Huizhong Investment Group Pty Ltd v Westpac Banking Corporation Ltd

Huizhong Investment Group Pty Ltd, the owner of Torrens title land, entered into two mortgages with Westpac Banking Corporation Ltd, the first and second mortgagee, respectively. After the first mortgage was fully paid, the second mortgagee paid out the first mortgage pursuant to statutory rights under the Conveyancing Act 1919 NSW, sections 94-95, and registered the transfer of the first mortgage. The second mortgagee subsequently claimed to be subrogated to the rights of the first mortgagee under securities collateral to the first mortgage, but no formal assignment of the rights under the collateral securities had been made. The central issues before the court were whether the second mortgagee was entitled to be subrogated to the rights under the securities collateral to the first mortgage, and whether any entitlement to subrogation was lost when the second mortgagee appropriated the sale proceeds exclusively towards payment of the second mortgage debt, discharging the first mortgage.

The court found that the second mortgagee was not entitled to be subrogated to the rights under the securities collateral to the first mortgage, as there had been no formal assignment of the rights under the collateral securities. The court also found that any entitlement to subrogation was lost when the second mortgagee appropriated the sale proceeds exclusively towards payment of the second mortgage debt, discharging the first mortgage. The court held that the second mortgagee was not entitled to disregard the first mortgage debt in its claim to be subrogated to the rights under the securities collateral to the first mortgage, and that any entitlement to subrogation was lost on receipt of the sale proceeds in excess of the first mortgage debt and discharge of the first mortgage.

The court ordered that the second mortgagee was not entitled to be subrogated to the rights under the securities collateral to the first mortgage, and that any entitlement to subrogation was lost. The court also ordered that the second mortgagee's claim for subrogation be dismissed with costs.