An Auckland $1.8 million mortgage fraud was blocked at the last moment with Westpac freezing funds. Since the fraudster had vanished without a trace, a High Court order was needed to return funds to Merchant Finance Ltd as the rightful owner.
The High Court was told Merchant Finance approved a $1.8 million dollar loan in May 2025 to be secured over Shenquing Song’s property in Auckland suburb Glendowie.
Ms Song had never applied for a loan.
A fraudster claiming to be Ms Song used a forged passport to fox a mortgage broker, Merchant Finance and sundry lawyers into thinking they were dealing with the real Shenquin Song.
The fraud almost succeeded. Funds were advanced by Merchant Finance, lawyers innocently acting for the fraudster registered a mortgage in favour of Merchant Finance over the Glendowie property and the funds passed through the lawyers’ trust account into a Westpac account nominated by the supposed Ms Song.
Only then did suspicions of fraud surface.
Westpac froze the funds.
The Registrar-General of Land registered a caveat on title to the Glendowie property, to block further fraudulent activity.
Westpac subsequently transferred the money back into the trust account of lawyers Chan & Co Legal Ltd. It was now the lawyers’ problem.
It was more than a legal problem for Chan & Co; it was also a practical problem.
Lawyers owe ethical and contractual duties to their clients.
Chan & Co did not where their client was or who she is, other than her not being the real Shenquin Song.
As things stood, Chan & Co were holding funds on behalf of an unknown client as an unsecured $1.8 million loan from Merchant Finance.
To break the impasse, Chan & Co supported a High Court application under Contract and Commercial Law Act declaring the original loan and subsequent mortgage be set aside on grounds of mistake: Merchant Finance thought it was dealing with the real Shenquin Song; the fraudster knew this was untrue and took advantage of this mistake.
Cancellation of the loan contract allowed Chan & Co to return stolen funds to Merchant Finance.
The court was told Merchant Finance said it would release its mortgage after receiving repayment, with the Registrar-General of Land agreeing to then remove the caveat over Ms Song’s Glendowie property.
Song v. Merchant Finance Ltd – High Court (1.04.26)
26.122