court found Mr Cipri to be entitled to compensation from the Torrens Assurance Fund, the Registrar-General contended that Mrs Cipri should be made liable to indemnify or contribute the corresponding amount.

Facts 30 In relation to substantive issues in the proceedings, Perpetual relied upon the affidavits of Lloyd Joseph David sworn on 6 September 2007 and that of Joe Merciera sworn on 21 July 2008. 31 Mr David described in his affidavit the business method by which Perpetual operated and made the loan in question. Mr David is the National Assistant Credit Manager of Challenger Mortgage Management Pty Limited ("Challenger"). He explained in his affidavit, that Perpetual was appointed as its trust manager in respect of loan and securities including those the subject of the present proceedings. 32 Challenger is the loan servicer of the Challenger Mortgage Trusts and Perpetual is the trustee of the Challenger Trust. Firms known as mortgage originators submit loan applications to Challenger for consideration and approval. Challenger is not required to submit the application to Perpetual for its approval. Once a loan is approved, Challenger becomes responsible for its management, regulation and for credit control of Perpetual's loan accounts relating to the Challenger Trust. 33 A loan application purportedly in the name of Mr and Mrs Cipri dated 16 June 2003 was submitted through Xenium Home Loans to Crown Mortgages Pty Limited for a loan of $400,000. Crown Mortgages Pty Limited submitted their application to Interstar. The loan of $400,000 was settled on 28 August 2003. A subsequent application for an increase in the loan amount (to $504,000) was made shortly before 11 June 2004. On or about 15 June 2004, Interstar approved the increased loan (leading to the Loan Agreement dated 17 June 2004, the subject of these proceedings). A copy of the Loan Terms & Conditions booklet applicable to the loan was annexed as Annexure "J" to Mr David's affidavit. The booklet purported to bear the signature of both the first and second defendants on its cover. 34 Mr Cipri, in his affidavit sworn on 2 November 2007, stated that he was completely unaware of the loan and the Mortgage and that his supposed signature appearing on the Loan Agreement and Loan Terms and Conditions Booklet as well as anterior loan-related documentation (the home loan application, loan purpose check list, declaration of purpose and privacy consent), and the signature purporting to be his as appearing on the Mortgage are forgeries. 35 According to his evidence, Mr Cipri has never received any money from Perpetual by way of the Loan, that he never gave permission to his wife to use the Certificate of Title to enable Perpetual to obtain a Mortgage and that he only came to know of the Mortgage when on approximately 20 December 2006, a man appeared at his front door advised him that repayment of the debt under the Mortgage was required or possession of the premises would be sought. 36 Pursuant to the Loan Agreement, Perpetual agreed to lend a maximum of $504,000 to the defendants (the "Facility Limit"). As noted above, Perpetual already held the Mortgage dated 28 August 2003 in its favour securing all monies owing by it. 37 Whilst the signature purporting to be Mr Cipri's signature was forged by his wife on both the Loan Agreement and on the Mortgage, as earlier noted, her signature on the documents was her own. 38 The Facility Limit was reached in July 2006 and since September 2006, the evidence indicates that the account has always been in excess of the limit owing to the accrual of interest and fees. 39 A notice to Mr Cipri and a separate notice to Mrs Cipri, pursuant to s.57(2)(b) of the Real Property Act, was served on 30 August 2006 demanding payment in full of all monies owing under the Loan Agreement. A total amount of approximately $657,061.89 was owing as at 31 July 2008.

The Loan Agreement 40 A copy of the Loan Agreement was annexed to Mr David's affidavit (Annexure "I") at pp.75 to 130 of the tender bundle. 41 Clause 1 provides as follows:- "We hereby agree to lend money to You which You agree to borrow and repay . The terms of the Loan are as set forth in this agreement (including the Schedule) and the Terms and Conditions Booklet (non-Consumer Credit Code) ('Terms and Conditions')." (emphasis added)

42 The term "You" is defined in clause 1.2 of the Terms and Conditions (forming part of the Loan Agreement) as "the Borrower or Borrowers" (tender bundle, p.91). 43 A copy of the Mortgage was also annexed to Mr David's affidavit (Annexure "O", tender bundle, pp.73 to 74). 44 The Mortgage identifies the "mortgagor" as "Domenico Cipri and Sandria Delores Cipri" who were stated as:- "mortgag[ing] to the mortgagee all the mortgagor's estate and interest in the land specified above …" 45 Furthermore, the clause covenants with the mortgagee "… that the provisions set out in … memorandum No 3625652 filed at Land and Property Information NSW are incorporated in this mortgage". 46 A copy of that Memorandum was tendered at the hearing and marked as Exhibit A. 47 Consistently with the reference to both the first and second defendants as the "Mortgagor", clause 17.18(a) of the Memorandum states that:- "Where two or more parties comprise the Mortgagor … (a) a reference to the Mortgagor includes each and any two or more of them; and (b) the obligations on the part of the Mortgagor bind them jointly and severally." 48 Clause 3.1 of the Memorandum to the Mortgage importantly contains a covenant that:- "The Mortgagor … shall pay the Secured Money to the Financier in accordance with any agreement which obliges the Mortgagor to pay it …" 49 The Loan Agreement (clause 1) expresses the "mortgagor's" obligation to "repay" the "loan". Clause 1 operates together with clause 22.3 of the Terms and Conditions which provides:- " Joint and several liability If the Loan is being made to more than one person, then -each person will be liable individually, and every 2 or more persons are liable jointly, for all amounts due under the Loan. All of your obligations attach to your successors and permitted assigns. " 50 These provisions operate to impose an obligation on Mrs Cipri under the Loan Agreement in respect of the repayment of loan monies, interest and costs. 51 On the basis of the above, Mrs Cipri was subject to an obligation whereby she owed money within the meaning of the definition of "Secured Money" for the purposes of the covenant in clause 3.1 of the Memorandum to the Mortgage. 52 The Schedule to the Loan Agreement particularises the terms of the loan along with other provisions. The evidence of Mr Merciera establishes "default" as at 31 July 2008 in the amount of $657,061.80, such default being a default in the observance of a covenant within the meaning of s.57(2)(a) of the Real Property Act. 53 Memorandum 3625652R (Exhibit A) which is expressly incorporated in the Mortgage contains provisions in Part 3, Payment of Secured Monies. Clause 3.1 provides "that the mortgagor … shall pay the Secured Money to the Financier in accordance with any agreement which obliges the mortgagor to pay it …". 54 "Secured Money" is defined in clause 1.1 of the Memorandum as follows:- " Secured Money means all moneys and damages:- (a) which now or in the future are owing (actually or contingently) by the Mortgagor to the Financier; (b) which having now or in the future become owing (actually or contingently) by the Mortgagor to the Financier, cease to be owing under any law relating to Bankruptcy and remain unpaid by the Mortgagor and unreleased by the Financier; (c) that now or in the future there is a prospect may become owing (actually or contingently) by the Mortgagor to the Financier, for any reason including, without limitation, moneys and damages payable:- (d) by the Mortgagor alone or jointly or severally with any other person; (e) if there is more than one Mortgagor, by all or any of them . …" (emphasis added) 55 The express terms of the Mortgage provided that all of the mortgagor's estate and interest in the land was made subject to it. 56 In summary, the Mortgage, by reason of the definition of "Secured Money" operates to secure the obligation of Mrs Cipri to pay amounts owing under the Loan Agreement and does so by reference to the interests in the property of both Mr and Mrs Cipri.

Relevant principles 57 Considerations of indefeasibility follow on ascertaining, by construction of the mortgage, what, according to its terms (including those in the Memorandum which it incorporates) is the debt which it secures: Chandra v Perpetual Trustees Victoria Limited [2007] NSWSC 694 at [31]. 58 A number of reported cases involving forged mortgages have been single borrower cases unlike the present case. In the case of a forged mortgage/single borrower, the agreement is void and no obligation arises there under and, accordingly, the mortgage does not secure the performance of any obligations under such an agreement. In the present case, the first and second defendants, as noted above, were expressed to be jointly and severally liable under the Loan Agreement. 59 Facts that are central to Perpetual's case include, firstly, the fact that there was a contract - the Loan Agreement made between it and Mrs Cipri - and, secondly, that Mr Cipri was not a party to the Agreement. These are significant matters in relation both to the operation of the Mortgage and to Mr Cipri's claim for relief under the Contracts Review Act in respect of a "contract". 60 Of fundamental importance also is the fact that the Mortgage is registered on the Folio Identifier for the property so that it has the effect given to it by the Real Property Act, particularly s.40 and s.42. However, the question remains what estate or interest in land or what obligation is part of or secured by the estate or interest in land claimed by Perpetual?

(1) Case law principles 61 The principles to be applied in considering the effect of registration of a mortgage, in general terms, are well-established. In this respect, Basten JA in Provident Capital Limited v Printy [2008] NSWCA 131 observed at [22] the dicta in English, Scottish and Australian Bank Limited v Phillips (1937) 57 CLR 302 wherein, at 321-322, Dixon, Evatt and McTiernan JJ stated:- "Under the system of registration governing the present case, the statutory charge described as a mortgage is a distinct interest. It involves no ownership of the land the subject of the security. Like a lease, it is a separate interest in land which may be dealt with apart altogether from the fee simple or other estate or interest mortgaged. But, like a lease, it involves, or usually involves, personal obligations. It is impossible to treat the personal obligations in the same way entirely as the interest in land is treated by the registration system … but, nevertheless, the plan of the legislation is to enable the proprietor to transfer by registration not only the interest in the land, but all the accompanying personal obligations normally incident thereto." 62 Under the Torrens system, a forged mortgage, which might be a nullity under the old system title when registered without fraud, is fully efficacious as conferring on the mortgagee the interest in land described in the mortgage: Perpetual Trustees Victoria Limited & Anor v Tsai [2004] NSWSC 745 per Young CJ in Eq at [13]. However, as Campbell J (as he then was) in Small v Tomassetti [2001] NSWSC 1112; (2001) 12 BPR 22,253 at [9]:- "Notwithstanding that registration confers indefeasibility on a mortgagee, there is still a question 'indefeasibility for what?'" 63 Accordingly, whilst registration of a mortgage, including a forged mortgage, may confer indefeasibility on the mortgagee, it does not give the mortgagee an indefeasible title in general terms: Yazgi v Permanent Custodians Limited [2007] NSWCA 240; (2007) NSW Conv R 56-195 at [15]. 64 Accordingly, it has been observed "that which is attained by registration is, in the words of s.42, an estate or interest in the land": PT Limited v Maradona Pty Limited (1992) 25 NSWLR 643 at 679 per Giles J (as he then was). His Honour stated, "registration merely validates those [terms or conditions] which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor". In contrast, it does not, his Honour stated, validate all the terms and conditions of the registered instrument: Maradona (supra) at 679 per Giles J.

65 The charge of the debt on the land is an estate or interest in land whilst the personal covenant (on the part of the mortgagor) to pay the debt is not an interest in land: Chandra (supra) at [29]. As such, notwithstanding registration, a mere covenant to pay cannot be enforced against a defrauded mortgagor, the covenant to pay not being an interest in land and unaffected by the effects of indefeasibility.

66 In order to ascertain the extent of indefeasibility conferred by registration of a (forged) mortgage, it is necessary to consider the terms of the particular mortgage in question: see Small v Tomassetti (supra) at [9] per Campbell J (as he then was) and Yazgi (supra) at [22]. Before turning to the construction of the mortgage in this case, it is helpful to examine and contrast the mortgage considered in Chandra (supra). 67 In that case, the mortgage was a forgery, the signature of both plaintiffs on the mortgage having been made by two persons who were not identified in the evidence. 68 The analysis of Bryson AJ in Chandra (supra) was, in part, directed to the meaning and effect of the mortgage and associated provisions incorporated into it in light of the fact that the principal claim by the plaintiff against Perpetual was for a "declaration that no money is secured by the false mortgage" upon the ground that it was contended that it did not actually secure any sum of money on the plaintiffs' property. 69 As Bryson AJ observed, the charge of a debt on land is an estate or interest in land, and the personal covenant to pay the debt is not, even though it is necessary to understand the personal covenant to see what is charged upon the land (at [29]). Accordingly, his Honour observed that the operation of a mortgage to charge a money obligation on land is recognisable without any difficulty as an interest in land. 70 As earlier noted, considerations of indefeasibility arise after ascertaining, on the construction of the mortgage in question, what, according to its true meaning and effect, is the debt which it secures: Chandra (supra) at [31]. 71 In Bryson AJ, in Chandra (supra), referred to Printy v Provident Capital Limited [2007] NSWSC 287. In that case, Studdert J, at first instance, concluded to the effect that the forged document did not fall within the references in the mortgage because it was not in fact the registered proprietor's document (at [40]). His Honour there observed:- "It would have been open to the first defendant to fashion the mortgage obligations so as to make the mortgagor liable not only for his own conduct but for the dishonest conduct of others over whom the mortgagor had no control. However … that the clearest possible expression would have been needed to achieve that effect." 72 In Chandra (supra), in relation to the definition of "Secured Money", money could be "Secured Money" as defined by the terms of that expression (and hence the mortgage may be security for payment of it), even if the mortgagor did not give any agreement personally to pay the secured money. That observation is relevant to the disposition of the present case. 73 In that case, the definition of secured money, which was linked to the definition of "secured agreement", led to the conclusion that the Loan Agreement was the only agreement that fell within the latter term. It was clear on the facts that the plaintiffs there were not parties to an agreement between themselves and Perpetual Trustees Victoria Limited. Accordingly, as the Loan Agreement was not signed by the plaintiffs at all, Bryson AJ concluded that clause 2.2 and references to "secured money" and "secured agreement" did not relate to that Loan Agreement. 74 In Chandra (supra), the relevant provision (clause 2.2) additionally made provision whereby the mortgage security was for "performance of all your obligations under the Mortgage". However, the relevant provisions that secured the performance of obligations under the mortgage by clause 2.2, referred to "the form of mortgage that You have executed" but on the evidence no such form of mortgage existed in that case. (2) The present case 75 In the present proceedings, Perpetual's contention was, inter alia, that the facts are materially different to those in Chandra (supra) and they support the relief claimed by it. In this matter, Mrs Cipri (but not Mr Cipri) was in fact a party to both the Loan Agreement and the Mortgage and, in those circumstances, the Mortgage was said to operate to secure obligations arising under the Loan Agreement. In this respect, the definition of "Mortgagor", as noted above and the joint and several liability provision in clause 17.18 of the Memorandum, in my opinion support that contention. 76 It was submitted for the plaintiff:- "20. The application of these principles to the present case results in the conclusion (outlined further below) that:- (a) The Mortgage secures the sum owing jointly and severally by Mrs Cipri under the Loan Agreement (being the entire amount owing under the Loan Agreement); (b) Accordingly, the Mortgage conferred an estate or interest on the plaintiff in respect of the whole of the Property, which estate or interest secured the entire sum lent under the Loan Agreement ($504,000 plus interest thereon and associated costs and expenses)." 77 In Provident Capital Limited v Printy (supra), Basten JA (with whom Tobias and McColl JJA agreed) observed at [30]:- "The language of 'indefeasibility' is not entirely apt in relation to an interest which arises by way of security for payment of a debt. The effect of ss41 and 42 of the Real Property Act may more clearly be expressed as providing that, upon registration, the land becomes charged as security for the debt secured by the mortgage, regardless of any form of invalidity which may affect the mortgage under the general law … The mortgagee has a statutory right, as against the land, to recover the debt if not paid in accordance with the requirements of the mortgage." 78 Where a covenant in the mortgage requires payment in accordance with a separate loan agreement, provided monies are in fact and in law owing under the separate loan agreement, then the mortgagee is entitled to exercise its power of sale by virtue of a default in the observance of that covenant: Provident Capital Limited v Printy (supra) per Basten JA at [48] to [51].

79 There was no issue in the present case but that the indebtedness of Mrs Cipri arose under the Loan Agreement and her obligations thereunder were secured by the Mortgage over her interest in the property. 80 In light of the principles to which I have referred and having particular regard to the observations of Bryson AJ in Chandra (supra), it was common ground that because of the forgery, the personal covenant to pay the loan with interest contained in the Mortgage was not enforceable against Mr Cipri.

81 Mr Leopold, on behalf of Perpetual, relied upon the fact that the Mortgage lists both the first and second defendants (Mr and Mrs Cipri) as "Mortgagor" and that the whole of the property is expressed to be the subject of the Mortgage. Further, the Mortgage is expressed to incorporate the provisions of Memorandum No 3625652. Particular reliance was placed on the covenant embodied in clause 3.1 of the Memorandum which is extracted in paragraph [48] above, and on the definition of words in that clause.

Consideration of the principal claim 82 The mortgage instrument in this case stated that the "Mortgagor" "mortgages to the mortgagee all the mortgagor's estate and interest in the land…". 83 Clause 3.1 of the Memorandum to the Mortgage, as identified in the submissions of Perpetual was "the key covenant" in the Mortgage. 84 The provisions of the Mortgage, including, in particular, the definition of "Mortgagor" as indicated on the first page of the Mortgage and in the provisions of clause 17.18 of the Memorandum, make it clear that it secured all monies, presently owing or owing in the future, by both or either of the defendants to Perpetual.

85 Mr Cipri was not a party to the Loan Contract (his signature having been forged), he does not owe the plaintiff any monies under the Loan Agreement and there is no agreement otherwise between him and the plaintiff obliging him to pay monies to Perpetual. 86 Clause 1 of the Loan Agreement, read in conjunction with clause 1.2 of the Terms and Conditions (the "You" definition), contained a covenant by the "Borrower or Borrowers" to repay the money lent in accordance with the terms of the loan, the terms being set out in the agreement and the schedule thereto as well as in the accompanying Terms and Conditions Booklet. 87 Importantly, clause 22.3 of the Terms and Conditions provided for joint and several borrowing. 88 Consequently, by virtue of clause 1 of the Loan Agreement (as understood by reference to clause 22.3 of the Terms and Conditions), the second defendant (Mrs Cipri) was obliged to repay all amounts due under the loan. The Loan Agreement incorporated a covenant, obliging her to repay Perpetual the entirety of the amount lent. 89 By reason of the definition of "Secured Money" employed in clause 3.1 of the Memorandum to the Mortgage, the Mortgage itself secured Mrs Cipri's indebtedness under the loan. That debt was money payable or owing by her, she being severally, as well as jointly, liable to Perpetual. 90 Given that the Mortgage secured Mrs Cipri's indebtedness (that being the entire amount lent under the Loan Agreement) and as the whole of the property was subject to the Mortgage, Perpetual is entitled to enforce the Mortgage against both the first and second defendants' interests in the property. 91 Although at common law a mortgage purportedly signed by two joint tenants is not enforceable against the joint tenant whose signature on the mortgage has been forged, absent fraud on the part of the mortgagee or its privies, the fact of registration confers on the mortgagee an indefeasible interest in the land the subject of the mortgage irrespective of whether the mortgage was a forgery: Breskvar v Wall (1971) 126 CLR 376; Tsai (supra) at [11], [13]; Chandra (supra) at [1]. 92 The plaintiff is, accordingly, entitled to enforce the mortgage and seeks to invoke s.58 of the Real Property Act, this section conferring the power of sale on a mortgagee in circumstances where the requirements of s.57(2) of the Act have been satisfied. 93 Section 57(2) of the Real Property Act provides that:- "… a registered mortgagee … may, subject to this Act, exercise the powers conferred by s.58 if:- (a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition express or implied in the mortgage or charge …" 94 Perpetual relied upon the fact of a default on an express covenant in the mortgage, that being clause 3.1 of the mortgage and as required under s. 57(2)(a) of the Act. Accordingly, on the basis of the principles referred to above and by the terms of the Mortgage and Memorandum thereto, subject to resolution of the defences raised and the first cross-claim (as to which see discussion below), Perpetual is authorised as mortgagee to exercise the power of sale under s.58 of the Act.

Defences raised by Mr Cipri (1) A personal equity 95 Mr Tregenza of counsel submitted on Mr Cipri's behalf that the conduct of Perpetual, in producing the relevant certificate of title to the Registrar-General and otherwise using it without Mr Cipri's authority, gave rise to a personal equity in his favour to have the mortgage set aside: see Statement of First Cross-Claim, dated 23 January 2007, at [5]-[7]. 96 Mr Cipri's particulars in the Amended Defence as to the circumstances anterior to the registration of the Mortgage are limited. In his defence as well as his cross-claim, Mr Cipri pleaded that "on or about 28 August 2003, the cross-defendant [Perpetual] received a document purporting to be a mortgage approved for registration … in which the cross-claimant [Mr Cipri] and Sandria Cipri purported to be the mortgagors" and that "the cross-defendant [Perpetual] registered the Mortgage" and "produced to the Registrar-General … the certificate of title": Statement of First Cross-Claim, dated 23 January 2007, at [2]-[5]. 97 Notwithstanding the provisions of the Real Property Act, especially s.41 and s.42, and the concept of indefeasibility which those provisions establish, the proprietor of a registered interest is not immune from claims founded on personal equities: Frazer v Walker [1967] 1 AC 569; Bahr v Nicolay (No 2) (1988) 164 CLR 604; Mercantile Mutual Life Insurance Co Limited v Gosper (1991) 25 NSWLR 32. Such rights in personam may be enforced against the registered proprietor whether they arose before or after the registered interest was acquired: see Gosper (supra) at 42 per Mahoney JA. 98 In this case, the personal equity is claimed to arise from conduct of the registered mortgagee preceding registration of its interest. 99 It is well-established that the mere fact of forgery does not make it unconscientious for the registered mortgagee to enforce its security and that no personal equity (in favour of the defrauded mortgagor) to have the mortgage set aside arises from that fact alone: Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 per Gleeson CJ at 736. Something more is needed: Gosper (supra) at 47 per Mahoney JA. 100 In Vassos v State Bank of South Australia [1992] V Conv R ¶54-443 Hayne J stated:- "… it may well be that the bank did not act without neglect but there is in my view no material which would show that the bank acted unconscionably. There was no misrepresentation by it, no misuse of power, no improper attempt to rely upon its legal rights, no knowledge of wrongdoing by any other party. It obtained a mortgage apparently regular on its face but which was in fact forged. Even if by making reasonable enquiries the bank could have discovered the fact of the forgery I do not consider that that fact alone renders its conduct unconscionable. I do not consider that the plaintiffs have any in personam right against the bank …" 101 The first cross-claim does not plead and the evidence in these proceedings fails to establish considerations such as those referred to by Hayne J in Vassos (supra). The only fact before this Court, upon which Mr Cipri placed emphasis, was Perpetual's use of the certificate of title without his authority. But the mortgage being a forgery, it is necessarily inherent that production of the Certificate of Title occurred without Mr Cipri's authority. 102 Mr Tregenza relied, amongst other authorities, upon the judgment of Mahoney JA in Gosper (supra) to support the claim of a personal equity in his client's favour. There, the mortgagee had used the certificate to obtain registration of its variation of mortgage (increasing the debt) in circumstances said to have breached its obligations to the registered proprietor of the premises and supposed mortgagor, Mrs Gosper (the variation of mortgage was, in fact, a forgery). Whilst Mahoney JA referred to the mortgagee producing the certificate to the Registrar-General without the authority of the registered proprietor of the land, his Honour's finding of a personal equity in favour of Mrs Gosper at pp.47-48 of the judgment was founded upon the circumstances that had led to the mortgagee having had custody of the certificate and the obligations arising in that respect. The personal equity arose not simply by virtue of an unauthorised use of the certificate but by reason of its use by the mortgagee "in breach of its obligations in relation to the possession and custody of the certificate of title": Gosper (supra) at 48-49 per Mahoney JA. 103 In the present case, Mr Tregenza acknowledged that the Certificate of Title lay, originally, in the joint possession of Mr and Mrs Cipri and that Mrs Cipri, as a joint tenant of the property, was entitled to possession of the certificate which she gave to Perpetual. 104 In this present case, the evidence does not establish any custodial obligations owed by Perpetual to Mr Cipri in contrast to the position that existed in Gosper (supra). 105 Mr Leopold, in his submissions, emphasised that there was no pleaded case raising material facts as to circumstances in which Perpetual had held the Certificate of Title. The only fact pleaded was the act of producing it to the Registrar-General. Further, no obligations of any kind in Perpetual, vis a vis Mr Cipri, were pleaded to support any contention of breach. 106 Mr Leopold also contended that no different principle applied in the case of co-owners in a forged mortgage case to that in a single owner case. In particular, he contended there was no obligation on the part of a mortgagee to inquire by virtue of the fact that the property is held in co-ownership. Further, in this case, he emphasised there was no allegation of actual or constructive notice in Perpetual in support of the "personal equity" alleged. 107 Mr Leopold relied upon a number of authorities including Vassos (supra), Story (supra) and more recently Vella v Permanent Mortgages Pty Limited [2008] NSWSC 505 (Young CJ in Eq) at [365], [366], [371], [372], [375] and [379] and Spina v Conran Associates Pty Limited [2008] NSWSC 326 (Austin J). 108 Mr Leopold and Mr Tregenza also referred to extracts from the Law of Torts by R P Balkan and J L R Davis, Lexis Nexis Butterworths [2004] at [4.18] and [4.19], the latter entitled "Acts of conversion". At [4.18], reference was made to the distinction between exercising dominion over another's goods and "a mistaken belief as to that identity or ownership". Mr Leopold contended that this distinction is an important one in mortgage forgery cases where, in the nature of such cases, someone has been duped and has acted under a mistaken belief as to identity or ownership. Conversion, he contended, requires "something higher" - an intention to exercise dominion over them and denial of the rights to a person over immediate possession. 109 In the course of this submissions, Mr Tregenza referred to Atwood v Ernest (1853) 138 ER 1449; Re Gillie, ex parte Cornell (1996) 150 ALR 110 and Kitano v Commonwealth (1974) 129 CLR 151. 110 In Atwood (supra), a declaration was sought that the defendant had detained from the plaintiff certain books, papers and other records, these items being the property of a number of persons who also had a right to possession jointly with the plaintiff. The defendant denied the plaintiff's right to claim against him in detinue. It was held in that case that where two or more who are jointly interested in a chattel, deposit it with a stranger, a demand by one in his own name only, and not on behalf of all, will not entitle such one person to maintain detinue for it: see Maule J at 1453. 111 In Kitano (supra) at 172, the High Court adverted to the principles relating to a claim in conversion and, in particular, that conversion may be brought at the instance of a co-owner of a chattel. 112 Mr Tregenza also relied upon the dicta of McMurdo J in White v Tomasel [2004] 2 QdR 438 at 455. In that case involving the sale of real property by auction, it was contended that the auctioneer had sold the property to the respondent at a figure which was below the reserve price and therefore without the authority of the appellant. On an application before a District Court Judge, an order was made that the appellant comply with obligations pursuant to the relevant contract of sale and proceed to settlement in accordance with the specific conditions of the contract within a specified period. 113 On appeal, a question arose as to whether or not the appellant had established as "equity" within s.185(1)(a) of the Land Title Act 1994 (Qld). McMurdo J stated at 455:- "72. Accordingly, to constitute an 'equity' within s.185(1)(a), the interest must arrive from a recognised right of action, at law or in equity, which arises from the acts of the registered proprietor and which is not inconsistent with the policy of a Torrens system of title. In some cases, fine questions can arise as to whether a proprietary right, which would be recognised under the general law and which arises at least partly from the registered proprietor's acts, can be enforced against a registered interest consistently with the policy of Torrens title … 73. But in the present case, the restitutionary obligation on the respondents does not derive from any knowledge or notice of another person's unregistered interest in the land. Instead, it derives from the respondents' actions in acquiring their title by the orders of a court which should not have been made. There is no tension here between the enforcement of the restitutionary obligation and the policy and objectives of a Torrens system of title. To exempt the respondents from the performance of their obligations simply because they have reached the high ground of a registered interest would not advance the purposes of the Torrens system, but it would undermine the administration of justice by significantly limiting the powers of courts to correct erroneous judgments and to reverse their consequences. To hold that the registered interest of a proprietor in these circumstances is the subject of an obligation enforceable against the proprietor is not to derogate from that interest; it is simply to say that the interest itself, like other property, can be the subject of rights as a result of circumstances of the proprietor's making." 114 McMurdo J went on to refer to examples including those in Vassos (supra), Story (supra) and other cases and continued:- " 74 … In each of these cases, because the mortgagee's title was derived from its registration and not from the mortgage instrument itself, a personal obligation was sought to be established by reference to what was known or should have been known by the mortgagee, and which was said to affect its conscience when seeking to enforce its mortgage. Each of those claims failed, not because a recognised cause of action under the general law was defeated by the registration of the mortgage, but because the facts did not give rise to any recognised cause of action. In the circumstances of those cases, the establishment of the cause of action depended upon proof of some knowledge of the forgery or other invalidity of the instrument which would have made it unconscientious or unconscionable to have enforced the mortgage. A mere failure to make careful inquiries as to the validity of the mortgage instrument was not sufficient to provide an obligation under the general law, irrespective of the impact of registration. The alleged cause of action in each case was equitable, and the claim was rejected because the established facts should not have affected the mortgagee's conscience. Thus, in Vassos , Hayne J said that 'it may well be that the bank did not act without neglect but there is [in] my view no material which would show that the bank acted unconscionably'. In Mercantile Mutual Life Insurance Co Limited v Gosper … the mortgagee was held to be subject to an equity enforceable under the general law, because it facilitated the registration of a forged mortgage by its own breach of certain obligations to the registered proprietor relating to possession and custody of the certificate of title. In my view, the use of the criterion of unconscionability in these cases should not be understood as meaning that, in every case, the registered proprietor's interest is susceptible to the performance of obligations arising from his own actions only where there is some element of unconscientious or unconscionable conduct. When Hayne J remarked in Vassos that there was no misrepresentation, misuse of power, improper attempt to rely upon legal rights or knowledge or wrong-doing by the other party, his Honour was excluding the grounds for the obligation sought to be imposed upon that registered proprietor in the facts and circumstances of that case, rather than attempting to comprehensively list the circumstances in which a registered proprietor might be bound by his own actions in relation to his registered interest …" 115 Mr Tregenza's submission based on the above authorities was that the use of the Certificate of Title in the present case by Perpetual where Mr Cipri was a co-owner with a right to possession of the Certificate of Title was unauthorised. Such unauthorised use by it so as to deny Mr Cipri's possessionary rights in respect of it was said to amount to a conversion and went to support the personal equity asserted by him. These submissions, however, are to be evaluated in light of established principles including, in particular, the dicta of Hayne J in Vassos (supra) set out in paragraph [100] above. 116 There was, in the present case, apart from the allegation of the production of the Certificate of Title, in my opinion, neither particularisation of a case nor evidence sought to be relied upon to establish a claim founded on a personal equity as discussed in Frazer (supra) and Gosper (supra). Mr Tregenza properly conceded that, in the present case, Mrs Cipri was entitled to put the Certificate of Title in the hands of the plaintiff, although he added not such as to authorise it to produce it, she only being one of two co-owners. 117 I have, accordingly, concluded that the circumstances of the present case do not establish the claimed personal equity. In particular, there is no evidence of actual or constructive knowledge in Perpetual of any wrongdoing or impropriety or of any misuse of power by it and no evidence of any breach of an obligation by Perpetual. (2) Relief under the Contracts Review Act 118 The second defence was based upon the Contracts Review Act. Section 7 of the Act provides:- "(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following:- (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that:- (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument." 119 A foundational issue in the present case is whether there existed a contract for the purposes of the Contracts Review Act to which the first defendant and Perpetual were parties. 120 Mr Tregenza sought to argue that the forged Mortgage was a contract to which they were parties for the purposes of the Act. He submitted that by registration of the Mortgage under the Real Property Act, it was deemed to be a contract thus enabling the first defendant to seek relief under the Contracts Review Act. 121 As Mr Tregenza observed, the term "contract" is not defined by that Act. He noted that statutes may operate so as to produce results departing from those otherwise arising at general law. Accordingly, he contended, by virtue of statutory provisions a contract may be deemed to exist despite the absence of a meeting of the minds. Mr Tregenza pointed in that respect to s.55 of the Sydney Water Act 1994, which provides for an owner of land connected to one of the Corporation's water mains to be taken as having entered into a contract with the Corporation. He then submitted that the same outcome (as that provided for explicitly in s.55 of the Sydney Water Act) had occurred in respect of the forged mortgage owing to the operation of the Real Property Act. In aid of this submission, he drew attention to s.36(11) of the latter Act providing that:- " Upon registration, a dealing shall have the effect of a deed duly executed by the parties who signed it. " 122 In Permanent Trustee Company Limited v Frazis [1999] NSWSC 319, Dunford J dismissed a notice of motion by the applicants to set aside a default judgment which had given the respondent a right to possession of their premises. The applicants argued that their signatures on the Loan Agreement and Mortgage were forgeries yet also sought to argue that the contract was unjust. As explained by Dunford J at [17]:- " I fail to see how parties who deny that they entered into a contract can at the same time argue that such contract was unjust. The Contracts Review Act 1980 is an Act designed to review unfair contracts, not an Act to set aside relationships or obligations constituted by forged documents. The applicants' present predicament is not due to them having entered into a contract which was 'unjust' within the meaning of that Act, but to the operation of the relevant provisions of the Real Property Act 1900 and in particular to the force and effect which that Act gives, on registration, to forged instruments." 123 In Khan v Hadid [2003] NSWSC 1191 at [24], Cripps AJ upheld a mortgagee's application for summary judgment, noting that counsel for the mortgagors had failed to provide any authority in support of the contention that s.42 of the Real Property Act operates to deem the existence of a contract notwithstanding the forgery (the decision of the primary judge being overturned on appeal for different reasons). 124 More recently, in the decision of Chen v Song [2005] NSWSC 19, James J at [179] stated:- "It would seem that what is validated by the registration of a forged instrument does not amount to a contract to which the Contracts Review Act can apply." 125 His Honour did not advert to the possible impact of s. 36(11) of the Real Property Act but cited the decisions of Khan (supra) and Frazis (supra) in support. 126 The first defendant sought to place reliance on the decision in Small v Gray [2004] NSWSC 97. In that case, McDougall J found the existence of a contract for the purposes of a grant of relief under the Contracts Review Act, reasoning that the registration of the mortgage, by virtue of s.36(11) of the Real Property Act, gave the mortgage the effect of a deed between the plaintiffs and the defendant in question: Small v Gray (supra) at [74]. Whilst in that case the mortgage in question contained a forgery (one of the signatures of the two mortgagors having been forged), it was the mortgagor whose signature had not been forged who sought relief under the Contracts Review Act. Accordingly, so far as that mortgagor's interest was concerned, s. 36(11) of the Real Property Act could operate to give the mortgage effect as a deed "duly executed by the parties who signed it": see Small v Gray (supra) at [79]-[80]. 127 However, McDougall J in referring to the facts of Frazis (supra) observed:- "… It is at least arguable that that subsection would have no application to the facts before his Honour, because neither of the applicants could be described as 'parties who signed' the relevant mortgage. Had Rodney pursued his defence under the Act, then the reasons of Dunford J in Frazis would have been a substantial barrier in his path" (Rodney's signature in Small was forged). 128 The result in Small v Gray (supra), accordingly, does not assist Mr Cipri on the facts of the present case. He was not a person "who signed it" (the Mortgage) and, as such s.36 (11) of the Act, in my opinion, can have no operation. 129 I find no reason to depart from the line of authority commencing with Frazis (supra). As there is no contract between Mr Cipri and Perpetual, the basis required for the grant of relief under the Contracts Review Act is absent. Accordingly, the defence raised in reliance on the Act and the first cross-claim seeking relief under it must fail.

Second cross-claim 130 By the second cross-claim, Mr Cipri claims an order against the Registrar-General for compensation from the Torrens Assurance Fund. In that cross-claim, Mr Cipri relies, inter alia, upon the following matters:- "7. Perpetual has commenced the proceedings by the Statement of Claim for possession of the land and for leave to issue a writ of execution for possession of the land and costs against, inter alia, the cross-claimant. 8. The cross-claimant has defended the proceedings on the basis of the matters set out in the Defence and has brought the First Cross-Claim against Perpetual. 9. Subject to paragraph 10 hereof, as a consequence of the registration of the Mortgage, the cross-claimant has suffered loss and damage arising from the registration of the mortgage. 10. These proceedings are brought in the alternative to the Defence to the Statement of Claim and the First Cross-Claim in the event that the cross-claimant is liable to Perpetual for the monies secured by the Mortgage." 131 In the Registrar-General's Outline of Submissions, it is stated that, on the basis of Mr Cipri's denial that he executed the Mortgage, that his wife forged his signature and he was unaware of the Mortgage until service on him of the Statement of Claim that, if the Mortgage is enforceable over his interest in the property, then he will have suffered loss or damage by reason of Sandria Cipri's conduct in relation to the Mortgage. 132 In paragraph 8 of the Registrar-General's written submissions, it is also stated that, in the event that Mr Cipri is found to be entitled to payment of compensation from the Torrens Assurance Fund on the second cross-claim, then the Registrar-General seeks indemnity, alternatively contribution, from Sandria Cipri in respect of any amounts payable by the Registrar-General to Mr Cipri. 133 The Registrar-General relies upon the third cross-claim filed on 21 February 2008 and the affidavit evidence of James Greig sworn 18 March 2008 (as to service of the filed third cross-claim on Sandria Cipri on 3 March 2008), the affidavit of Miriam Neil sworn 13 November 2007 (as to service of the Registrar-General's motion) and affidavit in support of P A Woodin sworn 7 November 2007 with covering letter, on Sandria Cipri, on 7 November 2007, the affidavit of Patricia Anne Woodin sworn 15 February 2008 and the affidavit of Patricia Anne Woodin sworn 29 July 2008. 134 The third cross-claim was personally served on Sandria Cipri on 3 March 2008. She has failed to file an appearance in accordance with Rule 6.10(1) or to file a defence in accordance with the Rule 14.3(1) of the Uniform Civil Procedure Rules 2005. On that basis, Mrs Cipri is in default for the purposes of Part 16 of the Rules: Rules 16.2(1)(a). 135 In the written submissions on behalf of the Registrar-General, in the above circumstances it is contended that the pleaded allegations are deemed to have been admitted. 136 In paragraph 13 of the Registrar-General's written submissions, it is stated:- "If the Court finds that the Mortgage is enforceable over Domenico Cipri's interest in the Property, making findings to the effect of the matters referred to in paragraphs 3 and 5, Domenico Cipri will have suffered loss or damage by reason of Sandria Cipri's conduct in relation to the mortgage." 137 Accordingly, on the basis that Mr Cipri is entitled to claim compensation from the Torrens Assurance Fund, then, as stated above, in that event, the Registrar-General seeks indemnity or, alternatively, contribution in respect of the same. 138 On the above basis, the Registrar-General seeks judgment against Mrs Cipri together with costs. 139 The affidavit of Mr Cipri sworn 2 November 2007 establishes that he did not execute the Mortgage, that his signature on the Mortgage was forged and that he was unaware of the Mortgage until service on him of the statement of claim. 140 On the basis of the failure by the third cross-defendant, Sandria Cipri, to file an appearance, to file a defence and failure to attend the hearing, the pleaded allegations have gone forward unopposed. 141 On the basis that Perpetual has, as I have held, established an entitlement to orders referred to below and in light of the evidence of the first defendant, Mr Cipri, which entitles him to an order on the second cross-claim against the Registrar-General, the Registrar-General, having regard, in particular, to the provisions of s.133(2) of the Real Property Act is, in my opinion, entitled to an order by way of indemnity in respect of compensation payable by it from the Torrens Assurance Fund against the third cross-defendant, Mrs Sandria Cipri, as well as to an order against her for the costs of the proceedings.

Orders 142 On the basis of the conclusions which I have expressed, I propose that there be orders as follows:-

(1) An order that the first and second defendants give the plaintiff possession of the whole of the land comprised in Certificate of Title Folio Identifier Lot 120 in Deposited Plan 255678 and known as 48 Beechwood Avenue, Greystanes NSW 2145.

(2) That a writ of possession issue, such writ not to issue before eight weeks from the making of final orders.

(3) An order that the second defendant pay to the plaintiff the amount of outstanding loan monies together with fees, charges, expenses and interest calculated in accordance with the Loan Contract dated 17 June 2004 from 20 November 2006 to the date of making final orders.

(4) An order that the first cross-claim be dismissed.

(5) An order that the first defendant/cross-claimant is entitled to payment of compensation from the Torrens Assurance Fund in respect of loss arising from the conduct of Mrs Sandria Delores Cipri and from an act of the Registrar-General as specified in s.129(1) of the Real Property Act 1900.

(6) Judgment for the cross-claimant on the second cross-claim ( "Domenico Cipri" ) against the cross-defendant to the second cross-claim ( "Registrar-General" ) for $280,000 plus costs.

(7) The Registrar-General to pay the costs of Domenico Cipri of the second cross-claim.

(8) An order that the third cross-claimant, the Registrar-General, is entitled to be indemnified by the third cross-defendant, Sandria Delores Cipri in respect of compensation to which the first defendant, Mr Domenico Cipri, is entitled from the Torrens Assurance Fund.

(9) An order that the third cross-defendant, Sandria Delores Cipri, pay the Registrar-General's costs of the third cross-claim. 143 I will hear any submissions of the parties on the above orders as proposed and as to any costs orders including any order sought by the plaintiff. 144 I request that the parties bring in short minutes of order to give effect to these reasons. 145 The proceedings may be re-listed on a date and at a time suitable to the parties by arrangement with my associate. **********

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