Hypec Electronics v Registrar-General [2005] NSWSC 1213

The plaintiff sought an order pursuant to s 96 of the Conveyancing Act 1919 to allow a property to be transferred. Section 96 had, up until this case was decided, been used by unregistered second mortgagees to force the production of the certificate of title by registered first mortgagees to allow the registration of the first mortgage. Section 96 states:

A mortgagor shall be entitled to inspect documents of title in the custody of the mortgagee. The mortgagor shall be entitled to have the relevant certificate of title lodged at the office of the Registrar-General, to allow of the registration of any authorised dealing by the mortgagor with the land.

The lender resisted the order on the grounds that its mortgage contained the following provision:

The Mortgagor will not without the consent in writing of the Mortgagee (which consent may be subject to such terms and conditions as the Mortgagee thinks fit) transfer, convey, sell, assign, surrender or create any Security Interest in or over or otherwise deal with or dispose of any part of the Mortgaged Property.

The judge decided that as a result of this clause the transfer was not an authorised dealing:

My conclusion, in all the circumstances, is that the expression “authorised dealing” ought receive the interpretation that the dealing is permitted or not forbidden as between the borrower and the lender.

After this decision was handed down the Land Titles Office issued circular number 2006/04 in which they announced they would no longer act on any request by a second mortgagee (without distinguishing cases where the first mortgage prevented the dealing).

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