Land Title Act 1994

This section applies if—

a person (the mortgagee) is recorded in the freehold land register as a mortgagee of a lot, or an interest in a lot, under an instrument of mortgage; and

the execution of the instrument of mortgage involved, or was associated with, fraud against a person (the defrauded person) who is or was a registered proprietor of the lot; andExamples—

the mortgagee is entitled to—

if the lot or interest is sold—any proceeds of the sale; or

payment of an amount under the mortgage, if the mortgage is otherwise discharged; and

if the position of the defrauded person in relation to the lot or interest is not otherwise rectified, the defrauded person will be entitled to compensation under section 188 for deprivation of the lot or interest.

Subsections (3) and (4)—

apply to limit the interest and costs components of the proceeds of sale or an amount that the mortgagee is entitled to under the mortgage; and

apply despite anything to the contrary in the instrument of mortgage (including any associated document).

The rate of interest to be applied for calculating the interest component for any particular day for which the instrument of mortgage was in effect must not exceed—

if the rate of interest provided for under the instrument of mortgage for the day is less than or equal to the official cash rate for the day plus 2%—the rate of interest provided for under the instrument; or

if the rate of interest provided for under the instrument of mortgage for the day is greater than the official cash rate for the day plus 2%—the total of the following—

the official cash rate for the day;

2%.

The costs component must be limited to the costs incurred by the mortgagee in directly protecting the mortgagee’s interest as mortgagee of the lot or the interest in a lot, to the extent the costs were reasonably incurred.Examples of costs incurred in directly protecting the mortgagee’s interest—insurance premiums, rates, land taxesExamples of costs not incurred in directly protecting the mortgagee’s interest—costs of entry into possession, costs of exercising power of sale

In this section—costs component means costs incurred by the mortgagee in relation to the mortgage.official cash rate, for a day, means the Reserve Bank of Australia’s official cash rate for the day.