The BC Court of Appeal handed down its decision in the Gill v Bucholtz case involving real estate fraud.  The Court found that a charge granted by a registered owner who is not the true owner of the title, is invalid.

An excerpt from the judicial reasoning reads as follows:

On its plain meaning, the exception in s. 23(2)(i) to the indefeasibility of title applies and the phrase “void instrument” in s. 25.1(1)  includes a mortgage taken from a person who obtained her title by fraud or forgery, as occurred in this case.  The Act preserves the nemo dat rule with respect to charges – even where the holder has relied on the register and dealt bona fide with a non-fictitious registered owner.  The mortgagees in this case did not acquire any estate or interest in Lot 4 on registration of their instruments because having been granted by a person who had no interest to give, those instruments were void, both at common law and under s. 25.1(1).  With respect, I conclude that the chambers judge erred in law in his interpretation of the scope and nature of indefeasibility in the context of the scheme, and in “applying a principle in favour of indefeasibility … [by assuming] the answer to the … question presented for decision.”  (Vassos, supra, at 322.)

[27]      It may be that in a perfect Torrens system, any person lending money bona fide on the security of a mortgage granted by the registered owner, would have a valid charge.  But there are sound policy arguments on both sides of the question.  The Legislature of British Columbia would appear to have adopted the policy that the cost of frauds perpetrated against mortgagees and other chargeholders should be borne not by the public (as the funders of the Assurance Fund) but by lenders and  other chargeholders themselves.  Whether this policy choice is a good one or not is not for us to decide.  We must give effect to the language of the statute in its ordinary and grammatical meaning.

[28]            I would allow the appeal and order that the mortgages be cancelled as encumbrances against the plaintiff’s title.  In view of the fact that this was in some ways a ‘test’ case which the Authority wished to have decided by this court, I would order that the parties bear their own costs.