Ocvirk v Permanent Custodians [2013] NSWSC 1021

The parents allege the son and his wife forged their signatures on the mortgage.

All monies mortgage

The parents claim that the loan agreement is void and, because the mortgage secured amounts due under the loan agreement, the mortgage itself therefore secures nothing and it is liable to be set aside. This is the indefeasibility of what argument. Ultimately, whether the lender succeeds will depend on how skillfully their mortgage documents were drafted.

In response, the lender made two alternative claims in the event that its mortgage was found to be unenforceable. These were subrogation and restitution.

Subrogation

The parents argued that subrogation is only available where the person seeking subrogation did not obtain the security they bargained for. The judge struck this argument out of the defence because subrogation is only sought as an alternative if the lender’s primary claim under the mortgage fails. The lender’s primary claim is that it did obtain the security it bargained for, the parents’ dispute that. Thus, before the subrogation argument comes into play, the lender would first find that it had not obtained the security it had bargained for.

The borrower argued that subrogation to the earlier mortgage was impossible because it had been discharged and due to the system of indefeasibility there is no mortgage to which the lender can be subrogated. The judge struck this argument out of the defence because it was not consistent with an earlier decision of the Court.

Restitution

The parents denied that any of the money advanced by the lender was for their benefit or that that money was received and had by them. The judge struck this argument out of the defence because that claim was inconsistent with the parents’ admission that the sum of $66k was paid to discharge the earlier mortgage they had with the NAB.

The parents claimed that restitution was not available where the mistake was self induced by the party claiming restitution. The judge struck this argument out of the defence because there is no such requirement.

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