Ellis v Newton [2011] NSWSC 117

The tenant fell behind in rental repayments and provided a mortgage over another property to the landlord to secure them. The landlord lodged a caveat over the property.

The tenants alleged that at the time of executing the mortgage, the landlord had told him that if he signed the mortgage the landlord would allow time to trade out of the difficulties but they would be unofficial documents held for the landlord’s personal comfort.

The tenant had difficult constructing a consistent story and the Judge said:

In my view, the assertion that a landlord, following non-payment of rent by the tenant and the guarantor (for an extended period), would seek a mortgage and a consent to caveat without intending those documents to provide security against non-payment is fanciful.

The landlord was therefore entitled to a declaration he held a valid mortgage over the property.

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This decision was appealed.

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