ProLend Solutions No. 123 Pty Ltd v Karout
[2023] NSWSC 490
•08 May 2023
Supreme Court
New South Wales
Medium Neutral Citation: ProLend Solutions No. 123 Pty Ltd v Karout [2023] NSWSC 490 Hearing dates: 8 May 2023 Date of orders: 8 May 2023 Decision date: 08 May 2023 Jurisdiction: Equity - Duty List Before: Parker J Decision: see [13]
Catchwords: LAND LAW – caveats – removal of caveat – removal by order of court
Legislation Cited: Real Property Act 1900, ss 74MA, 74N
Cases Cited: Nil
Texts Cited: Nil
Category: Principal judgment Parties: ProLend Solutions No. 123 Pty Ltd (Plaintiff)
Nariman Karout (Defendant)
Australian and New Zealand Banking Group Limited (Interested Party)Representation: Counsel:
Solicitor:
JR Bennett (Plaintiff)
Summer Lawyers (Plaintiff)
Dentons (Interested Party)
File Number(s): 2023/139982 Publication restriction: Nil
JUDGMENT – Ex Tempore
Revised from transcript; issued 9 May 2023
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This is an application to remove a caveat from the register. The plaintiff holds a registered second mortgage over the property in question and has entered into a contract to sell the property by way of exercise of its power of sale under that mortgage. The proceedings have been dealt with urgently because the caveat was lodged only shortly before the contract was due to complete.
Background
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The loan which gave rise to the plaintiff's mortgage was made in January 2022. The registered proprietor of the property, Mr Roland Essa Chahoud, is a guarantor and provided the property, which is a residential property at Menai, by way of security for his obligations as guarantor.
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The plaintiff issued a default notice to Mr Chahoud calling for repayment of the amount outstanding under the loan in July last year. The amount claimed to be outstanding is now $248,000. The plaintiff entered into a contract to sell the land on 18 March of this year. The sale price is $1,078,000.
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The first mortgagee, the Australia and New Zealand Banking Group Limited ("ANZ"), is aware of the contract and of this application. The ANZ has been represented on the application and, as I understand the bank's position, supports the removal of the caveat so that the sale can proceed. Mr Chahoud’s liability to the ANZ will be discharged out of the proceeds of sale of the property pursuant to the contract, in the ordinary way.
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The caveat which has given rise to these proceedings was lodged on 17 April this year. That was a bit over four weeks after the plaintiff's contract had been entered into. The caveat was lodged by the defendant, Mr Nariman Karout. The caveat claims an interest as chargee pursuant to an alleged contract for sale of the property between Mr Chahoud, as vendor, and Mr Karout, as purchaser.
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When the plaintiff became aware of the caveat, its solicitors asked the solicitors who were responsible for lodging the caveat on behalf of Mr Karout for details of the contract. In response, Mr Karout's solicitors sent a one-line email attaching the alleged contract which is the subject of the caveat. It is a contract in the Law Society's standard form which provides for the sale of the land by Mr Chahoud to Mr Karout for a sale price of $1.2 million with a $300,000 deposit. The contract bears the date 12 July 2022 and provides for an accelerated completion date, namely, 30 July 2022.
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On receipt of the contract the plaintiff's solicitors wrote to Mr Karout's solicitors noting that, if genuine, Mr Karout's interest under the contract would be postponed as arising later in time to the registered interest of the plaintiff. No further response was received from Mr Karout or his solicitors.
Removal of Caveat
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The application has been served on Mr Karout's solicitors pursuant to s 74N of the Real Property Act 1900. There must be some question about the genuineness of the contract. There is no evidence that any attempt was made to complete it on its completion date of 30 July last year, or on any later date. Completion would, of course, have required notification both to the ANZ and to the plaintiff as the registered mortgagees so that the amounts due to them would be deducted from the proceeds of sale.
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Nor is there any evidence that the deposit has been paid, noting that the amount of the deposit would be more than enough to discharge the debt due to the second defendant. There is, in fact, no independent evidence that the contract existed before it was referred to in the caveat in March this year.
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In any event, as the solicitor for the plaintiff noted in correspondence, even if the contract is valid, Mr Karout's interest as purchaser would not prevail over the registered interest of the plaintiff, which had given rise to the sale of the contract before the caveat had been lodged.
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In these circumstances, on the evidence, there is no justification for the caveat to remain on the title as an obstacle to the completion of the plaintiff's sale of the property, and the Court will order that it be withdrawn pursuant to s 74MA of the Real Property Act.
Costs
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The plaintiff claims costs on an indemnity basis. In my view, that is justified. I do not question the good faith of the solicitors who are acting for Mr Karout. But the difficulties facing maintenance of the caveat in the circumstances of the case were fully disclosed to them before the proceedings were begun. I infer that they have received no instructions from Mr Karout which would provide any way of overcoming those difficulties.
Orders
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The orders of the Court are:
Order that the defendant withdraw forthwith caveat AT14030 lodged in respect of the land comprised in folio identifier 90/260721 and more particularly known as 73 Bradman Road, Menai, 2234 in the State of New South Wales.
Order that the defendant pay the plaintiff's costs of the proceedings on an indemnity basis.
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Decision last updated: 09 May 2023
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