C & F Nominees Mortgage Securities Ltd v Karbotli

The matter before the court involved C & F Nominees Mortgage Securities Ltd, the mortgagee, seeking to enforce a registered mortgage against Karbotli, the mortgagor. The dispute centred around the validity of the mortgage, the enforceability of a payment covenant within the mortgage, and the mortgagee's entitlement to indemnity from the Registrar of Titles. The case was heard in the Supreme Court of Victoria.

The primary legal issues the court had to address were whether the mortgagee took reasonable steps to verify the authority and identity of the mortgagor, and if the mortgage was valid and enforceable. Specifically, the court needed to determine if the mortgagee's reliance on a deficient solicitor’s certificate and an incomplete 100 point identification check amounted to reasonable steps under section 87A of the Transfer of Land Act 1958. Additionally, the court had to consider whether the mortgage was enforceable despite no funds being advanced to the mortgagor and whether the mortgagee was entitled to indemnity from the Registrar of Titles under section 110 of the Act.

The court found that the mortgagee did not take reasonable steps to verify the mortgagor's authority and identity, rendering the mortgage void. The court concluded that the mortgagee's reliance on an incomplete identification check and a deficient solicitor’s certificate was insufficient. Furthermore, the court held that the covenant to pay the principal sum was enforceable irrespective of whether funds were advanced to the mortgagor. The court distinguished the current case from Winau Aust Pty Ltd v LCC Property Development Pty Ltd, finding that the mortgage was not void due to the absence of funds. Lastly, the court held that the mortgagee was not entitled to indemnity from the Registrar of Titles because it was in breach of its statutory duty and neglectful.

The court ordered that the mortgage was void and unenforceable, and that the mortgagee was not entitled to indemnity from the Registrar of Titles.