IWC Industries Pty Ltd v Union Fidelity Capital Funding Pty Ltd
[2022] NSWSC 1312
•16 September 2022
Supreme Court
New South Wales
Medium Neutral Citation: IWC Industries Pty Ltd v Union Fidelity Capital Funding Pty Ltd [2022] NSWSC 1312 Hearing dates: 16 September 2022 Date of orders: 16 September 2022 Decision date: 16 September 2022 Jurisdiction: Equity Before: Kunc J Decision: Caveat to be withdrawn on terms that an identical caveat may be lodged after registration of incoming mortgagee’s security
Catchwords: LAND LAW — Caveats — Removal of caveat — Removal by order of court — Where caveator will be adequately protected by leave to file identical caveat after incoming mortgagee’s security has been registered
Legislation Cited: Real Property Act 1900 (NSW)
Cases Cited: George Bevan Pty Ltd v Robert Patrick Pty Ltd (1987) 4 BPR 9457
Category: Procedural rulings Parties: IWC Industries Pty Ltd (Plaintiff)
Union Fidelity Capital Funding Pty Ltd (Defendant)Representation: Counsel:
J Wydell (Plaintiff)
JP Redmond (Defendant)
Solicitors:
Citilawyers (Plaintiff)
File Number(s): 2022/273521 Publication restriction: No
Ex Tempore Judgment (revised)
Summary
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This judgment resolves an urgent application brought in the Duty List for the removal of a caveat. For the reasons which follow, the Court has determined that the caveat is to be removed but on terms that the caveator will be entitled to file a further caveat in identical terms after the plaintiff has refinanced the property which is burdened by the caveat.
The facts
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The plaintiff (IWC) is the registered proprietor of land at Killarney Heights (the property). The defendant (Union Fidelity) is a lender or, perhaps more accurately, an intermediary which connects parties who wish to lend money with potential borrowers.
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The ultimate issues in this case are whether on or about 1 February 2022, IWC and Union Fidelity entered into an agreement, referred to as a “prospective approval indication”, for the provision of finance (the agreement); and, whether or not the agreement gave Union Fidelity a security interest in the property for certain fees irrespective of whether or not funds were ultimately advanced through Union Fidelity to IWC. In the events which happened, no such funds were advanced.
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Union Fidelity has lodged a caveat (the caveat) over the property in purported reliance on the rights which it says are conferred upon it by the agreement to secure an amount of approximately $116,000 in fees. IWC wishes to refinance a mortgage which it has over the property. Standing in the way of that refinancing is the caveat. IWC has today moved the Court for an order under 74MA of the Real Property Act 1900 (NSW) that the caveat be withdrawn.
Consideration
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Mr J Wydell of Counsel, who appeared for IWC, entirely properly in my respectful opinion, accepted that there was a serious question to be tried in relation to whether or not Union Fidelity was owed money by IWC that was secured over the property by the agreement. Notwithstanding that concession, Mr Wydell endeavoured to persuade the Court that the strength of his client’s case was such that it should be considered in relation to the balance of convenience. That case was that there was neither an agreement with, nor any consequent liability owed by his client to, Union Fidelity.
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As the nature of the causes of action to be asserted between the parties is clearly at an early stage, and without disrespect to the arguments carefully put by Mr Wydell, it is sufficient for me to record that none of the entirely arguable matters which he raised was of sufficient strength to persuade the Court that there was anything other than a serious question to be tried about what rights Union Fidelity has against IWC. In those circumstances, it seemed to me that the present application turns entirely on the balance of convenience.
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As to the balance of convenience, Mr J P Redmond of Counsel, who appeared for Union Fidelity, again, in my respectful view entirely properly, accepted during the course of argument that his client would be no worse off or, putting it another way, would be adequately protected if it could file a fresh caveat in identical terms to the caveat once IWC had paid out its existing mortgagee and a mortgage had been registered over the property in favour of IWC’s new lender.
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In those circumstances, the present application was indistinguishable from that considered by Needham J in George Bevan Pty Ltd v Robert Patrick Pty Ltd (1987) 4 BPR 9457. In that case, his Honour came to the view that the interests of the caveator would be adequately protected if orders were made to the effect that the existing caveat should be withdrawn but that a substitute caveat be allowed to be filed once the registered proprietor of the subject land had refinanced and a new mortgage had been registered.
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That is what the Court has concluded should occur in this case. The parties have been given an opportunity to bring in short minutes of order to reflect the Court’s conclusion which I will make at the conclusion of these reasons.
Pleadings and possible transfer to the District Court
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However, before doing so, I should also explain why the Court will direct the matter to proceed by way of pleadings by a cross-claim to be filed by Union Fidelity. The final relief sought in IWC’s summons is expressed in the negative:
“1 A declaration that there are no monies due and payable by IWC Industries Pty Ltd to Union Fidelity Capital Funding Pty Ltd.
2 A declaration that IWC Industries Pty Ltd has not authorised Union Fidelity Capital Funding Pty Ltd to lodge a caveat over Land being Lot 1 in Deposited Plan XXXXX .
3 A declaration that the document dated Wednesday 19 January 2022 addressed to IWC Industries Pty Ltd c/- Edward Taffa of Shore Financial and signed by Lajos Kovacs on 1 February 2022 is of no force or effect.”
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Having satisfied the Court that it is entitled to maintain its caveat, both as a matter of discretion and practicality, it seems to me that it now falls on Union Fidelity to assert its right to the money which it claims under the agreement. In those circumstances, the most efficient way to achieve that result is to direct that the matter proceed on pleadings but with Union Fidelity to take the lead by filing a cross-claim.
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I should also record that I gave consideration to whether or not, before anything else happens, the proceedings should be transferred to the District Court once the Court has made orders concerning the caveat. The reason for that is that if Union Fidelity’s claim is, as was explained to me, a claim solely in debt under the agreement for $116,000, then it is not appropriate for a contractual dispute about that amount of money to remain in this Court.
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I remain of the view that, if that is all that the case is about, it should be transferred to the District Court. However, given that the Court will now direct the matter to proceed by way of pleadings, the better course is to await the close of those pleadings and the identification of all the issues between the parties before making any final decision about whether or not the proceedings should be transferred to the District Court.
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It may be that, for reasons of which I am not currently aware, one side or the other may introduce a cause of action which would require the proceedings to remain in this Court. They are, of course, perfectly entitled to do that if so advised. However, I record that if, by the close of pleadings, there is no jurisdictional reason for these proceedings to remain in this Court, I would expect the parties to agree when the matter is next before the Registrar for the proceedings to be transferred to the District Court.
Conclusion
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The orders of the Court are:
“1. Upon notification from IWC Industries Pty Ltd to Union Fidelity Capital Funding Pty Ltd (UFCF) to register a new mortgage, UFCF will withdraw caveat ASXXXXX to allow registration of the necessary discharge and new mortgage.
2. Grant leave to UFCF to lodge a further caveat upon registration of the discharge and mortgage in identical terms to caveat ASXXXXX .
3. Direct the proceedings to continue on pleadings with the Defendant to file a Cross-Claim by 7 October 2022.
4. Plaintiff to file defence to Cross-Claim by 28 October 2022.
5. Defendant to file reply to defence to Cross-Claim by 18 November 2022.
6. The matter be listed for directions before the Equity Registrar on 21 November 2022.
7. Liberty to apply on three days’ notice.
8. Costs reserved.”
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Decision last updated: 28 September 2022
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