Jack and Jill, a middle aged married couple, are registered as co-owners of their freestanding family home in Kensington. The property is held under Torrens Title and they are registered as joint tenants. They have paid off the loan they had taken out from the Eastpac Bank to purchase the property, which is now worth over one million dollars.

The marriage is going through a difficult time, and Jack recently became friends with a single woman living in the USA through an online dating service. He has decided to travel to the US by himself to meet his new friend and start a new life, taking as much money as possible with him. Having very little cash in the bank, Jack successfully applied to Eastpac bank for a new loan of $500,000, with a mortgage over his house as security. The bank manager told Jack he and Jill would need to attend his office to sign a mortgage agreement, but Jack made up a story that Jill was unable to come to the bank to sign personally due to illness. As a long term reliable customer, the manager allowed Jack to take the documents home for his wife Jill to sign. Without telling Jill about the loan, Jack forged his wife’s signature on the mortgage document. The bank accepted the signed mortgage not knowing Jill’s signature was forged, and registered it at the Land Titles Office.

Taking the $500,000 with him, Jack disappeared to the USA, never to return, and made no repayments of the loan. When the loan defaulted, the bank followed the usual procedure and exercised its power of sale over the property to recover the outstanding loan. It sold the property at auction to Mr. Chan, who became registered owner of the land.

Jill has had to vacate the property, but knew nothing about the loan to Jack. She claims the mortgage to the Eastpac bank is void because her signature was forged. She claims she still legally owns the house and should not have to suffer due to Jack’s dishonesty.

Mr. Chan says he is entitled remain owner as he legally bought the property at the auction, and knew nothing about the forged mortgage.

Advise Jill and Mr Chan as to their legal position under the Torrens Title system.