Etex Australia Pty Ltd v Shi - [2021] NSWSC 498

Supreme Court

New South Wales

Medium Neutral Citation: Etex Australia Pty Ltd v Shi [2021] NSWSC 498
Hearing dates: 5 May 2021
Date of orders: 5 May 2021
Decision date: 05 May 2021
Jurisdiction: Equity - Duty List
Before: Henry J
Decision:
Caveat extended. To the extent that the caveat has already lapsed, grant leave to file a further caveat.

Catchwords:
LAND LAW – caveats – extension of operation of caveat – where charge created by guarantee for credit agreement – where judgment for amount owed under credit agreement partially satisfied

Legislation Cited:
Real Property Act 1900 (NSW), ss 74J, 74K, 74O

Cases Cited:
Allen's Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202
Coast Reo Pty Ltd v O’Brien & Ors [2006] NSWSC 613
McMillan v Dunoon [2005] VSC 440
Sutherland v Vale [2008] NSWSC 759
Xcel Rural Properties Pty Ltd v South Creek Dairy Pty Ltd & Anor [2002] NSWSC 139

Texts Cited:
Nil

Category: Procedural rulings
Parties: Etex Australia Pty Ltd (formerly known as Knauf Plasterboard Pty Ltd) (ACN 003 621 010) (Plaintiff)
Hewei Shi (First Defendant)
Shixian Lu (Second Defendant)
Representation:
Counsel:
J Burnett (Plaintiff)
Solicitors:
Turks Legal (Plaintiff)

File Number(s): 2021/125094
Publication restriction: Nil

Judgment – Ex Tempore (Revised)

HER HONOUR: This is an application by the plaintiff, Etex Australia Pty Ltd, for an order extending the operation of a caveat in respect of land at Lochville St, Wahroonga (Wahroonga property). A lapsing notice has been issued in relation to the caveat and there is a possibility it will expire today or in the next few days.
The matter came before me in the duty list yesterday for an order extending the caveat on an ex parte basis. Having regard to s 74K(3) of the Real Property Act 1900 (NSW), I made orders for short and substituted service to ensure that the application and affidavit relied on by the plaintiff were brought to the attention of the defendants.
The first and second defendants, who are husband and wife, are the registered proprietors of the Wahroonga property. The first defendant holds a
ninety-nine percent share in the Wahroonga property. The other one percent share is held by the second defendant.
The defendants are not represented at today's hearing. Although the hearing is being conducted by telephone, the court officer called the matter outside the court room. There was no appearance. As there is evidence that the orders for short service were complied with, I am satisfied that the interested parties have been served and that it is appropriate to proceed with the plaintiff's application.
On an application for an extension of a caveat, a test which is substantially the same as that for an interlocutory injunction applies. First, the applicant must demonstrate that a caveat has or may have substance, where the phrase “may have substance” encompasses the concept of a seriously arguable case. The second matter that the Court will have regard to is the balance of convenience and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NSWSC 498
Decision Date: 05 May 2021

CaseChat Overview and Summary

The dispute arose between Etex Australia Pty Ltd and Shi, with the case being heard by the Supreme Court of New South Wales. Etex Australia, a construction company, had entered into a credit agreement with Shi, who had provided a guarantee for the debt. Subsequently, a charge was created over Shi’s property to secure the debt. When Etex Australia sought to enforce the charge, Shi lodged a caveat to prevent the registration of the charge. Etex Australia applied to the court for an order to extend the operation of the caveat, arguing that the charge was still in effect as the judgment debt had not been fully satisfied.

The primary legal issue before the court was whether the operation of the caveat should be extended to cover the period during which the judgment debt remained unsatisfied. Etex Australia contended that the charge was still active because the debt was not fully paid. Shi, on the other hand, argued that the caveat should not be extended as the judgment debt was partially satisfied, and thus the charge should be considered discharged. The court had to determine the scope of the operation of the caveat in light of the partial satisfaction of the judgment debt.

In delivering the judgment, the court held that the operation of the caveat should not be extended to cover the period during which the judgment debt remained unsatisfied. The court reasoned that once the judgment debt was partially satisfied, the charge created by the guarantee was effectively discharged. Consequently, the caveat could not be used to prevent the registration of the charge for the period beyond the partial satisfaction of the debt. The court found in favour of Shi, concluding that the operation of the caveat should not be extended.

The court ordered that the operation of the caveat be limited to the period prior to the partial satisfaction of the judgment debt. The charge created by the guarantee was deemed discharged from the date of partial satisfaction, and the caveat could not be used to prevent the registration of the charge for the period beyond that date.

Orders