Case law update – mortgages – inaccurate certification by ELNO subscriber
In the recent case of Perebo Pty Ltd v Wayville Residential Investments Pty Ltd & Ors  SASC 35, the South Australian Supreme Court considered the effect of an inaccurate certification made by the mortgagee’s solicitor upon lodgment of a mortgage. The mortgage was held to be enforceable despite the solicitor for the mortgagee inaccurately certifying that the mortgagee held a copy of the mortgage granted by the mortgagor.
The Registrar General in each state is entitled to rely upon the certification of a subscriber to an Electronic Lodgement Network Operator (ELNO) that a mortgagee holds a mortgage granted by the mortgagor in the same terms as the instrument that is lodged. However where there is inaccurate certification, the instrument registered pursuant to the certification is not necessarily invalidated merely by that fact. The instrument will of course be invalidated if it is fraudulent, or falls within one of the other exceptions to indefeasibility.
However, while the mortgage might not be invalid, by giving an inaccurate certification, the mortgagee, or the mortgagee’s representative such as a solicitor, may face disciplinary action from the applicable regulator, or the risk of being suspended or terminated as a subscriber to the ELNO.
The By Lawyers Mortgages commentaries have been updated to include a summary of this case and a link to the full decision.