It doesnt operate as notice of the caveators interest

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Unformatted text preview: prior to the bank lodging any documentation. ISSUE: Did the lodging of a caveat give the second equitable mortgage priority over the earlier equitable (unregistered) mortgage? DECISION: The High Court held that the priority of the bank’s equitable interest had not been lost by the failure to lodge a caveat or register the mortgage. The purpose of a caveat is to act as an injunction to prevent registration of later dealings until notice is given to the caveator. It doesn’t operate as notice of the caveator’s interest. The bank was entitled to rely on its possession of the duplicate Certificate of Title and on the practice of the Registrar-General of refusing to accept a Memorandum of Mortgage for registration without production of the duplicate Certificate of Title. COMMENT: When there are competing mortgages, the legal mortgage (recognised by common law and equity) takes priority over an equitable mortgage (recognised in equity only), and equitable mortgages take priority in order of creation. A legal mortgage takes priority over an equitable mortg...
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