Yazgi v Permanent Custodians Ltd

The New South Wales Court of Appeal considered a dispute between Sabah Yazgi and Permanent Custodians Ltd concerning a registered mortgage over jointly owned land. Yasin Yazgi, the other joint tenant, had forged a mortgage document and housing loan contract with Permanent Custodians Ltd. The central issue was whether the indefeasible title acquired by the mortgagee through registration of the forged mortgage extended to secure moneys owing under the loan contract against the interest of the innocent joint tenant, Sabah Yazgi.

The Court was required to determine the extent to which a registered mortgage, procured by fraud on the part of one joint tenant, could encumber the interest of the innocent joint tenant. Specifically, the court had to consider the effect of the Torrens system's provisions on indefeasibility of title in circumstances where a forged instrument was registered, and whether the moneys advanced under the loan contract were secured against Sabah Yazgi's interest in the property.

The Court of Appeal allowed the appeal, setting aside previous orders. It declared that no moneys were secured by the registered mortgage against Sabah Yazgi's interest in the property and that she was entitled to a discharge of the mortgage in relation to her interest. Conversely, the mortgage was declared to have full force and effect against Yasin Yazgi's interest, with judgment entered against him for the assessed amount. The Court also ordered the sale of the property and directed the distribution of proceeds, with a specific agreed deduction from Sabah Yazgi's share to be paid to Permanent Custodians Ltd.