Commonwealth Bank of Australia v Christine Maree Delacy

The dispute between the Commonwealth Bank of Australia and Christine Maree Delacy involved the status and priority of mortgages over two strata title properties: a residential unit and a car parking space. Delacy originally mortgaged both properties to a lender, which was later discharged by a loan from the Commonwealth Bank. The Bank, however, only registered a mortgage over the residential unit and not over the car parking space. Subsequently, a second defendant lent Delacy money and obtained an equitable mortgage over both properties, which included the car parking space. The central issue before the court was to determine the priority of the mortgages, particularly whether the Commonwealth Bank had an equitable interest over the car parking space, and if so, whether it took precedence over the second defendant’s equitable mortgage.

The court examined whether the Commonwealth Bank could claim an equitable mortgage over the car parking space. It considered two potential avenues: subrogation and the deposit of title deeds. Subrogation might apply if the Bank had effectively stepped into the shoes of the original mortgagee by paying out the previous lender. Alternatively, if the Bank had taken possession of the titles to both properties, it could have an equitable interest by virtue of the deposit of the title deeds. The court found that the Bank indeed had an equitable mortgage over the parking space, either by subrogation or by the deposit of the title deeds, thereby taking priority over the second defendant's equitable mortgage.

Consequently, the court ruled in favour of the Commonwealth Bank, establishing that it held an equitable mortgage over the car parking space, which had priority over the second defendant's interest. This decision underscored the importance of the possession and registration of title deeds in determining the priority of equitable mortgages. The equitable interest of the Commonwealth Bank was recognised as taking precedence due to its possession of the title deeds for both properties, despite only registering the mortgage over the residential unit.

The final orders of the court recognised the Commonwealth Bank's equitable mortgage over the car parking space as having priority over the second defendant's interest, ensuring that the Bank's security over the property was upheld. This outcome provided clarity on the priority of interests in the context of equitable mortgages, particularly in relation to the possession and registration of title deeds.