The Queensland government has refused to pay out a Gold Coast couple who found out the house they bought never belonged to them, five years after they moved in.
Lawyers for the state have lodged an appeal against a monetary order made earlier this year, arguing the judge who approved the $2.7 million compensation got it wrong.
In February, the Queensland Supreme Court ruled Jess and Jackie Morecroft's Mermaid Beach home still belonged to the previous owner – 83-year-old Hind Issa – and was never transferred into their names, even though it had been sold and paid for.
The couple has spent hundreds of thousands of dollars trying to keep their family home, which they bought for $1.265 million at a mortgagee auction in 2018.
But it was later found the property still belonged to Ms Issa and the Morecrofts were ordered to pay one-third of the woman's legal costs. At the time, they believed they would be compensated.
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 put a caveat over the property after Ms Issa had claimed her home had been "fraudulently mortgaged by criminals".
The court later found the 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 multiple mortgagees — described in the documents as "lenders of last resort" — were not entitled to exercise the power of sale over the house.
After five years in court, the couple thought the ordeal might be drawing to a close when Justice Lincoln 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.
Government appeals
But the state government has now appealed the order, arguing Justice Crowley erred in law by deciding the Morecrofts had an "equitable interest" in the Francis Street property.
"If anything, the respondents only acquired an equitable right to seek specific performance of the contract," the appeal document said.
Lawyers for the government have appealed on several grounds, including that the Morecrofts were never "deprived of an interest in a lot" because the fraud of Ms Issa's relative, which allowed them to be granted compensation.
Instead they argue the couple were deprived of an interest because of conduct involving the mortgagees who sold the property, and because a title search was not conducted before they entered into the purchase contract.
The state argues the couple "caused" or "contributed to" the loss because of the failure to search the register before signing the contract.
The documents show they claim the judge erred in ordering compensation to the Morecrofts because they did not have any interest in the property.
The state is seeking the compensation order be set aside and the claim for compensation be dismissed.
'They're going to destroy our family'
The Morecrofts told the ABC they were struggling to come to terms with the decision to appeal.
"Initially I just felt like a huge wave go through my body of fear and [questioning] what this means for us," Mrs Morecroft said.
"We were only about five days away from coming out of this and now I just have constant knots in your stomach, constantly feeling sick and worried about what's going to happen."
Mr Morecroft said he believed the state government was thinking about "money not fairness" by continuing the litigation.
"They're not an insurance company but that's not how they're behaving," he said.
"They're behaving like a bad insurance company [saying]: 'Deny, deny, deny'.
"We do not understand why. It's unjust and it's cruel and they're going to destroy our family, and I'm not really sure why they're doing it. I'd like them to tell me why."
The couple want the government to withdraw their appeal, saying they already are unsure how they will meet a costs order that has been made against them.
"We want [the government] to just back down and say: 'You know what, we agree, and it's gone too far'," Mr Morecroft said.
Gold Cost MP Ray Stevens has called on Premier Annastacia Palaszczuk to intervene.
"I think it's time for the premier to step in and override the treasurer's decision on this matter because basically the Morecrofts will be financially ruined out of this appeal and the legal costs," he said.
"And are they [the government] going to go all the way to the High Court? Are they that stubborn about the matter?
"It's just a ridiculous situation for a lovely innocent family and please let them get on with their life in Queensland."
A Department of Resources spokesperson confirmed an appeal had been lodged but said "as this is now before the court it is not appropriate to comment further".
The appeal will be heard at a date to be set.
