Capital Finance Australia v Struthers [2008] NSWSC 440

Behind his wife’s back the husband borrowed from Capital Finance and secured the loan on his half of the matrimonial properties. The husband was a gambler and the marriage broke up with the wife agreeing to consent orders for the mortgaged property to be conveyed to her and other property to the husband.

Thus there were competing priorities between the lender and the wife. The court had to determine which party was entitled to the property. The court applied the usual rule (first in time prevails) to favour the lender’s interest, but then applied the exception rule (failure to caveat reverses the usual rule) and postponed the lender’s interest to the wife because the lender failed to lodge a caveat until after the wife’s interest had been created.

Lenders who are interested in the law of priorities should contact Bransgroves Lawyers and ask for a copy of Matthew Bransgrove’s seminar paper Understanding Mortgage Priorities.

Click here to read the full judgment

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