ANZ Ltd v Kavia Holdings [2013] NSWSC 1532

The bank granted a mortgage to enable the purchase of a property. Some 19 years later, the bank by letter of offer made available a further $60m facility to the same mortgagor.

The bank sought possession and the borrower argued that the all moneys mortgage did not secure the advances made pursuant to the letter of offer because that particular debt was not actually incorporated in the mortgage.

The court rejected the argument as misconceived noting that the cases relied upon in support of it were indefeasibility cases concerning forgeries. There was no fraud here and so the mortgage secured the $60m.

The directors of the mortgagor next sought an order under section 125(4) of the Residential Tenancies Act 2010, which empowers the court to make a lease binding against a mortgagee. The judge refused noting:

The legislation is plainly beneficial legislation designed to protect tenants who find themselves in a vulnerable position because of action taken by a mortgagee in circumstances not connected with their tenancy of the property.

The court found that the directors were not in that position and were in no sense arms length from the borrower.

The court ordered possession.

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