Leslie Peter Sole v Benjamin Nuele Akari

[2007] NSWSC 1022

CITATION:	Leslie Peter Sole v Benjamin Nuele Akari [2007] NSWSC 1022
HEARING DATE(S):	5 September 2007
JUDGMENT DATE :	5 September 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	McDougall J at 1
DECISION:	See paragraphs [17] and [18] of judgment
CATCHWORDS:	TORRENS SYSTEM – Caveat – Whether unregistered mortgage has sufficient interest when mortgage taken after all advances made – Whether forbearance to sue is sufficient consideration for grant of mortgage.
LEGISLATION CITED:	Real Property Act (1900)
CASES CITED:	Earl of Lucan, Re; Hardinge v Cobden (1880) 45 Ch D 470 Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) 5 BPR 11 King Investment Solutions v Hussain [2005] NSWSC 1076
PARTIES:	Leslie Peter Sole (Plaintiff) Benjamin Nuele Akari (First Defendant) Kathryn Dolores Akari (Second Defendant)
FILE NUMBER(S):	SC 3998/07
COUNSEL:	J A Darvall (Plaintiff) D A Allen (First and Second Defendants)
SOLICITORS:	Bizannes & Associates Solicitors (Plaintiff) Hancocks Solicitors (First and Second Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

5 September 2007 (ex tempore – revised 5 September 2007)

3998/07 LESLIE PETER SOLE v BENJAMIN NUELE AKARI

JUDGMENT

1 HIS HONOUR: The plaintiff claims to have lent sums of money totalling about $130,000 to the first defendant, and claims also to have made advances to or for the benefit of the second defendant (who is the wife of the first defendant). I am concerned only with the position as between the plaintiff and the first defendant.

2 On the plaintiff's evidence in cross-examination, there were no loans made after August 2005, although the plaintiff's affidavit refers to advances made "between 2005 and February 2006".

3 The plaintiff claims the benefit of an unregistered mortgage from the first defendant which, as a matter of construction, must relate only to the first defendant's interest as joint tenant in the matrimonial home owned by him and the second defendant. That unregistered mortgage was made on 1 November 2005. On the same day, the plaintiff signed and caused to be lodged a caveat claiming an interest under that unregistered mortgage.

4 The second defendant has given a lapsing notice in respect of that caveat. The plaintiff claims either an order that the operation of the caveat be extended or leave pursuant to s74O of the Real Property Act (1900) to lodge a further caveat.

5 It is in my view clear that the present caveat cannot stand. Although it states the interest claimed, it does not state either the instrument pursuant to which or the facts by virtue of which that interest is said to arise. Thus, the caveat does not comply with the relevant provisions of s74F of the Real Property Act or with the relevant regulations made pursuant to that Act. In my view, the defects are of substance rather than form, and are thus not "excusable" pursuant to s74L of the Real Property Act. See the decision of McLelland J in Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) 5 BPR 11, 314 in particular at 11,320.

6 Mr J A Darvall of counsel, who appeared for the plaintiff, accepted that his client's rights, if any, must be based on s74O. For the reasons that I have indicated briefly, Mr Darvall was correct to take that position.

7 Mr D A Allen of counsel, who appeared for the defendants, submitted that there were three reasons why no order should be made pursuant to section s74O. The first was that no specific caveat was propounded, and the Court should not grant leave at large. I agree with that in principle. The answer, however, is that I can give reasons and stand the proceedings down, or over, to allow a particular form of caveat to be propounded, and to deal with any objections to the form of that document. That is what I will do.

8 Secondly, Mr Allen submitted, this was a final hearing and the relief claimed was in terms final; but it could not accommodate the position (which on any view is necessary) that the property is to be sold. I accept that point. It does not mean, however, that the plaintiff cannot succeed. It means that any leave granted pursuant to s74O must be on terms that a caveat lodged in accordance with that leave is to be withdrawn on settlement of any sale of the subject property, perhaps subject to a qualification if the sale does not appear to be one made at arms’ length or in good faith. It appears to be agreed that in the event that there is a sale then any further caveat lodged should be withdrawn to permit completion of that sale, on the basis that one half of the net proceeds of sale after paying the costs and expenses of sale and the amount owing to any prior mortgagee or encumbrancee should be paid into Court or into a jointly controlled account. That, in my view, is an appropriate resolution of the second point.

9 The third point is that there is no caveatable interest because the plaintiff is not in a position to invoke the Court's assistance in enforcing his rights. That submission is based on the matter to which I have referred. The advances were complete by August 2005 but the mortgage was not given until 1 November 2005. Thus, on the face of things, it was given to secure advances made in the past and not to secure future advances, or in consideration of a promise to make future advances.

10 It is clear that for the plaintiff to enforce any rights that he has under the unregistered mortgage, he will need the assistance of the Court. If authority be needed for that elementary proposition, it is to be found in the decision of Campbell J in King Investment Solutions v Hussain [2005] NSWSC 1076 at [80] [81]. (In referring to the proposition as "elementary", I intend no disrespect either to the decision of Campbell J that exemplifies it or to the submission founded upon it.)

11 That being so, Mr Allen submits, the plaintiff could not obtain the aid of equity because he is relevantly a volunteer. It is clear that equity will not enforce a contract (whether simple or under seal) that is not made for what in the eyes of equity is valuable consideration. Again, if authority be needed for that elementary proposition, it may be found in the judgment of Chitty J in Re Earl of Lucan; Hardinge v Cobden (1880) 45 Ch D 470 at 475. (Again, I intend no disrespect either to his Lordship's observations or to the submissions founded upon them.)

12 However, the evidence of the plaintiff (which in this respect was unchallenged) suggests that there may have been consideration for the promise to give, and the giving of, the mortgage. In his affidavit sworn 13 August 2007, the plaintiff says that in October 2005 he requested that the defendant repay the plaintiff the amount then outstanding. According to the plaintiff, the defendant replied by saying "I'll try but if you hold off I'll give you a mortgage over my property...". As I have said, the mortgage was given on 1 November 2005.

13 There is no evidence as to the term of the loans in question. Accordingly, in the eyes of the law, they are to be regarded as loans repayable on demand. In my view, notwithstanding the polite way in which the plaintiff made the request to which I have referred, the proper inference to be drawn from that request is that the plaintiff did "demand" repayment. There is no relevant legal distinction between a request to repay and a demand to repay. Again, in my view, the proper inference from the first defendant's response is that the first defendant requested the plaintiff to forebear, and promised to give a mortgage if the plaintiff would agree to do so.

14 It is clear that a promise to forebear to enforce payment of a debt then due and owing is good consideration for a promise in return of the debtor (in this case, a promise to give a security). I think that, on the unchallenged evidence, it is open to me to infer that the mortgage was given in exchange for the promise of the plaintiff (who was then entitled to demand and receive repayment) to stay his hand and not require repayment of the amount then owing.

15 Thus, in my view, the evidence justifies the conclusion that the plaintiff gave consideration for the defendant's promise to give a mortgage. There was no submission that any different position might apply as between the date of the conversation in October 2005 and the events of 1 November 2005 when the mortgage document was signed and handed over.

16 I should add that there was a deal of cross-examination of the plaintiff as to (among other things) allegations made by him in his creditor's petition and affidavit verifying. In circumstances where it is not (on the evidence) disputed that the mortgage was in fact given, and where the plaintiff's account of the circumstances in which the mortgage was given was not challenged, I do not regard that cross-examination as having anything to do with the three issues for decision with which I have now dealt.

17 The outcome is that the plaintiff is in principle entitled to the relief sought under s74O, subject to what I have said as to the conditions on which that relief should be granted.

18 I stand the proceedings down to 2pm to enable the plaintiff to propound a form of caveat and to enable the parties to bring in short minutes of order to give effect to these reasons. I will hear the parties on costs at 2pm.

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