CEG Direct Securities Pty Ltd v Wang

CEG Direct Securities Pty Ltd (the applicant) appealed to the Court of Appeal of New South Wales against a decision concerning the validity of third-party mortgages executed under forged powers of attorney. The dispute centred on whether these mortgages secured any money, given that no funds were advanced to or at the request of the registered proprietors, nor was there any acknowledgement of receipt of funds by them.

The primary legal issues before the Court of Appeal were whether the mortgages, which were registered on the Torrens title land, secured any money in circumstances where the mortgagors had not received any advance and had not acknowledged receipt of such an advance. This involved considering the effect of indefeasibility of title under the Torrens system in relation to mortgages that did not secure any actual debt owed by the registered proprietor.

The Court of Appeal, comprising Bathurst CJ, Meagher and Brereton JJA, reasoned that for a mortgage to secure money, there must be an underlying debt or obligation owed by the mortgagor to the mortgagee. In this case, as no money was advanced to the mortgagors or at their request, and they had not acknowledged receipt of any funds, no debt was created. Consequently, the mortgages did not secure any money, notwithstanding their registration on the Torrens register. The principle applied was that indefeasibility of title does not create a debt where none exists; it protects the registered interest subject to the terms of the registered instrument, and in this instance, the instrument did not secure any money.

The Court granted leave to appeal, directed the applicant to file a Notice of Appeal, but ultimately dismissed the appeal. The balance of the proceedings was remitted to the Common Law Division, and the applicant was ordered to pay the respondents' costs.