Abdallah v Baygan

[2020] NSWSC 166

Supreme Court

New South Wales

Medium Neutral Citation:	Abdallah v Baygan [2020] NSWSC 166
Hearing dates:	2 March 2020
Date of orders:	02 March 2020
Decision date:	02 March 2020
Jurisdiction:	Equity
Before:	Henry J
Decision:	See paragraph [19].
Catchwords:	LAND LAW — caveats — removal of caveat — order that caveats be withdrawn pursuant to s 74MA of the Real Property Act 1900 (NSW) – where there is an order for judicial sale of the property – where no appearance by a caveator – where plaintiffs undertake to hold net proceeds of the sale on trust
Legislation Cited:	Real Property Act 1900 (NSW), s 74MA.
Cases Cited:	Abdallah v Baygan [2019] NSWSC 1507 Hanson Construction Materials Pty Limited v Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240
Texts Cited:	Nil.
Category:	Procedural and other rulings
Parties:	Brian Abdallah (first plaintiff) Karli Anderson (second plaintiff) Ali Baygan (first defendant) Samaneh Ghabelzadeh (second defendant) Westpac Banking Corporation (third defendant) ACN 601 158 507 Pty Ltd (fourth defendant) Bilpin Projects Pty Ltd (fifth defendant) Impero Pacific Group Pty Ltd (sixth defendant)
Representation:	Counsel: Anthony Rogers (plaintiffs) E Cowpe (fifth and sixth defendants)   Solicitors: John B Hajje and Co Solicitors (plaintiffs) KB Legals (fifth defendant) Clyde & Co (sixth defendant)
File Number(s):	2019/242734
Publication restriction:	Nil.

Judgment – ex tempore (revised)

1. By notice of motion filed on 28 February 2020, the plaintiffs seek orders under section 74MA of the Real Property Act1900 (NSW) that the fourth, fifth and sixth defendants be required, by no later than 12 noon on Tuesday 3 March 2020, to withdraw any caveats recorded on the title to the land contained in Folio Identifier 27/226211 located at Walker Avenue, St Ives (the Property).

2. The background to this motion is as follows.

3. On 5 August 2018, the plaintiffs commenced the proceedings seeking judgment against the first and second defendants in the sum of $614,000 in respect of amounts outstanding under a loan agreement and an order for judicial sale of the Property.

4. On 14 October 2019, the third defendant, Westpac Banking Corporation, which has a registered first mortgage over the Property, was joined to the proceedings. The fourth, fifth and sixth defendants, some or all of whom also claim security interests in the Property, were also joined as parties to the proceedings on that day.

5. On 4 November 2019, the proceedings came before Ball J. On that occasion, his Honour found that the plaintiffs' unregistered mortgage over the Property, which had been granted to secure the second defendant's obligations under a guarantee and indemnity, took effect as an equitable charge and made orders for the judicial sale of the Property. His Honour also gave judgment to the plaintiffs for possession of the land: Abdallah v Baygan [2019] NSWSC 1507.

6. The plaintiffs’ notice of motion is being heard today because settlement of the sale of the Property is scheduled to take place this Wednesday, 4 March 2020.

7. The fifth and sixth defendants are represented at today’s hearing of the notice of motion. They consent to orders requiring them to withdraw the caveats they have lodged over the Property. There is no appearance by the fourth defendant.

8. In support of their motion, the plaintiffs rely on the affidavits of Stephanie Anne Hajje sworn 28 February 2020 and of Michael Guest sworn 28 February 2020.

9. Ms Hajje's affidavit annexes the sale contract for the Property, which identifies that the Property is being sold by the plaintiffs for the sum of $3.25 million and that 4 March 2020 is the date of completion.

10. Ms Hajje’s affidavit also annexes a land title search which shows that caveat AN710218 has been lodged against the Property by the fourth defendant, caveat AP287694 has been lodged against the Property by the fifth defendant and caveat AP287764 has been lodged against the Property by the sixth defendant.

11. There is also correspondence annexed to Ms Hajje’s affidavit which indicates that the plaintiffs advised the fourth defendant about the upcoming sale of the Property and sought its agreement to the removal of the caveat it had lodged. No response was received to that communication.

12. The only express statutory pre-condition to the exercise of the Court's power to order the withdrawal of a caveat is that the application for withdrawal be served on the person required to withdraw if the order is made: Real Property Act1900 (NSW), s 74MA(2).

13. That requirement has been satisfied. Mr Guest’s affidavit confirms that, last Friday afternoon, the fourth defendant was served with the plaintiffs' notice of motion in accordance with orders made that day by Hammerschlag J abridging the time for service on the fourth defendant of the motion and any supporting materials to 5pm.

14. A Court will normally order the withdrawal of a caveat under section 74MA unless a caveator can establish an entitlement to an interlocutory injunction restraining the registered proprietor from dealing with the land pending determination of the claim of the caveator. The language of section 74MA is very broad and accommodates the removal of a caveat even accepting that the caveator has a caveatable interest: Hanson Construction Materials Pty Limited v Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240 at [60] – [61], [77].

15. As noted earlier, the fourth defendant has not appeared at today’s hearing. Consequently, it led no evidence as to the nature of the interest sought to be protected by its caveat or why it should not be withdrawn. The plaintiffs have the benefit of an order for judicial sale of the Property which is scheduled to take place this week. Refusing to make an order for withdrawal of the fourth defendant’s caveat would inevitably impact on the orderly sale of the Property.

16. Those matters are, in my view, sufficient to conclude that an order under section 74MA should be made that requires the fourth defendant to withdraw its caveat.

17. I also note that the plaintiffs are prepared to undertake to the Court that the net proceeds of the sale of the Property (after payment of the plaintiffs’ costs and expenses relating to the sale and payment to the third defendant) will be held in the plaintiffs’ solicitor’s trust account until agreement of the active parties to the proceeding or, in the absence of agreement, order of the Court.

18. That undertaking, together with the terms of the orders made by Ball J on 4 November 2019, may go some way to protect the fourth defendant’s position, assuming protection is needed. Ultimately, it will be a matter for the fourth defendant to satisfy the plaintiffs and the fifth and sixth defendants or the Court that it has an enforceable security interest in the Property and that it is entitled to a share in the net proceeds of sale.

19. For these reasons, I make the following orders:

1. Pursuant to section 74MA, the caveat AN710218 recorded on the title of the land at 21 Walker Avenue, St Ives, (being all the land contained in certificate of title Folio Identifier 27/226211 ("the Property")) by the Fourth Defendant be withdrawn by no later than 12.00 noon on Tuesday 3 March 2020.

2. Upon the Plaintiffs notifying the Fifth Defendant in writing that settlement of the Property is about to occur, pursuant to section 74MA, the caveat AP287694 recorded on the title of the Property by the Fifth Defendant be withdrawn on, or immediately prior to, the settlement of the sale of the Property scheduled for 4 March 2020 via the Plaintiffs' PEXA workspace.

3. Upon the Plaintiffs notifying the Sixth Defendant in writing that settlement of the Property is about to occur, pursuant to section 74MA, the caveat AP287764 recorded on the title of the Property by the Sixth Defendant be withdrawn on, or immediately prior to, the settlement of the sale of the Property scheduled for 4 March 2020 via the Plaintiffs' PEXA workspace.

4. In default of compliance with orders 1, 2 or 3, the Registrar in Equity be empowered to act in the place of the Fourth Defendant, the Fifth Defendant or the Sixth Defendant as appropriate.

The Court notes:

5. The Plaintiffs undertake to the Court to cause the net proceeds of the sale of the Property (after the amounts noted in paragraph 14(i) and (ii) of the orders made on 4 November 2019 have been paid out) to be held in the Plaintiffs' solicitor's trust account until:

1. agreement of all the active parties to this proceeding; or (in the absence of agreement)

2. order of the Court.

6. The Plaintiffs, the Fifth Defendant and Sixth Defendant acknowledge and agree that their entitlements (if any) to any surplus proceeds arising from the sale of the property after discharging the first mortgage and payment of usual settlement adjustments, the agent’s sale commission and the vendor’s conveyancing legal costs shall not be affected by the withdrawal of the caveats contemplated by orders (1) to (3).

The Court also directs that:

7. These orders be entered forthwith.

8. The plaintiffs serve a copy of these orders on the fourth defendant by 3 pm, 28 February 2020.

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Decision last updated: 02 March 2020