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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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- Three '12