Permanent Custodians v El Ali [2008] NSWSC 1264

A man arranged a mortgage over a property to be purchased in the name of his mother-in-law, as he was a bankrupt and could not own property. This case involved an application by the mother-in-law to set aside part of the default judgment. The mother-in-law alleged her signature was forged on the documents, that she was at a disability due to her unfamiliarity with the English language, and that she received no benefit from the money advanced.

The mortgagee sale did not satisfy the totality of the debt and the mother-in-law challenged the capacity of the mortgagee to enforce, against her, any money amount owing over and above the value obtained for the property. On advice, the mother-in-law differentiated her interest in defending the possession and mortgagee sale from the contractual issues associated with the personal debt. Her solicitor did not appear to become aware of the money judgment until a time well after the entry of the judgment and after the mortgagee sale.

Justice Rothman held that whilst it was regrettable that, at the outset, the appropriate steps were not taken to defend the proceedings, the lender would not suffer irreparable damage, or substantial injustice, if the mother-in-law was permitted to agitate her defence in relation to the money claim. As a consequence, His Honour held it was possible to challenge the money judgment, in so far as it exceeds any amount obtained from the mortgagee sale, without challenging the writ of possession or the mortgagee sale.

Click here to read the full judgment

Scroll to Top