The state government has been ordered to pay compensation to a Queensland couple whose house was given back to the previous owner by a court, five years after it was sold.
But Jess and Jackie Morecroft may still be required to pay significant costs for the legal action that forced them to move out of the Gold Coast property where they have lived since 2018.
In February, the Queensland Supreme Court ruled the couple's Mermaid Beach home of the past five years still belonged to the previous owner – 83-year-old Hind Issa – and was never transferred into the Morecroft's names, despite being sold and paid for.
That ruling marked the end of a five-year court battle for the couple who have spent hundreds of thousands of dollars trying to keep their family home, which they purchased for $1.265 million at a mortgagee auction in 2018.
Court documents show that soon after the settlement in 2018, the couple were unable to transfer the home into their names because the Registrar of Titles had placed a caveat over the property after Ms Issa contacted them saying her home had been "fraudulently mortgaged by criminals".
The Queensland Supreme Court later found that mortgage was fraudulent and accepted Ms Issa's signature had been forged.
She had alleged the house had been unlawfully mortgaged as security for a loan by a relative who later defaulted.
The court also found the seven mortgagees – described in the documents as "lenders of last resort" -- were not entitled to exercise the power of sale over the house.
The ABC earlier this week revealed the Morecrofts were facing the prospect of trying to recoup their losses from the several mortgagees, who did not personally appear during the Supreme Court trial over the house.
But on Friday, Justice Crowley ruled the Morecrofts were entitled to recover $2.7 million from the Queensland government because they had been deprived of the property due to the mortgage fraud.
Queensland Law allows a person who has been "deprived of an interest in a lot" because of fraud to make a claim for compensation.
Government could appeal
Outside court, Mr Morecroft said the order was a "huge relief" as the couple were concerned they would never be able to recoup their losses from the mortgagees.
"It's now a clear instruction for the state to pay us compensation and we just hope they accept the umpire's decision," he said.
The Queensland government has the right to appeal the decision.
Lawyers for the state argued during the trial they should not pay the compensation, court documents show.
The Queensland Supreme Court has also reserved a decision relating to a costs order against the Morecrofts.
In court on Friday, lawyers for Ms Issa argued 10 per cent of the legal costs would be too little for the Morecrofts to pay, calling the figure "fanciful" and "plucked out of the air".
The court previously heard Ms Issa had always maintained her legal interest in her property and the Morecrofts interest was only ever "equitable" despite the fact they paid for the house.
Ms Issa had placed a caveat over the property in an attempt to stop the sale but she agreed to remove it in exchange for $40,000 prior to settlement, documents show.
The woman had negotiated with the mortgagees and while she removed the caveat, she had reserved her rights, the court has heard.
Justice Crowley found her conduct in removing the caveat in exchange for $40,000 was not misleading or "unmeritorious".
"She was clearly pressured by the mortgagees and their lawyers to withdraw the caveat," he said in the February judgement.
He said Ms Issa was, "faced with the prospect of costly legal proceedings brought by the mortgagees to have the caveat removed" which she could not afford to defend and believed she would not succeed in.
The matter will return to court next month and the costs order has been reserved.
