Akfinans Bank v Kulaksiz 5 – “all ten of the purchasers were victims of FRAUD”

Which came first, the chicken or the egg?  A question we have all heard and really, how can it be answered.   The conundrum takes you round in circles.

Which came first in the case of Kulaksiz 5 purchasers, the Contract or the Mortgage. Here again you could be going round in circles – or could you?

My understanding from reading so much on this subject is that there were definitely several Contracts in force before the mortgage. One Contract straddling the small mortgage of March 2005 and one Contract definitely signed after both mortgages were taken, i.e.. March 2005 and November 2005.

That being so, why would a bank not check on the provenance of the land being offered as security. Was it just a mistake on their part? Did they even ask if there was a Contract in place? Now that is a question we might never have the answer to. So let us go back to the situation as we know it.

Contracts were in force before the mortgage was taken, possibly eight of them, and since we are all led to believe that paying Stamp Duty on the Contracts makes them legally binding, why should it be that the mortgage, taken after at least 8 of them were signed, takes precedence over the Contracts?  It would need only one of those Contracts to have had Stamp Duty paid on it to put the mortgage in second place to all the Contracts, in my humble opinion. I am not legally trained so I cannot say with all certainty that I am right. That is the whole point of this article, to throw the subject open to debate.

Two of the Contracts that were signed by the Vendors, were signed deliberately and fraudulently because the Vendors were aware of the existing mortgages and therefore an act of fraud was maliciously perpetrated on the purchasers. The other eight purchasers would almost certainly have had a clause in their Contracts prohibiting the taking of mortgages on their land, so the crime of Fraud has taken place after the fact. Either way, all ten of the purchasers were victims of FRAUD.  Whether or not the bank was aware of the existence of the purchasers is another question we may never have the answer to.

So many questions, so few answers.

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