Property Development (WA) Pty Ltd v Commercial N Pty Ltd

[2023] WASC 91

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   PROPERTY DEVELOPMENT (WA) PTY LTD -v- COMMERCIAL N PTY LTD [2023] WASC 91

CORAM:   SMITH J

HEARD:   17 MARCH 2023

DELIVERED          :   24 MARCH 2023

FILE NO/S:   CIV 1126 of 2023

BETWEEN:   PROPERTY DEVELOPMENT (WA) PTY LTD

First Plaintiff

CLAUDIA PROPERTIES PTY LTD

Second Plaintiff

ANGELA TILLI

Third Plaintiff

AND

COMMERCIAL N PTY LTD

First Defendant

MAJOR BLUE AIR PTY LTD

Second Defendant

THE REGISTRAR OF TITLES

Third Defendant

Catchwords:

Interlocutory injunction - Mortgagee exercised power of sale - Mortgagor claims Mortgagee did not act in good faith in selling the land in breach of a mortgagee's general law duties or s 420A of the Corporations Act 2001 (WA) - Mortgager claims land sold under value - Proceedings commenced after settlement of the mortgage sale complete but before transfers for the land registered on the titles to the land - Principles that apply to Mortgagee's exercise of power of sale considered - Valuation evidence considered - Inglis principle considered

Property law - Caveat - Withdrawal of Mortgagor's caveat by Mortgagee - Whether power of attorney authorised - Strong prima facie case that power of attorney not in accordance with the form prescribed by the 19^th Schedule and s 143 of the Transfer of Land Act 1893 (WA)

Caveats - Principles that apply to the removal of a caveat considered

Statutory unconscionability - Section 12CA(1) and s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth)

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Transfer of Land Act 1893 (WA)
Planning and Development Act 2005 (WA)

Result:

Interim injunction not continued

Category:    B

Representation:

Counsel:

First Plaintiff	:	Mr P J Hannan
Second Plaintiff	:	Mr P J Hannan
Third Plaintiff	:	Mr P J Hannan
First Defendant	:	Mr L Firios
Second Defendant	:	Mr S D Majteles
Third Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Corporate Counsel Lawyers
Second Plaintiff	:	Corporate Counsel Lawyers
Third Plaintiff	:	Corporate Counsel Lawyers
First Defendant	:	Kingston & Partners Pty Ltd
Second Defendant	:	McWilliams Davis Lawyers Property & Commercial
Third Defendant	:	No appearance

Cases referred to in decision:

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618

Blundell v Associated Securities Ltd (1971) 19 FLR 17

Brimstone Resources Ltd v Empire Resources Ltd [2018] WASCA 107

Cayne v Global Natural Resources plc [1984] 1 All ER 225

Clazy v The Registrar of Titles (1902) 4 WALR 113

CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231

Emission Assessments Pty Ltd v James Jackson [2022] WASC 60

Farahbakht v Midas Australia Pty Ltd (No 2) [2006] NSWSC 1323

Forsyth v Blundell (1973) 129 CLR 477

Harvey v Perpetual Nominees Ltd [2009] NSWSC 1379

Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309

Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533

La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd [2022] WASC 264

Lithium WA Investments Pty Ltd v Kirman and Brauer as joint and several administrators of Alita Resources Ltd (Receivers and Managers Appointed) (Administrators Appointed) [No 2] [2021] WASC 63

McCourt v National Australia Bank Ltd [2010] WASC 121

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105

Mould v Canale [2017] VSC 793

National Bank Australia Ltd v Joyce [2012] WASC 224

Network Ten Ltd v Fullwood (1995) 62 IR 43

Patrick Stevedores v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1

Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676

Pike v Tighe [2018] HCA 9; (2018) 262 CLR 648

Re Coffey; Bartel [1995] QSC 67

Rowe v National Australian Bank Ltd [2019] WASCA 140; (2019) 56 WAR 1

Six Bruce Pty Ltd v Jadig Finance Pty Ltd [2018] VSC 552

Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110

Upton v Tasmanian Perpetual Trustees Ltd [2007] FCAFC 57; (2007) 158 FCR 118

Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27

Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62

Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433

Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2021]WASC 30

Table of Contents

1.0 Summary

2.0 Background

3.0 The issues raised by the plaintiffs

3.1 The plaintiffs' claim

3.2 Withdrawal of the caveat – Reliance on a power of attorney

4.0 Principles that apply to the removal of a caveat

5.0 Legal principles relevant to the exercise of a mortgagee's power of sale

6.0 The grant of an interlocutory injunction – Principles

7.0 The general rule requiring payment or payment into court of amount owing when seeking to restrain the exercise by a mortgagee of rights under the mortgage instrument

8.0 Have the plaintiffs made out a prima facie case, and if so, what is the strength of their case?

9.0 Balance of convenience

9.1 The plaintiffs' submissions

9.2 The balance of convenience does not favour the grant of an injunction

SMITH J:

1.0 Summary

1. Property Development (WA) Pty Ltd as trustee for the Belmont Hotel Unit Trust (Property Development) acquired two vacant adjoining lots in March 2020 for $3 million (the Land).  On or about 4 March 2021, Property Development mortgaged the Land to the first defendant, Commercial N Pty Ltd (Mortgagee), with the second plaintiff, Claudia Properties Pty Ltd, and the third plaintiff, Angela Tilli, as guarantors (Loan).  The Loan was for short term finance whereby the Loan was to be re‑paid in six months.

2. The plaintiffs failed to pay the Loan by the end of the term.  On 21 September 2021, the Mortgagee issued notices of default and demand.  The parties negotiated and ultimately agreed to a Deed of Forbearance on 8 November 2021.  The plaintiffs again defaulted.  The Mortgagee exercised its power of sale and entered into a contract to sell the Land on or about 11 August 2022 to the second defendant, Major Blue Air Pty Ltd (Major Blue).

3. On 6 September 2022, Property Development executed a caveat in respect of the Land, and on the same day the third defendant, the Registrar of Titles (Registrar) recorded the caveat against the certificates of titles to the Land.

4. On 20 December 2022, the Mortgagee executed a caveat withdrawal on behalf of Property Development, and on the same day the Registrar recorded the withdrawal on the titles to the Land.  Property Development claim the caveat withdrawal was done without the requisite authority.

5. On 21 December 2022, settlement of the mortgagee sale was completed.  On 21 December 2022, executed transfer forms for the transfer of the Land to Major Blue were lodged with the Registrar for registration, but were not immediately processed.  As at the date of hearing of the application for injunctive relief, the transfer forms have not been lodged on the titles of the Land by the Registrar.

6. On 8 February 2023, the plaintiffs filed a Writ of Summons with a Statement of Claim indorsed seeking various declarations and injunctions against the Mortgagee and the Registrar, to prevent registration of Major Blue's interest in the Land.  They also seek to set aside the contract of sale between the Mortgagee and Major Blue.

7. The plaintiffs also sought relief in the writ to maintain the Property Development caveat.  However, at the time the writ was filed it appears that the plaintiffs were not aware that the Registrar had recorded the caveats as withdrawn.

8. On 15 February 2023, the plaintiffs filed a motion seeking an interim injunction.  Following conferral, on 21 February 2023, an interim injunction was made by consent to restrain the Registrar from registering the mortgagee sale transfers on the titles to the Land until the plaintiffs' application for an interim injunctive relief was listed for hearing on 17 March 2023.  On 17 March 2023, after hearing argument, an order was made to continue the interim injunction until after judgment delivery on Friday, 24 March 2023.

9. For the reasons below, the plaintiffs' application for continuation of an injunction should be dismissed.

2.0 Background

1. The Land is comprised of two vacant lots located at 155 and 157 Great Eastern Highway Belmont.  The two lots have a 38.5 m frontage onto Great Eastern Highway and total 1941 m² in area.

2. Prior to the Land being acquired by Property Development, development approval for the Land had been granted in January 2017 approving, subject to specified conditions, the construction of a hotel comprising 147 guest rooms, 40 serviced apartments with meeting rooms, a bar, and restaurant.  The development approval was extended on 8 May 2019 for two years by the Metro Central Joint Development Assessment Panel (JDAP) on application on behalf of the persons who then owned the land, a group of individuals who can be conveniently described as the Barrington Vendors.

3. A Heads of Agreement was entered into between the Barrington Vendors and Barrington Family Holdings Pty Ltd and Property Development on 24 October 2019 whereby the Barrington parties agreed to sell the Land for a sum of $3 million and Property Development agreed to purchase shares in Barrington Family Holdings Pty Ltd for the sum of $6 million.  The purchase of the shares was expressed in the Heads of Agreement to be in return for 'Barrington Family Holdings Pty Ltd … [providing] … and [allowing] the purchaser [Property Development] the use of all the Development Approvals, Valuations, Consultants reports, Hotel Management agreements, etc which it owns over the two lots described in Annexure A'.[1]

   [1] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT10, 62.

4. Pursuant to the terms of the Heads of Agreement:

   (a)the first payment for the Land sale settlement was to be paid on 14 November 2019, and the balance of the Land purchase price of $2,700,000 was to be paid in 18 regular equal monthly instalments of $150,000 over the 18 months construction period commencing from the first QS progress claim approval and payment from the construction lender;[2] and

   (b)a payment of $70,000 for deposit of the purchase of the shares was to occur on 14 November 2019, with $3 million to be paid 90 days after the hotel development practical completion and $2,930,000 18 months after the hotel development practical completion.[3]

   [2] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT10, 62.

   [3] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT10, 63.

5. It appears the Heads of Agreement was varied on 17 December 2019 on terms which are not before the court.[4]

   [4] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT11, 96 ‑ 98.

6. On or about 20 February 2020, a form of a second mortgage was executed by Property Development and Barrington Family Holdings Pty Ltd as mortgagee for the loan of a sum of $2,700,000 repayable by no later than 21 October 2021.[5] The mortgage, however, was not registered. On 1 April 2022, Barrington Family Holdings Pty Ltd executed a caveat to protect its interest in the Land under the unregistered mortgage loan agreement. On the same day, the Register recorded the caveat against the titles of the Land. This caveat lapsed on 15 December 2022 as a result of the expiry of time limited by a notice issued pursuant to s 138B of the Transfer of Land Act 1893 (WA).

   [5] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT11, 96.

7. On 4 March 2020, the Barrington Vendors executed the transfers transferring the Land to Property Development, and on the same day the transfers were registered on the titles to the Land, and Property Development became the registered proprietor of the Land.

8. On or about 3 April 2020, Property Development submitted a development application for approval to develop the Land by constructing a hotel to be known as the Wyndham Belmont Hotel.

9. On 1 July 2020, an article about the proposed construction of the Wyndham Belmont Hotel was published in the property section of The West Australian Newspaper.  In the article, it stated that developers of a new 12 level hotel in Belmont have gone back to a JDAP to increase the number of hotel rooms from 147 to 216.  The article also indicated that the hotel development proposal had been approved three years ago.[6]

   [6] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT38, 437.

10. The plaintiffs plead in par 48 of their Statement of Claim that on or about 3 April 2020, Property Development caused to be submitted to the City of Belmont an application and associated plans for the development of the Land as a hotel.  The plaintiffs then plead in par 49 that a JDAP approved the development application subject to the amendments and conditions referred to in a letter dated 7 July 2020.  The plaintiffs characterise the approval of 7 July 2020 as the 'Original Hotel Development Approval', which characterisation is not correct. 

11. The development approval given on 7 July 2020 was a decision of JDAP to amend the previously approved development:

    (a)to increase the number of hotel rooms from 147 rooms to 216 rooms;

    (b)to decrease the number of serviced apartments from 40 apartments to 10 apartments,

    (c)to expand the basement to incorporate two additional levels;

    (d)to remove a car stacker module, thus removing 128 car parking bays and substitute additional landscaping; and

    (e)to provide for the provision of 145 car parking bays within the proposed basement levels.

12. It was noted by JDAP in the development approval that the alteration in rooms/apartments was premised on the reconfiguration of guestrooms to decrease the number of two and three‑bedroom guestrooms and increase the number of one‑bedroom guestrooms.[7]

    [7] Affidavit of Oliver James Small sworn on 7 March 2023, Attachment OJS-2, 13 and 17.

13. On 21 January 2021, the Commonwealth Department of Infrastructure, Transport, Regional Development and Communications, gave their approval to construct a hotel to a maximum height of 62.5 m.

14. By January 2021, Property Development were seeking a loan for business operating cash flow for development business.

15. On 18 February 2021 a company associated with the Mortgagee, Mutual Mortgage Service Pty Ltd, obtained a draft valuation report from a licensed valuer, Mr Peter Murphy, a Senior Valuer for a firm known as Independent Valuers of Western Australia.  In his draft report Mr Murphy indicated that the client's estimate of value was $4 million exclusive of development approval for a hotel.  Mr Murphy was asked by Mutual Mortgage Service Pty Ltd to express an opinion of the 'market value', 'market value of the Land in 120 days' and the value of the Land.[8]  Mr Murphy assessed the value of the Land in his draft report as at 18 February 2021 to reflect forced sale circumstances as $2,590,000 exclusive of GST, and the 'as is market value' without including any value attributed to a hotel approval to be $3,700,000.[9]

    [8] As a forced sale on an 'as is basis'.

    [9] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT23, 246 - 276.

16. On about 4 March 2021, the plaintiffs entered into the Loan in the amount of $1,989,150 for business operating cash flow with the Mortgagee.  The terms of the Loan required that Property Development grant the Mortgagee a first registered mortgage over the Land.  The Loan agreements consisted of a Loan Offer Letter dated 3 March 2021, a Finance Offer Schedule and a Memorandum of Common Provisions.[10]

    [10] Affidavit of Angela Tilli sworn on 14 February 2023, par 54.

17. It was a term of the Loan that it was repayable in full on the last day of the Loan term (12 September 2021).  Property Development failed to pay the Loan in full by 12 September 2021.  On 21 September 2021, the Mortgagee's solicitors sent to Property Development a notice of default, and a notice of demand.  They also sent a notice of demand addressed to Ms Tilli.[11]  The demand was for the amount of $2,138,194.57 increasing at the rate of 30.50% per annum.[12]

    [11] Affidavit of Morgan Ng sworn on 8 March 2023, pars 12 and 13.

    [12] Affidavit of Angela Tilli sworn on 14 February 2023, par 81.

18. On or about 21 September 2021, the Mortgagee's lawyers sent two letters dated 21 September 2021 to the registered office of Property Development, giving notice under s 106 of the Transfer of Land Act that Property Development had 31 days to remedy the default.[13]

    [13] Affidavit of Morgan Ng sworn on 8 March 2023, par 15.

19. On or about 22 October 2021, the Mortgagee went into possession of the Land.

20. On the same day, Property Development executed a contract with the owners of 153 Great Eastern Highway to purchase land that adjoins the Land for $1,760,000, exclusive of GST.[14]  The contract, however, did not proceed to settlement, and this site was later sold to Major Blue for $1,750,000, exclusive of GST in July 2022.

    [14] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT19, 213 ‑ 214.

21. On or about 8 November 2021, the plaintiffs and the Mortgagee entered into a Deed of Forbearance by which the repayment date under the Loan was extended to 22 December 2021.  It was a term of the Deed of Forbearance that Property Development pay to the Mortgagee an amount of $81,382.60 by 5.00 pm on 25 November 2021, and that if Property Development breached the Deed of Forbearance it must immediately deliver possession of the Land to the Mortgagee upon seven days written demand.  Property Development failed to make this payment, and for this reason breached the Deed of Forbearance.[15]

    [15] Affidavit of Morgan Ng sworn on 8 March 2023, pars 18 - 19.

22. It was also a term of the Deed of Forbearance that the new default consequences included that Property Development and the guarantors must not take any step whatsoever, whether directly or indirectly, to frustrate or delay the Mortgagee in exercising any of its rights, including enforcement rights under the security documents, the Deed of Forbearance, and at law.[16]  The Mortgagee does not contend that this provision is enforceable so as to prohibit the plaintiffs from making this application.

    [16] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-5, 119.

23. On 3 December 2021, the Mortgagee's solicitors sent a notice of default under the Deed of Forbearance to the plaintiffs' solicitor and made a demand that Property Development and the guarantors deliver up possession of the Land.[17]  By 13 December 2021, the Mortgagee went back into possession of the Land.[18]

    [17] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-6, 125.

    [18] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-7 128.

24. On or about 20 December 2021, the Mortgagee instructed Independent Valuers of Western Australia through Mutual Mortgage Service Pty Ltd to provide a revaluation of the Land, which report was to include 'a Market Value' and 'a Market Value for 120 days'.[19]

    [19] Exhibit 1.

25. Mr Murphy valued the Land as at 21 December 2021, and prepared a valuation report dated 10 January 2022.[20]  In his report he recorded that the client's estimate of value was 'None known as a development site $4 million inclusive of hotel approval'.[21]

    [20] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-8, 129 - 160.

    [21] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-8, 134.

26. Mr Murphy valued the Land as at 21 December 2021 without including any value attributed to hotel approval:[22]

    (a)on the basis of 'market value as is' as at 21 December as $2,400,000 exclusive of GST; and

    (b)'as is basis for 120 days sale as $2,040,000', which assessment was based on the impact of a shortened selling campaign reflecting forced sale conditions.

    [22] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-8, 150.

27. In his report, Mr Murphy analysed 15 sales of improved and unimproved land in the surrounding areas that had sold between 12 March 2019 and 24 November 2021 and noted that the analysed sales had selling periods ranging from 54 days to 1,067 days with an average of 392 days and a median of 282 days.  In his assessment of 'market value for 120 days as is', Mr Murphy noted that there was a good supply of similar land available for a prospective purchaser to consider and choose from and on this basis he adopted a discount of 15% to arrive at that value.

1. By January 2022, the Mortgagee had engaged an agent, Burgess Rawson, to sell the Land.  In January 2022, Mr Morgan Ng received a marketing submission from Burgess Rawson setting out a proposed marketing campaign for the sale of the Land.  In their marketing proposal, Burgess Rawson proposed that the chosen method of sale be by expressions of interest and to maximise the value of the Land the two lots be sold as one parcel.  Burgess Rawson proposed a selling fee of 1.5% plus GST of the sale price and indicated that marketing costs would be $9,151 inclusive of GST.[23]

   [23] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-9, 165.

2. In their marketing proposal, Burgess Rawson stated that based upon current market conditions and sales evidence they were of the opinion that the Land would have a sale range in the vicinity of $2,200,000 plus GST.  They also:

   (a)stated in their report that no price would be advertised and that the expressions of interest campaign would allow buyers to bid for the Land to determine the price; and

   (b)identified a target market for the Land and named a number of well‑known developers of large commercial developments, and included in this list a general category of 'hotel operators'.[24]

   [24] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-9, 167.

3. On or about 7 February 2022, the Mortgagee engaged Burgess Rawson as the selling agent of the Land.  On or about 15 February 2022, the Land was listed online for sale by expressions of interest, closing on 2.00 pm, Wednesday, 30 March 2022.

4. On 23 February 2022, 2 March 2022 and 9 March 2022, the Land was advertised for sale in The West Australian Newspaper in the property section.  Each of the advertisements contained an aerial picture of the Land and made statements to the effect that the Land was a development opportunity - gateway site.  The advertisements contained the contact details of two of the principals of Burgess Rawson, and stated:[25]

   [25] Exhibit 2.

   +Land area 1,941 sqm

   +Huge 38.5 m frontage

   +Zoned 'Mixed Business'

   +Vacant possession

   +Great exposure

   +Suitable for Land Banking, Warehouse, Factory, Hotel, Mixed Use Commercial (STCA) [subject to Council approval]

   Expressions of Interest closing 2 pm Wednesday, 30 March 2022

5. On 3 March 2022, the Mortgagee received a second marketing report.  In the report Burgess Rawson stated that the enquiry level for the Land was low and there had only been seven enquiries.[26]

   [26] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-13, 192 - 194.

6. On 10 March 2022, the Mortgagee received a further marketing report in which it was stated that there had been only 11 enquiries, and there was little interest in the site.[27]

   [27] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-14, 196 - 197.

7. On 17 March 2022, the Mortgagee received a further marketing report which advised there had only been 12 enquiries, and that the enquiries had been followed up and there was no interest in the site.[28]

   [28] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-15, 202 - 203, 199 - 200.

8. On 30 March 2022, Mr Jason Gard, a real estate agent in Bunbury, contacted one of the principals of Burgess Rawson and asked about the Land and what was the asking price.  He was told that an offer of around $2 million 'would get the property'.

9. On 31 March 2022, the Mortgagee received a further marketing report which stated that there had only been 13 enquiries to the date of the report which had been followed up, that there is no current interest in the site and recommended that the marketing campaign for the sale of the Land be extended.[29]

   [29] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-16, 202 ‑ 203.

10. Mr Ng provided instructions to Burgess Rawson in April 2022 to extend the marketing campaign for the sale of the Land.[30]

    [30] Affidavit of Morgan Ng sworn on 8 March 2023, par 33.

11. On 1 April 2022, Barrington Family Holdings Pty Ltd executed their caveat to protect their interest in the Land, and on that date the Registrar recorded the Barrington caveat on the titles to the Land.

12. By letter dated 5 April 2022, an alternative funder, New World Funding, granted Property Development conditional approval of a loan of $2,925,000 for a term of 12 months.  It was a condition of the loan approval that the loan to value ratio was 65%, and was subject to a valuation report and due diligence.[31]

    [31] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT26, 299.

13. On 7 April 2022, Mr Gard sent a text message to Burgess Rawson indicating he wanted to submit an offer to purchase the Land.  On 12 April 2022, Burgess Rawson sent Mr Gard an offer and acceptance document proposing an unconditional cash purchase price of $2 million.  Mr Gard did not proceed with the offer.  It appears he formed the view that the Land was being undersold for the amount of the mortgage.  After searching the titles for the Land and being provided with a copy of the registered mortgage by Burgess Rawson, he ascertained that 153 Great Eastern Highway, being the lot on the corner immediately next to the Land was for sale for $1.7 million (being Land on which there was a contamination memorial on the title).[32]

    [32] Affidavit of Jason Gard sworn on 18 February 2023, pars 11 - 17.

14. On 2 May 2022, Property Development's solicitor sent an email to the Mortgagee's solicitors.  In the email, Mr Frank Mestichelli stated on behalf of Property Development that his client's new lender had contacted his client's finance broker and had requested current lender details, the discharge amount and sought to have the amount owing calculated to 12 May 2022, being the proposed settlement date.  In the email, Mr Mestichelli put a without prejudice offer of settlement to pay out the Loan for an amount of $2,242,609 which amount included interest, a rollover fee, marketing costs, legal costs and discharge costs.[33]

    [33] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT7, 313 - 314.

15. No response to the email was received by Mr Mestichelli.

16. On 4 May 2022, New World Funding obtained a valuation report prepared by a certified practising valuer, Mr Graeme MacEwan, from Independent Property Valuers.  The purpose of the valuation report was recorded in Mr MacEwan's report.  It was to establish the market value of the Land 'as is', with development approval for 226 room hotel.[34]  In a very short report, Mr MacEwan:

    (a)had regard to the sales of three properties on Great Eastern Highway;

    (b)stated that his enquiries indicate land value range of between $2,000 m² and $2,200 m² for vacant land with no development approvals in place; and

    (c)stated he had adopted a value of $2,300 m² for the Land by regard to the location of the Land and the planning approvals in place which equated to a value of the Land of $4.64 million rounded to $4.5 million.

    [34] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT28, 317.

17. It is to be noted that when regard is had to the property description of the sales relied upon by Mr MacEwan, that at least two of the sales were sales of developed land.  One of these sales was the sale of the Quest Hotel in 2018 at 266 Great Eastern Highway, Ascot for an amount of $4.45 million of a land area of 2211 m² which achieved a sale of $2,011 m².[35]  The other was a property at 159 Great Eastern Highway, Belmont of a land area of 1060 m² on which there was constructed a modern 550 m² showroom in the subject of a 10 year lease at a rental of $125,000 per annum and subject to annual reviews at 2%.[36]  There is no evidence before the court as to whether the third sale referred to by Mr MacEwan was improved or improved land.

    [35] See Mr Murphy's draft valuation reports dated 18 February 2021; Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT23, 258.

    [36] See Mr Murphy's draft valuation reports dated 18 February 2021; Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT23, 257.

18. On 31 May 2022, the Mortgagee received a further marketing report from Burgess Rawson in which it was stated that since the beginning of the marketing campaign there had been 31 enquiries, 1,673 visits to the Realcommercial.com.au, 170 visits to Commercialrealestate.com.au and 60 visits to Reiwa.com.au being a total of 1,903 visits.[37]  Burgess Rawson also stated that:[38]

    (a)they had been advised by a local builder that one of his clients was interested in making an offer for the Land and the adjoining site;

    (b)Mr Gard had indicated he wanted to place an offer for $2 million and they had prepared a sale contract and sent it to him but after following him up on multiple occasions both by telephone and emails he had not responded; and

    (c)they had an email offer for $1,150,000 and they had advised (the offeree) was too low.

    [37] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-17, 205.

    [38] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-17, 209.

19. On 9 June 2022, New World Funding sent an email to Mr Joe Tilli, and Property Developments' finance broker in which it was stated that New World Funding had become aware that the Land was on the market with expressions of interest of just over $2 million and there had been no interest which had created a major concern to the investor over the validity of the valuation report (Mr MacEwan's report).[39]  It appears that during the process of due diligence it came to the attention of the lender that the Land was listed for sale, and contact was made with Burgess Rawson and who advised the Land was being sold by a mortgagee and the asking price was circa $2 million.[40]  Consequently, as a result of this information, New World Funding withdrew their offer of a loan to Property Development.

    [39] Affidavit of Salvatore Mancuso sworn on 15 February 2023, par 15.

    [40] Affidavit of Salvatore Mancuso sworn on 15 February 2023, par 14; Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT41, 446.

20. Mr Roopan Singh is a director of Major Blue.  His family, including his father and brother, own various business interests in Botswana, in Southern Africa, mainly in aviation, property development and construction, such as hotels, malls and self‑catered apartments, and education.

21. Mr Singh first moved to Perth in early 2020.[41]  In around June 2022, he met with his father and had a discussion about finding a property on which they could develop a warehouse or a self‑catered apartment complex which are usually classified as hotels without traditional hotel amenities such as room service and a concierge.  Mr Singh had in mind building a self‑catered apartment complex with rooms equipped with a kitchenette for cooking and perhaps laundry facilities for short‑term accommodation.[42]

    [41] Affidavit of Roopan Singh sworn on 5 March 2023, par 57.

    [42] Affidavit of Roopan Singh sworn on 5 March 2023, pars 8 - 9.

22. Mr Singh saw an advertisement listing the Land for Sale by Burgess Rawson.  The Land was appealing to him because it was opposite Amana Living, an aged care residential facility, and there are other hotels down Great Eastern Highway.  He formed the opinion that it would be a good area to operate a self‑catered apartments business.[43]

    [43] Affidavit of Roopan Singh sworn on 5 March 2023, pars 11 and 12.

23. On 14 June 2022, Mr Singh obtained an Information Memorandum from Burgess Rawson which included a City of Belmont Planning Scheme extract which detailed the different types of use that are permitted on the Land, one of which included the operation of a hotel business, subject to approval.[44]

    [44] Affidavit of Roopan Singh sworn on 5 March 2023, par 15.

24. On 15 June 2022, Major Blue made an offer to purchase the Land for $1,700,000 exclusive of GST.  The offer was rejected on 17 June 2022.  Burgess Rawson requested Major Blue offer $2,300,000 exclusive of GST.  That amount was more than Major Blue wished to pay.[45]

    [45] Affidavit of Roopan Singh sworn on 5 March 2023, pars 17 - 19.

25. On 18 June 2022, Mr Singh spoke to one of the principals of Burgess Rawson and was informed that their offer was under the valuation which the sellers had obtained.  He was also informed that the neighbouring property, 153 Great Eastern Highway, was for sale for $1,750,000 exclusive of GST.[46]

    [46] Affidavit of Roopan Singh sworn on 5 March 2023, par 20.

26. Mr Singh obtained information about the planning scheme zoning table of the allowed uses of 153 Great Eastern Highway from Burgess Rawson.  From this information, Mr Singh could see that 153 Great Eastern Highway could also be used as a hotel, subject to approval.[47]

    [47] Affidavit of Roopan Singh sworn on 5 March 2023, par 22; It is noted that a contamination memorial on the title to this land states that under the Contaminated Sites Act 2003, this site has been classified as 'Remediated for Restricted Use'.  The nature and extent of contamination was described in a report by the Department of Environment and Conservation dated 16 May 2017 as lead and petroleum hydrocarbon has been present in groundwater underlying the site, and appears to be reducing.  Restrictions on Use were stated in the report to be 'The land use of the site is restricted to commercial and industrial land uses excluding sensitive land uses such as primary schools, childcare facilities and care homes.  No groundwater may be extracted from the site without carrying out analysis in accordance with Department of Health guidelines to determine its suitability for use'; Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT22, 243 ‑ 245 and AT19, 219.

27. On 22 June 2022, Mr Singh spoke to his father and as a result Major Blue decided if it were to purchase 153 Great Eastern Highway it would make it more appealing for the development of the Land as it would increase the total area for available use to approximately 3000 m² and allow 40 to 50 self‑catered apartments to be built together with shops on the ground floor.  Major Blue decided to make an offer for the purchase of 153 Great Eastern Highway for $1,600,000, exclusive of GST, and make a counter offer for the Land for $2 million, exclusive of GST.[48]

    [48] Affidavit of Roopan Singh sworn on 5 March 2023, pars 24 ‑ 25.

28. Between 22 June 2022 and 29 July 2022, Mr Singh made several counter offers on behalf of Major Blue to purchase the Land and 153 Great Eastern Highway.  By 27 July 2022, the owner of 153 Great Eastern Highway had agreed to sell the property for $1.76 million (inclusive of GST).

29. On 29 July 2022, Mr Singh was informed by Burgess Rawson that the sellers of the Land had agreed to sell the Land for a sale price of $2,244,000 inclusive of GST.[49]

    [49] Affidavit of Roopan Singh sworn on 5 March 2023, pars 22 - 31.

30. When Mr Singh received a copy of the amended contract for the purchase of the Land on 29 July 2022 it revealed to him for the first time that the seller was in fact a mortgagee in possession.[50]

    [50] Affidavit of Roopan Singh sworn on 5 March 2023, par 32.

31. It appears that the terms of the contract for the sale of the Land continued to be negotiated between solicitors acting for the Mortgagee and Major Blue's solicitors.  The terms of contract for the purchase of the Land were finalised on 16 August 2022.[51]

    [51] Affidavit of Roopan Singh sworn on 5 March 2023, pars 33 - 38.

32. From about 16 August 2022 until 9 September 2022, Major Blue arranged for due diligence to be performed in relation to the Land.  On or about 25 August 2022, Mr Singh received a due diligence report from Altus Planning.[52]  The report was prepared by a senior town planner, Ben Laycock.  In his report dated 25 August 2022, Mr Laycock stated that they had undertaken a due diligence exercise in relation to a potential development of the Land and 153 Great Eastern Highway to develop a five story building comprising of ground floor retail, fast food outlets and restaurants, and a hotel on the upper floors.[53]

    [52] Affidavit of Roopan Singh sworn on 5 March 2023, par 52.

    [53] Affidavit of Roopan Singh sworn on 5 March 2023, Attachment RS27, 422.

33. Mr Laycock stated in his report that the zoning and land use for the Land and 153 Great Eastern Highway was zoned 'Mixed Business' pursuant to the City of Belmont Local Planning Scheme No 15 with both Great Eastern Highway and Belmont Avenue being zoned Primary Regional Road Reserve pursuant to the Metropolitan Region Scheme (MRS).  He also stated in his report that the MRS reservation encroaches on the land comprising 153, the effect of which would be that development approval would be required to be obtained under both the Local Planning Scheme and the MRS.[54]  Mr Laycock also stated that fast food outlets/lunch bar, restaurant/café, hotel and serviced apartments were compatible uses with one another in the immediate surrounding area, and therefore were consistent with the objectives of the Mixed Business zone.  He then went on to state that their desktop investigations found that:

    (a)a development approval for a hotel had been obtained through a JDAP in 2015 and renewed in 2017 for the Land but had since lapsed; and

    (b)the approval had comprised 147 guestrooms, 40 serviced apartments with meeting rooms, bar and restaurant.

    [54] Affidavit of Roopan Singh sworn on 5 March 2023, Attachment RS27, 423.

34. In light of the prior JDAP approval, Mr Laycock expressed the opinion that except the use of the shop they were confident that land uses proposed by Major Blue would be capable of approval.[55]

    [55] Affidavit of Roopan Singh sworn on 5 March 2023, Attachment RS27, 423 - 425.

35. During this period of due diligence, Mr Singh made his own enquiries of the City of Belmont.  From Botswana, he telephoned the City of Belmont to discuss zoning.  The person he spoke to informed him that their proposal for building self‑catered apartments was nothing new, they had done it before so there should not be any issue, they just had to accommodate for parking.[56]

    [56] Affidavit of Roopan Singh sworn on 5 March 2023, par 54.

36. On 6 September 2022, Property Development executed a caveat in respect of the Land, and on the same day the Registrar recorded the caveat against the certificates of title to the Land.

37. On 8 September 2022, Mr Singh gave notice to solicitors for the owners of 153 Great Eastern Highway to the effect that Major Blue was satisfied with the due diligence enquiries in respect of that land.  The terms of the contract for the purchase of 153 Great Eastern Highway were finalised by 12 October 2022, and settlement of that property was completed on 13 October 2022.[57]

    [57] Affidavit of Roopan Singh sworn on 5 March 2023, pars 40 and 42.

38. Sometime between 21 September 2022 and 12 October 2022, Mr Singh was informed by Major Blue's solicitors that a caveat had been registered over the Land by the previous owners and the Mortgagee would be relying upon a clause in the contract for the purchase of the Land whereby they could extend settlement for up to six months.[58]

    [58] Affidavit of Roopan Singh sworn on 5 March 2023, par 41.

39. On 21 September 2022, the Mortgagee's solicitors sent an email to solicitors, Frichot and Frichot, who had lodged the caveat on behalf of Property Development.  Mr Mestichelli was informed of the correspondence as he was acting for Property Development in respect of the mortgage.  On the same day, Mr Mestichelli sent an email to the Mortgagee's solicitors stating that Frichot and Frichot had been engaged solely to lodge the caveat and requested any further correspondence be forwarded to him.  In addition, he stated he was instructed to advise that the caveator did not agree to the removal of the caveat and that he also had instructions to accept service of any application (to remove the caveat).[59]

    [59] Affidavit of Franco Joseph Mestichelli sworn on 16 February 2023, Attachment FJM-3, 17.

40. On 29 September 2022, the Mortgagee's solicitors sent an email to Mr Mestichelli asking for the grounds of Property Development's caveat and to provide a copy of the contract relied upon for that purpose.  The email also stated that if we do not hear from you by 5.00 pm on 30 September 2022, 'we will be confirming our client's instructions to have that caveat lapsed'.[60]

    [60] Affidavit of Franco Joseph Mestichelli sworn on 16 February 2023, Attachment FJM-4, 19.

1. On 30 September 2022, Mr Mestichelli responded by email, attached a statutory declaration declared by Ms Tilli on 6 September 2022, together with exhibits lodged in support of the caveat, and stated that his client had a legitimate caveatable interest and had no intention of removing the same, and confirmed again that he was instructed to accept service should any application be made.

2. Mr Mestichelli received no response to this email. He assumed from the statement in the email he received on 29 September 2022 that the Mortgagee would take steps to have the caveat lapsed, that what would occur next would be that the Mortgagee would make an application pursuant to s 138B(1) of the Transfer of Land Act for the Registrar to serve Property Development with a notice to the effect that unless Property Development obtained from the Supreme Court an order extending the operation of the caveat pursuant to s 138B(2) within 21 days after the day on which the notice is served, the caveat would lapse.[61]

   [61] Affidavit of Franco Joseph Mestichelli sworn on 16 February 2023, par 30 - 31.

3. On or about 2 November 2022, the Mortgagee made an application pursuant to s 138B(1) to the Registrar, to serve a notice to remove the Barrington Family Holdings Pty Ltd caveat. On 23 November 2022, the Registrar issued a notice under s 138B(1), and the caveat lapsed as a result of expiry of the time limited by the notice on 15 December 2022.

4. On 16 December 2022, Property Development received an offer of finance by QLD Capital Pty Ltd for a loan of $2,766,668, for a term of six months with two options to extend for periods of three months, 'to go towards refinancing an existing debt'.  The purpose of the loan was recorded in the offer as a 'pathway for refinance and hold while securing required approvals for amendment to a Development Application'.

5. The terms of the proposed loan were conditional.  Under the heading 'Security Required' the following was to be provided:[62]

   (a)a first registered mortgage;

   (b)a facility agreement including, but not limited to a mortgage over shares of the borrower entity with completed transfer documents to be held in escrow and used only in the event of an unremedied breach, personal guarantee from all directors of the borrower, personal and corporate guarantees from all shareholders/unitholders of the borrower entity and power of attorney over sales contracts;

   (c)all property general security agreement from borrower which includes to the extent it is applicable to the right for the lender to a PPSR [Personal Property Securities Register] registration of interest over the company; and an assignment of the licence to use intellectual property granted by the holder of the copyright to use all plans, drawings and specifications for the purpose of completing and marketing the proposed development;

   (d)contract of sale of secured land and escrow deed; and

   (e)any other security interest or other document the lender considers appropriate to preserve their position.

   [62] Affidavit of Angela Tilli sworn on 27 February 2023, Attachment AT47, 8.

6. It appears from the security terms that if Property Development was to enter into this loan and it subsequently breached the terms of the loan which breach was not remedied, the lender could act on the contract of sale and the assignment of the plans drawings and specifications associated with the development approval to construct the Wyndham Belmont Hotel to complete the proposed development.

7. It was also a financial covenant of the proposed loan that the 'value of the property as is' excluding GST was $6,300,000 and that the maximum combined loan to value ratio was 44%.

8. Ms Tilli accepted the offer of finance on behalf of Property Development.[63]  However, Property Development did not communicate the receipt and acceptance of this offer to the Mortgagee, or make any further offer to redeem the mortgage.

   [63] Affidavit of Angela Tilli sworn on 27 February 2023, par 19.

9. On 19 December 2022, Major Blue paid the sum of $2,181,079.87 to the trust fund of its solicitors for the balance of the purchase price and transfer duty on the Land.[64]

   [64] Affidavit of Roopan Singh sworn on 5 March 2023, par 48.

10. The Mortgagee did not make an application pursuant to s 138B(1) in respect of Property Development's caveat on the Land. Instead on 20 December 2022, the Mortgagee's solicitors lodged by electronic means a withdrawal of caveat on behalf of Property Development. The operative clause in the withdrawal of caveat form stated that 'The caveator hereby withdraws the said Caveat from the Land above described'. The Mortgagee's solicitors certified and executed the document on behalf of Property Development, and made a number of certifications on the form which included a statement that, 'The Certifier has taken reasonable steps to verify the identity of the caveator or his, her or its administrator or attorney'.

11. The withdrawal of caveat was recorded by the Registrar as a dealing on 20 December 2022.  On the same day the withdrawal of caveat was registered, and the caveat was removed from the titles of the Land.[65]

    [65] Affidavit of Oliver James Small sworn on 7 March 2023, Attachment OJS-3, 19.

12. On 21 December 2022, settlement of the sale of the Land to Major Blue was completed.  On 21 December 2022, Major Blue's solicitors disbursed the funds they held in their trust fund on behalf of Major Blue for the purchase of the Land in satisfaction of the purchase price, rates, taxes, registration fees and duties.

13. Leaving aside the amount paid for the balance of the purchase price and solicitors fees, at settlement $110,586.75 was paid to the Commissioner of State Revenue for stamp duty on the transfer, approximately $43,000 was paid to the Commissioner of State Revenue for payment of outstanding land tax, approximately $10,000 was paid to the Water Corporation for outstanding water rates, and approximately $22,000 was paid to the City of Belmont for outstanding rates.[66]  Apart from the amount paid as stamp duty, it appears that in respect of each of the other amounts, that only approximately $9,500 was apportioned to Major Blue as its contribution to land tax and Council fees and the remaining sums were paid from the settlement funds owed to the Mortgagee.[67]

    [66] Affidavit of Roopan Singh sworn on 5 March 2023, Attachment RS26, 420 - 421.

    [67] See the settlement statement; Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-22, 285.

14. On 17 January 2023, a licensed valuer, Mr Gary Taplin from West Coast Valuers, on instructions from Qld Capital, provided a valuation report valuing the Land as at 17 January 2023 as $6,300,000 on the basis of current market value for pre‑mortgage security purposes on an 'as is basis', and on the assumption of development approvals that had been granted for the development of the titles.[68]

    [68] Affidavit of Angela Tilli sworn on 27 February 2023, Attachment AT48, 14 - 37.

15. The basis of this valuation was a feasibility study which had regard to the specific JDAP development approvals in place and plans to construct, in accordance with those approvals, the Wyndham Belmont Hotel, and calculated what a hypothetical purchaser/investor would be prepared to pay for the Land with the development approvals in place and a tenant secured for the end product.  Consequently, it appears from Mr Taplin's report that he valued the Land on the basis of a hypothetical purchaser who would purchase not only the Land but also acquire all the necessary rights to the plans and contracts in place to build and for a hotel management contract to operate the Wyndham Belmont Hotel in accordance with the 2020 JDAP approval (or any amendments thereto).

16. On 18 January 2023, Property Development became aware of the withdrawal of the caveat.  On 19 January 2023, the Registrar was advised that Property Development was intending to seek an urgent injunction.  As a result of that advice the transfers effecting the mortgagee sale of the Land were not registered and are being held by the Registrar in a Registrar's packet pending the outcome of the the application for an injunction.[69]

    [69] Affidavit of Oliver James Small sworn on 7 March 2023, Attachment OJS-3, 20.

17. On 22 February 2023, Mr Mestichelli informed solicitors acting for QLD Capital that Property Development had made an application for an interim injunction which had been bought about by lawyers for the Mortgagee filing a withdrawal of caveat on 20 December 2022, by purportedly relying on the general powers of attorney in the mortgage document to file the withdrawal, in relation to a caveat lodged by Property Development on 6 September 2022.[70]

    [70] Affidavit of Angela Tilli sworn on 27 February 2023, Attachment AT51, 47.

18. On 24 February 2023, solicitors acting for QLD Capital informed Mr Mestichelli that under the current circumstances the offer of funding was withdrawn, but that if Property Development 'could come back to us within the next 90 days and if the Lender is able to make a new funding offer to its satisfaction at that time, the Lender will credit the value of the application fees paid to date'.[71]

    [71] Affidavit of Angela Tilli sworn on 27 February 2023, Attachment AT51, 46.

3.0 The issues raised by the plaintiffs

3.1 The plaintiffs' claim

1. The plaintiffs plead in pars 109 to 122 of the Statement of Claim that:

   (a)on 11 August 2022, the Mortgagee purported to sell the Land to Major Blue for $2.244 million, at an undervalue in circumstances where Property Development purchased the Land on 30 August 2019 for $3 million and Land is now worth about $4.5 million + GST (or at least $3.7 million);[72]

   (b)the Mortgagee thereby: (1) breached the equitable obligation considered in cases such as Forsyth v Blundell;[73] (2) engaged in unconscionable conduct contrary to ss 12CA(1) or 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); and (3) breached s 420A of the Corporations Act 2001 (Cth);

   (c)the purported withdrawal of the Property Development caveat by the Mortgagee: (1) was done without the requisite authority of Property Development; and (2) constituted unconscionable conduct contrary to ss 12CA(1) or 12CB(1) of the ASIC Act; and

   (d)the purported withdrawal of the Property Development caveat constitutes: (1) 'sharp practice'; and (2) avoidance of the processes contemplated by ss 138B & 138C of the Transfer of Land Act.

   [72] The plaintiffs plead reliance on Mr MacEwan valuation report.

   [73] Forsyth v Blundell (1973) 129 CLR 477.

2. In par 115 of the Statement of Claim, the plaintiffs plead that if Major Blue is entitled to become the registered proprietor of the Land, in accordance with the mortgagee sale contract then each of plaintiffs will suffer loss and damage.  The particulars of damage pleaded in pars 114 and 115 are that: (1) Property Development has spent over $2 million for the purpose of the Wyndham Belmont Hotel development; (2) the Land is likely to have an improved value of approximately $80 million upon completion of the Wyndham project; and (3) Property Development will lose the opportunity to reap the benefit of the on completion improved value.

3. The plaintiffs plead in par 123 of the Statement of Claim that Major Blue is likely to have been aware immediately prior to 11 August 2022 that: (1) the value of the Land was considerably more than the purchase price of $2,244,000; (2) Property Development had applied to the City of Belmont for approval to develop the Land; and (3) the development approval was likely to increase the value of the Land.

4. The plaintiffs in effect plead in par 124 that on or shortly after 6 September 2022, Major Blue knew or ought reasonably to have known of Property Development's caveat and thereby the existence of the JDAP approval of the Wyndham Belmont Hotel development, and that the Mortgagee was attempting to sell the Land to Major Blue at a significant undervalue.

5. The plaintiffs plead that the interest rate under the Loan constitutes an unenforceable penalty. But the plaintiffs accept that this complaint cannot support the grant of an injunction,[74] and so it can be placed one side for the purposes of the present application.

   [74] Plaintiffs' Amended Submissions, par 50.

6. In the plaintiffs' claim for relief they claim the following relief that is relevant to the determination of this application for injunctive relief:

   (a)in par 1, a declaration that the Mortgagee had no authority to execute or lodge the Property Development caveat withdrawal;

   (b)in pars 6 and 7, an injunction in equity restraining the Registrar from registering any transfer on the titles to the Land;

   (c)in par 8, a decree in equity setting aside the mortgage sale contract;

   (d)in par 9, delivery up of the mortgage sale contract for cancellation;

   (e)in the alternative, in pars 14, 16 and 17, damages against the Mortgagee;

   (f)in the alternative, in par 15, equitable compensation against the Mortgagee; and

   (g)in the alternative, in par 21, an account taken of all monies alleged by the Mortgagee to be owing under the Loan and the mortgage on the basis of the sale of the Land for a proper price.

7. In summary, the plaintiffs' claim is that: (1) the Mortgagee sold the Land undervalued in breach of its general law duties and s 420A of the Corporations Act (claimed also to constitute unconscionable conduct under ss 12CA(1) or 12CB(1) of the ASIC Act); and (2) the Mortgagee's withdrawal of the Property Development caveat was unauthorised and unconscionable.

3.2 Withdrawal of the caveat – Reliance on a power of attorney

1. The Mortgagee relied upon cls 30.1 to 30.3 of the Memorandum of Common Provisions as authority to execute and lodge the withdrawal of caveat.

2. Clauses 30.1 to 30.3 of the Memorandum of Common Provisions provide:[75]

   [75] Affidavit of Morgan Ng sworn on 8 March 2023, Attachment MN-1, 58.

   30.1Appointment

   You irrevocably appoint us, each of our authorised officers, and each receiver individually as your attorney and must ratify anything an attorney does under clause 30.2 ("Powers").

   30.2Powers

   If an event of default is continuing an attorney may:

   (a)do anything which you can lawfully authorise an attorney to do in connection with this agreement, the collateral, or anything which the attorney believes is necessary to give effect to any of our or a receiver's rights, powers or remedies (These things can be done in your name or the attorney's name); and

   (b)delegate their powers (including this power) and revoke a delegation; and

   (c)exercise their powers even if this involves a conflict of duty or they have a personal interest in doing so.

   30.3Your acknowledgements

   You acknowledge that any person, including the Registrar of Titles of Western Australia or any other registration authority in Australia or elsewhere dealing with any attorney or a person purporting to be an attorney under this power, is:

   (a)entitled to rely on execution of any document by that person as conclusive evidence that:

   (i)the person holds the office set out in the power;

   (ii)the power of attorney has come into effect;

   (iii)the power of attorney has not been revoked;

   (iv)the right or power being exercised (or purportedly exercised) is properly exercised and that the circumstances have arisen to authorise the exercise of that right or power; and

   (b)not required to make any enquiries about any of the matters set out in clause 30.3(a).

3. The plaintiffs' claim that these contractual provisions are insufficient to comply with s 143 and the 19^th Schedule of the Transfer of Land Act.  It is argued that these provisions have the effect that the only means of appointing an attorney to deal with land under the operation of the Transfer of Land Act is to sign a power of attorney in the form in the 19^th Schedule or to the effect thereof, which form may be filed by lodging the original, duplicate or office copy of the instrument of power of attorney with the Registrar who shall note to the effect of the same in a book to be kept for that purpose until the registration of revocation or extinguishment of the power of attorney.

4. In Clazy v The Registrar of Titles, the Full Court held that the Registrar was right in declining to transfer the land in question where the applicant, being the registered proprietor to the land, proposed to transfer it by a means of a transfer signed by his attorney which power although in writing was not in the form provided for in the Transfer of Land Act.[76]

   [76] Clazy v The Registrar of Titles (1902) 4 WALR 113.

5. The plaintiffs' argument that cls 30.1 to 30.3 of the Memorandum of Common Provisions are insufficient to provide power to the Mortgagee to lodge a withdrawal of caveat is difficult to dispute.  Even if the contractual provisions could be said to be to the effect of the form in the 19^th Schedule, a document does not appear to have been lodged with the Registrar to note in a book kept for the purpose of recording the power of attorney in compliance with s 143 of the Transfer of Land Act.

6. Although the plaintiffs urge the court to determine this issue at an interlocutory stage of the proceedings, in the absence of proper argument on this point it is not appropriate for the court to do so.  For the purposes of this application it will be assumed that Property Development caveat was withdrawn without the requisite authority.

7. The consequence of this finding is that in determining this application for injunctive relief I have had regard to the relevant circumstances as if the matter had come before the court for removal of a caveat by a mortgagee, pursuant to s 138 or extension of a caveat following a Notice issued by the Registrar under s 138B of the Transfer of Land Act.

8. The court should also apply the principles that apply generally to applications for injunctive relief because the court cannot ignore the fact that settlement of the contract of sale between the Mortgagee and Major Blue has been effected, in circumstances where the relief sought by the plaintiff directly affects the rights of not only the Mortgagee to exercise its power of sale but also Major Blue's equitable rights in the Land to have the transfers registered against the titles of the Land.

9. Whilst I accept that for the purpose of this application that the maxim, 'no person can take advantage of his or her own wrong', is capable of application against the interest and rights of the Mortgagee, the application of this maxim cannot effect the Mortgagee's power of sale, as it had a legal right to sell the Land.  There is no dispute that the plaintiffs had breached the terms of the Loan or that the Mortgagee was entitled to be in possession of the Land.  Nor can this maxim be applied as against the rights of Major Blue.  There is no evidence before the court that Major Blue had any knowledge of the circumstances of the withdrawal of the caveat.

10. As to whether the plaintiffs are able to make out a case of breach of ss 12CA(1) or 12CB(1) of the ASIC Act is not entirely without doubt.

11. There is no evidence before the court that any of the plaintiffs are unsophisticated investors. Property Development appears to be in the business of property development, and it may be necessary to rely upon s 12CA(1) or s 12CB(1) of the ASIC Act to prove that one or more of the plaintiffs were under a special disadvantage.

12. In La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd, I recently made the following obiter observation to the effect that s 12CA does not add anything to the equitable doctrine of conscionability:[77]

    Section 12CA prohibits unconscionable conduct within the meaning of the unwritten law, from time to time, of the States and Territories and as such does not add anything to the existing common law of equitable doctrines, but simply enables additional statutory consequences for breach of s 12CA, such as regulatory enforcement, and statutory private rights of redress for loss or damage suffered because of the misconduct …

    [77] La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd [2022] WASC 264 [479].

1. I also observed in La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd that there appeared to be a division of opinion between judges of the High Court as to whether the identification of a special disadvantage of an individual is a necessary component of the statutory prohibition in s 12CB of the ASIC Act.[78]

   [78] La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd [2022] WASC 264 [485] - [490].

2. For the purposes of this application, it is not necessary to determine this issue. I accept for the purposes of this application only, that the plaintiffs may have an arguable case that the conduct of the Mortgagee in withdrawing the Property Development caveat without notice is capable of constituting a sharp practice and thus unconscionable conduct within the meaning of s 12CA and s 12CB of the ASIC Act.

4.0 Principles that apply to the removal of a caveat

1. There are competing lines of authority as to whether a registered proprietor has a caveatable interest in its own property. However, it appears to be accepted that a registered proprietor may have a caveatable interest if the registered proprietor is able to show that a mortgagee has sold properties in breach of its general duties of a mortgagee's right of sale, or has breached s 420A of the Corporations Act.[79]

   [79] McCourt v National Australia Bank Ltd [2010] WASC 121 [8] - [12] (Murphy J); Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 [21] and [47] (Beech J).

2. Under s 138(2) of the Transfer of Land Act, a person may summons the caveator to this court to show cause why the caveat should not be removed.

3. In an application to remove a caveat lodged by a registered proprietor to prevent the completion of a sale, the registered proprietor must show there is a serious question to be tried about the legal efficacy of the transfer, and once a caveator establishes an arguable caveatable interest, the court in exercise its discretion will consider where the balance of convenience lies.[80]

   [80] Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433.

4. The same considerations apply where an application is made under s 138B of the Transfer of Land Act by a judgment creditor for the Registrar to serve the caveator with a Notice that unless, the caveator obtains a court order to extend the caveat within 21 days it will lapse.

5.0 Legal principles relevant to the exercise of a mortgagee's power of sale

1. In CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd, Le Miere J summarised the relevant principles as follows:[81]

   The duties and requirements of a mortgagee exercising a power of sale were recently considered by the Victorian Court of Appeal in Boz One Pty Ltd v McLellan [2015] VSCA 68; (2015) ACSR 325. In a joint judgment of Whelan, Santamaria and Kyrou JJA the court made the following observations. A power of sale is given to the mortgagee entirely for its own benefit, the purpose of the power being to enable the mortgagee to realise the property to satisfy its claim and to return whatever balance may remain to the mortgagor. Under the general law, a mortgagee exercising its power of sale has a duty to exercise the power of sale in good faith and for the purpose for which it was conferred, such that a mortgagee could not recklessly or wilfully sacrifice the interests of the mortgagor. Section 420A of the Corporations Act imposes a more rigorous statutory duty which is intended to provide corporate mortgagors with additional protection. The relevant question for the purposes of s 420A is whether the controller has failed to do what a reasonable and prudent person would do, or has done what a reasonable and prudent person would refrain from doing in the circumstances. The onus of establishing a breach of s 420A rests with the complainant. The two limbs of s 420A(1) are exhaustive and mutually exclusive. Section 420A(1)(a) applies 'if, when [the property] is sold, it has a market value', otherwise s 420A(1)(b) will apply. The introduction of a category of property that is sold without a market value has presented conceptual difficulties in respect of which limb courts are to apply. Competing approaches have been identified.

   In my opinion it is not necessary to consider the different approaches that have been adopted to determining which limb of s 420A(1) should apply. The mortgaged properties have no unique or particular characteristics which cause the property not to have a market value. In Boz One the court said that the reasoning of Isaacs J in Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418 in analysing market value has been repeatedly cited with approval in the context of the definition of market value in s 420A(1)(a) of the Corporations Act.  The court observed:

   The sale price of a property may be the best evidence of the market value of the property if the court is satisfied that the mortgagee has taken proper steps in advertising and selling the property. If the process of advertising, marketing and sale of the property is shown to be unsatisfactory or inadequate, valuation evidence may be important to establish whether the price realised was an under value [165].

   The Court of Appeal said that in deciding whether there has been a breach of s 420A:

   A court assesses the process that a controller has undertaken in selling the property. The inquiry is whether, in the course of that process, the controller has taken all reasonable care to sell the property for not less than its market value. However, it is not necessary for the court to decide what actually was the market value of the property in order to find that s 420A(1) has been breached - or that the court needs to decide is that the process that was followed was not one where all reasonable care was taken to sell the property for its market value, whatever that market value might be.

   Accordingly, a breach of s 420A(1)(a) is not established merely because a [controller] fails to realise the property for its market value. However, if it is proved that the price obtained at sale was substantially below the market value of the property, this may be evidence that proper steps were not taken [167] ‑ [168].

   …

   In Boz One the Victorian Court of Appeal said at [174] that although it may be prudent for a receiver to obtain independent valuations of the property and advice as to the appropriate method of sale, that is not a rule of law and a controller is not bound to adopt any particular mode of sale, although the court added that a controller ought to take reasonable steps to ascertain the value of the property before selling it.

   [81] CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231 [18] ‑ [21].

6.0 The grant of an interlocutory injunction – Principles

1. The principles in relation to interlocutory injunctions are well known, and were summarised by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd.[82]  Essentially, there are three questions to be asked by the court:[83]

   (a)whether there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be entitled to relief;

   (b)whether the plaintiff will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and

   (c)whether the balance of convenience favours the granting of an injunction.

   [82] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110.

   [83] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [11].

2. In Mineralogy Pty Ltd v Sino Iron Pty Ltd, Newnes JA relevantly observed:[84]

   The first inquiry as to a 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed.  It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial.  How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks.  The second inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted:  Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions: Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59 [70].

   [84] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87] (Newnes JA; McLure P & Corboy J agreed).

3. Where a plaintiff seeks a mandatory injunction, the court must examine the form of the mandatory injunction sought, which may seek to do more than to establish the status quo.  The court in these circumstances must look at the nature of the injunction sought by the plaintiff and the practical consequences of the orders sought.[85]

   [85] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [12] (Beech J); see also Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27 [9] (Chaney J).

4. In assessing the balance of convenience, it is ultimately a question as to what is the balance of the risk of injustice.  First of all, it is an established principle that a plaintiff must show sufficient likelihood of success to justify the status quo being preserved until trial.  How strong the probability of success that a plaintiff must show depends upon the rights asserted by the plaintiff and the practical consequences that might flow from the orders the plaintiff seeks.[86]

   [86] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 (Gummow & Hayne JJ); see also Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, 622 (Kitto, Taylor, Menzies & Owen JJ).

5. Justice Edelman pointed out in National Bank Australia Ltd v Joyce:[87]

   Although the purpose of interlocutory injunction is often said to be to preserve the status quo until the hearing of the main action and although the status quo is the situation immediately before the issue of the writ seeking the permanent injunction, it has also been emphasised that the status quo can be disturbed by an interlocutory injunction and that 'the truth of the matter is that no real principles can be laid down'.

   [87] National Bank Australia Ltd v Joyce [2012] WASC 224 [88], applying the principle enunciated by M Leeming, R Meagher, D Heydon, Equity Doctrines and Remedies (4^th ed, 2002) 774 ‑ 775.

6. Unexplained delay by an applicant for injunctive relief,[88] or if the applicant's delay is coupled with some factor giving rise to prejudice to a defendant may found the basis for the court to exercise its discretion to refuse an injunction.

   [88] Network Ten Ltd v Fullwood (1995) 62 IR 43, 46 ‑ 47 (Young J).

7. In Emission Assessments Pty Ltd v James Jackson, Solomon J applied the following established principles as to whether an injunction should be refused on grounds of delay:[89]

   The issue of delay in such applications was discussed by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd (No 1):

   A most significant and well understood discretionary consideration in relation to interlocutory applications for injunctive relief, and for relief in the nature of appointment of receivers and managers, is and has always been that a plaintiff requires to commence such proceedings with special expedition.  A plaintiff who sits on his or her hands, whilst well aware that claimed rights are being infringed, takes the risk that interlocutory relief may be refused depending upon all the circumstances.

   In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies, the learned authors stated:

   As far as laches and delay are concerned, the cases are full of warnings.  Megarry J in Legg v Inner London Education Authority nearly declined interlocutory injunctions because the plaintiffs had been guilty of 12 weeks' delay and Goff J in Texaco Ltd v Mulberry Filling Station Ltd was troubled by a lesser period.  Excessive delay was the plaintiff's downfall in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Ltd.  However, in Express Newspapers plc v Liverpool Daily Post and Echo plc, Whitford J refused to uphold a defence of delay where the occasion of the delay was that the plaintiff was seeking undertakings in lieu of an injunction from the defendant.  Obviously if the delay is coupled with some such factor as the intervention of third-party rights or prejudice to the defendant, an interlocutory injunction should be refused just as a final injunction should be refused.  But authority is not wanting that on an interlocutory application – where different principles apply from those which would be applicable on a final hearing – mere delay of itself can (not must) be fatal.  Why should a court grant urgent relief when the plaintiff's tardiness in applying for it casts doubt on the reality of the alleged injury?

   In this court, Le Miere J observed in Jaddcal Pty Ltd v Minson:

   Excess delay, whilst not fatal, is a factor that weighs against the court not granting an interlocutory injunction: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633.

   [89] Emission Assessments Pty Ltd v James Jackson [2022] WASC 60 [63] ‑ [65].

8. The adequacy of damages is not independent of the balance of convenience.  The question of whether damages are an adequate remedy is not an essential pre‑condition that an applicant must satisfy, it is treated as an aspect of the balance of convenience.[90]

   [90] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [11] (Beech J).

9. The balance of convenience is ultimately a question as to what is the balance of the risk of injustice.  Put another way, balancing the risk of doing an injustice in considering whether greater injustice will be wrought by wrongly refusing an injunction than will be occasioned by wrongly granting one.[91]

   [91] Farahbakht v Midas Australia Pty Ltd (No 2) [2006] NSWSC 1323 [28] (Brereton J); citing May LJ in Cayne v Global Natural Resources plc [1984] 1 All ER 225, 237.

10. In considering the balance of convenience as part of the consideration of whether an injunction should continue or should be discharged, it is relevant to consider whether the injunction will materially injure the interests of third parties who will be impacted by the injunction.[92]

    [92] Patrick Stevedores v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1 [65]; applied in Lithium WA Investments Pty Ltd v Kirman and Brauer as joint and several administrators of Alita Resources Ltd (Receivers and Managers Appointed) (Administrators Appointed) [No 2] [2021] WASC 63 [43] (Hill J).

11. It may also be relevant to consider in some matters when considering the balance of convenience whether refusing or granting interlocutory relief will have the effect of final relief.  In Wyloo Metals Pty Ltd v Quarry Park Pty Ltd, Tottle J relevantly observed:[93]

    In assessing whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted, in other words assessing where the risk of an injustice lies, the court will consider whether the refusal of an injunction will have the practical effect of determining the claim for substantive relief against the plaintiff.  If so, that is a factor that favours the grant of an injunction.

7.0 The general rule requiring payment or payment into court of amount owing when seeking to restrain the exercise by a mortgagee of rights under the mortgage instrument

[93] Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2021]WASC 30 [40];citing Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533.

1. In Inglis v Commonwealth Trading Bank of Australia, the High Court held that in order for mortgagor to restrain the exercise of a mortgagee's power of sale, the mortgagor must pay to the court the amount sworn by the mortgagee as the amount owing, or a lesser amount if it appears from the terms of the mortgage instrument that the lesser amount is due.

2. The decision in Inglis v Commonwealth Trading Bank of Australia came to be known as the Inglis rule and is an application of the equitable maxim that 'he who seeks equity must do equity'.[94]

   [94] Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62 [45].

3. In Welldog Pty Ltd v Prox Pty Ltd, the Court of Appeal observed:[95]

   The general rule in Inglis supplements the ordinary requirement that an applicant for an interlocutory injunction give an undertaking as to damages.  See Harvey v McWatters (1948) 49 SR (NSW) 173, 177 (Sugerman J).

   The general rule in Inglis is not inflexible.  There are exceptions. 

   For example, subject to the overriding discretion of the court as to the terms and conditions (if any) to be imposed on the grant of interlocutory injunctive relief, and depending on the facts and circumstances and overall justice of the particular case, payment into court may not be required where it is alleged that:

   (a)the power of sale under the mortgage is not properly exercisable:  Inglis (164 ‑ 165); Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd [2011] NSWCA 39; (2011) 279 ALR 166 [58] (Campbell JA, Tobias & Macfarlan JJA agreeing);

   (b)the mortgage is invalid, or a breach of the mortgage has not occurred which engages the power of sale, or a notice required to engage the power of sale is ineffective:  Allfox Building Pty Ltd v Bank of Melbourne (1992) NSW Conv R 55‑634, 59,626 ‑ 59,627 (Powell J);

   (c)the power of sale is being exercised for an improper motive:  Milton Park Country Club Pty Ltd v Yasuda Trust Australia Ltd (Unreported, NSWSC, 8 March 1991 (Bryson J) 11 ‑ 15; or

   (d)the mortgage or the power of sale is impugned pursuant to the Australian Consumer Law or the Australian Securities and Investments Act or equitable principle: Glendore Pty Ltd v Elders Finance & Investment Co Ltd (1984) 4 FCR 130, 133 ‑ 136 (Morling J); Town & Country Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540, 545 (Davies, Gummow & Lee JJ).

   [95] Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62 [35] ‑ [37].

4. A court may in some circumstances not apply the rule in Inglis and restrain a mortgagee from exercising its power of sale for a short period where a mortgagor has established a prima facie case to preserve its equitable right of redemption, being the right of a mortgage or to satisfy the mortgage and so have the mortgage discharged in circumstances where there is demonstrable evidence before the court of an unconditional approval of finance from an incoming financier to provide immediate finance.[96]

   [96] Harvey v Perpetual Nominees Ltd [2009] NSWSC 1379; applied Six Bruce Pty Ltd v Jadig Finance Pty Ltd [2018] VSC 552.

5. A party who seeks injunctive relief to restrain a mortgagee from exercising rights under the mortgage must establish a ground to depart from the general rule in Inglis.[97]

   [97] Brimstone Resources Ltd v Empire Resources Ltd [2018] WASCA 107 [56].

6. As Beech J observed in Westpac Banking Corporation v Murray Riverside Pty Ltd, where there is no attack on the question of whether the power of sale arises at all in considering whether a caveat should be removed to allow a sale of a property by a mortgagee to proceed:[98]

   In circumstances where there is no dispute about the validity of the mortgage, the default, and that the power of sale has become exercisable, and the sole dispute is about the manner of exercise of the power of sale, the fact that the mortgagor has not brought the money the subject of debt into court is a factor, often a powerful or perhaps overwhelming factor, against the grant of an injunction or the extension of a caveat.

   [98] Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 [67].

1. Le Miere J made a similar observation in CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd.  His Honour observed that if the payment of the amount outstanding under the mortgage or bringing money into court (by payment into court of the amount claimed to be owed) is not a necessary precondition for the grant of an injunction restraining completion of the sale entered into by a mortgagee in exercise of its power of sale, it is at least a significant and important consideration on the question of the balance of convenience.[99]

   [99] CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231 [17].

2. In this matter, the plaintiffs argue that it would be unjust to apply the rule in Inglis, to require the plaintiffs to pay the amount outstanding under the mortgage or to pay the money into court in circumstances where they are challenging the proprietary of the mortgagee sale and the Mortgagee has already received the sale purchase price from Major Blue.  Consequently, they say if required to pay the amount outstanding under the mortgage would result in the Mortgagee being paid twice.

3. This submission ignores the principle that where a mortgagor seeks rescission of a mortgagee sale, the mortgagor should be in a position to redeem the mortgage.  In circumstances such as in this matter where a mortgagor seeks rescission of a mortgagee sale and where the purchaser has paid the purchase price to the mortgagee, the purchaser is to be treated in equity as having taken a transfer of the mortgage.  In those circumstances, the mortgagor would retain the right of redemption against the purchaser.[100]

   [100] Rowe v National Australian Bank Ltd [2019] WASCA 140; (2019) 56 WAR 1 [133] (Murphy JA & Sofronoff AJA).

4. Consequently, where a mortgagor seeks injunctive relief to prevent the completion of a mortgagee sale, the mortgagor should when it comes to the court be in a position to redeem the mortgage or to pay an equivalent amount into court.  If the mortgagor is not in a position to do so it is a powerful factor that militates against the grant of injunctive relief, which factor would have to be balanced together with all other relevant factors when considering the balance of convenience.

8.0 Have the plaintiffs made out a prima facie case, and if so, what is the strength of their case?

1. The plaintiffs have a strong prima facie case that the Property Development caveat was withdrawn without authority.  As set out in [104] ‑ [106], I accept for the purpose of this application that the caveat was withdrawn without authority.

2. The plaintiffs also have an arguable case that the execution and lodgement of the Property Development withdrawal of caveat constituted sharp practice and unconscionability within the meaning of s 12CA and s 12CB of the ASIC Act.

3. The withdrawal of the caveat is a separate issue to the exercise of the power of sale.  However, even if the withdrawal of the Property Development caveat could be considered to be part of the mortgagee sale process, this does not address the issue that the plaintiffs took no immediate action to seek injunctive relief once it came to their attention (at least by 6 September 2022 when Property Development lodged the caveat) that the Mortgagee and Major Blue had entered into a contract for the sale of the Land which is a factor relevant to the balance of convenience, and is considered below in 9.0 of these reasons.

4. The plaintiffs argue that the facts of the case suggest there is at least a serious question to be tried whether the Mortgagee acted in good faith in purporting to sell the Land to Major Blue for only $2,244,000 despite having been purchased by Property Development in August 2019 for $3 million.

5. The plaintiffs point to the fact that the appointed selling agents for the Mortgagee, Burgess Rawson, did not at any time in their advertising refer to the fact that there was in place a current development approval to build a hotel on the Land.  The effect of this submission appears to be that in the absence of any information provided to the market that there was a current development approval to construct the Wyndham Belmont Hotel, the Land must have been sold at undervalue.

6. If a person who agrees to purchase land from a mortgagee has no notice of any impropriety at the date of the contract and continues to have no notice at the time when it is completed, the purchaser will obtain a title which cannot be challenged by the mortgagor.[101]

   [101] Re Coffey; Bartel [1995] QSC 67, 6; Blundell v Associated Securities Ltd (1971) 19 FLR 17, 39.

7. However, I am not satisfied that on the evidence presently before the court at the time Major Blue entered into the contract to purchase the Land that it had notice of the alleged breach of duty. Major Blue entered into reasonably lengthy negotiations to purchase the Land after the Land was advertised on the open market. There appears to be no convincing evidence that Major Blue had notice of the facts from which an inference or conclusion that the Mortgagee had breached its equitable obligation by selling the Land at an undervalue or that the Mortgagee had engaged in unconscionable conduct (within the meaning of s 12CA(1) or s 12CB(1) of the ASIC Act or had engaged in conduct contrary to s 420A of the Corporations Act.

8. In addition, as set out above there is no evidence that Major Blue had any knowledge of the circumstances of the withdrawal of the Property Development caveat.  However, Major Blue did have knowledge of the lodgement of the Property Development caveat on the titles to the Land, after it had entered into the contract to purchase the Land.  In his affidavit Mr Singh states that he was informed by his solicitors a caveat had been registered on the titles of the Land by the previous owners.  However, there is no direct evidence before the court that Mr Singh was aware of the grounds set out in the caveat or any of the information contained in the documents lodged in support of the caveat.

9. However, if the evidence is taken at its highest for the purposes of this application I accept that Major Blue may have had notice prior to the settlement date of the mortgagee sale of the plaintiffs' claim of alleged impropriety.

10. I have also had regard to the fact that the differences between Mr Murphy's assessment of market value in his draft valuation report that valued the Land as at 18 February 2021 as $3,700,000 or $2,590,000 and his valuation report 10 months later as at 21 December 2021 as $2,040,000 and $2,400,000 is unexplained.  I note also that there are a number of different sales relied upon in the draft report and the subsequent report.

11. Given the unexplained inconsistencies of Mr Murphy's report, for the purposes of this application I accept that the plaintiffs have made out a prima facie case that the Land may have been sold at undervalue.  However, on the basis of the valuation reports presently before the court, I am not satisfied the plaintiffs have at this point in time a very strong case.

12. This is principally because the valuation reports relied upon by the plaintiffs were not prepared for sale on the open market, but were prepared for the purpose of a finance applications by Property Development and those reports assess the value of the Land to Property Development as a person who had access to and held a current development approval to develop and construct the Wyndham Belmont Hotel with a management agreement in place for the running of the hotel after it was complete.

13. As the Mortgagee points out the evidence presently before the court is that the Mortgagee adopted a conventional method of sale as follows:

    (1)The Mortgagee commissioned an independent valuation at the outset of the sale process in about January 2022 from Mr Murphy.

    (2)The Mortgagee engaged a professional real estate agent to market the properties.  The agent undertook an extensive marketing campaign which included advertisements in The West Australian and real estate sales websites of the Land highlighting the development opportunity of the Land, including stating in the advertisements that the Land was zoned mixed use and suitable for development for several uses including as a hotel.

    (3)The properties were marketed on the open market for seven months.  There was little interest in the properties.  Major Blue was the only viable buyer.

14. The specific development approval of the Land was a matter of public record, which any prospective purchaser could obtain.

15. It is difficult to accept that the Mortgagee was at fault for the withdrawal of the New World Funding conditional loan approval of $2.925 million in June 2022, when that offer of finance to the plaintiffs was conditional and subject specifically to a condition of due diligence.  It appears that when New World Funding conducted its due diligence they doubted the veracity of the $4.5 million market valuation assessed by Mr MacEwan as at 4 May 2022 when it was apparent that there were no buyers at that price.

16. Mr MacEwan valued the Land on the basis that the Land had development approval and was able to meet of all requirements of the Western Australian Planning Commission and the City of Belmont necessary to construct the proposed Wyndham Belmont Hotel.  Although the attachments to Mr MacEwan's report are not before the court it is apparent that when assessing the value of the Land, Mr MacEwan had available to him copies of the planning approvals and the hotel concept.  He then assessed the value of the Land (which is vacant land) as if it had been developed to arrive at a value of $2,300 m² (rounded to $4.5 million).[102]  Mr Taplin recently assessed the value of the Land on the same basis.

    [102] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT28, 321.

17. The plaintiffs submit that a development approval attaches to the land and binds a successor in title.  This submission is correct.[103] Pursuant to s 216(1) of the Planning and Development Act 2005 (WA), it is an offence if a development is commenced, continued or completed contrary to or otherwise than in accordance with any condition imposed by the responsible authority with respect to the development, and this court may, on application by the responsible authority, grant an injunction restraining a person from commencing, continuing or completing a development contrary to or otherwise than in accordance with any condition imposed by the responsible authority with respect to the development.

    [103] Pike v Tighe [2018] HCA 9; (2018) 262 CLR 648.

18. Consequently, anyone who wishes to develop land must apply to the responsible authority for development approval and must only complete the development in accordance with the approved conditions, unless they apply to the responsible authority and obtain approval to vary the development approval.  If a purchaser wishes to develop land either for another use or to construct a building for the same use that does not meet the same approved conditions which often cover a variety of items such as height, setbacks, bulk and scale, parking and landscaping they must make an application to vary the development application or they may need to seek an entirely new development approval from a responsible authority.

19. It necessarily follows, therefore, that a current development approval for land may or may not be of significant value to a purchaser, or put another way a current development approval may or may not add to the value of the land in question.

20. The plaintiffs have assumed that the valuation reports of Mr MacEwan and Mr Taplin (which were prepared in the context of Property Development obtaining finance for the development of the Land in circumstances where the plaintiffs were proposing to develop the Land to construct a hotel that is to be managed by the Wyndham group as the Wyndham Belmont Hotel) can be used to ascertain the market value of the Land to any prospective purchaser who purchases the Land on the open market from the Mortgagee.

21. It is difficult to assume that a prospective purchaser purchasing the Land on the open market as a mortgagee sale would be in a position to utilise the development approval that is presently in place in respect of the Land, because a prospective purchaser would in effect be required to proceed with the development as planned and complete the construction of a hotel in accordance with the plans submitted to JDAP and the conditions which attach to the development approval.

22. There is no evidence presently before the court that a prospective purchaser would be in a position to acquire all of the necessary rights to utilise the plans and consultants reports and management agreement that Property Development has the right to use.  Property Development acquired the rights to use the development approval, consultancy reports etc by entering into the Heads of Agreement on 24 October 2019 with the Barrington Vendors and Barrington Family Holdings Pty Ltd.

23. Unless a prospective purchaser of the Land wished to, and was able to, enter into an agreement with Property Development and if necessary the Barrington Vendors and Barrington Family Holdings Pty Ltd to use the plans and other reports etc, a prospective purchaser of the Land would have to engage consultants to draft to prepare their own plans, obtain the necessary reports and other documents (including any management agreements if they wish to engage with a chain of hotel managers) and to make their own application for development approval to construct a hotel on the Land.

24. For these reasons, although I am satisfied that the plaintiffs have made out a prima facie case, they do not appear to have a strong case that the sale of the Land was sold undervalue, in circumstances where the Land was marketed on the open market by an independent sales agent and other than Major Blue there was little interest in the Land.

9.0 Balance of convenience

9.1 The plaintiffs' submissions

1. In assessing the balance of convenience, the court must balance the injustice to the plaintiffs by not granting further injunctive relief against the injustice that will be suffered by the defendants if an injunction is granted.

2. The plaintiffs argue that the balance of convenience weighs in their favour.  The plaintiffs point out that they have each given the usual undertaking as to damages, and those undertakings operate to the benefit of Major Blue as well as the Mortgagee and the Registrar.

3. The plaintiffs argue that the general rule in Inglis should not be applied.  They point out the Loan was short term in nature and made in contemplation of Property Development obtaining refinance from another lender, and it needs to retain title so that the Land may be mortgaged to the new lender.

4. They also argue that the conduct of the Mortgagee has prejudiced Property Development's refinancing arrangements with New World Funding.  The difficulty with this submission is that it cannot be found that the Mortgagee did not have the right to exercise its power of sale by advertising the property on the open market.

5. The plaintiffs claim that if an injunction is not continued Property Development's efforts in obtaining development approval for the Wyndham Belmont Hotel will be wasted, and their development expenditure wasted.

6. In a statutory declaration filed in support of the Property Development caveat, Ms Tilli declared that Property Development had expended over $2 million on developing the Land, and Property Development expects the improved value of the Land to be so far $80 million upon the turnkey completion of the hotel development.[104]

   [104] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT32, 385.

7. However, there is no direct evidence before the court to support the claim that Property Development have expended of $2 million on development costs to develop the Land.

8. First, at the time of the mortgagee sale the Land remained undeveloped.  Second, the only estimate of past costs of consultant drawings and reports for the development application submission is contained in a letter dated 15 November 2022 that is written by an architect, Laurie Scanlan of Scanlan Architects, and addressed to Mr Tilli.  In this letter Mr Scanlan states:[105]

   As requested, this is to confirm that the cost to prepare all relevant consultants drawings and reports for the development application submission for the above project would have been in excess of $500,000 (excl GST).

   In addition, the cost to prepare all relevant consultants drawings and reports for lodgement of a building permit application for the above project would be a further $1,500,000.

   This phase/stage of the work is almost finished with only minor work required to complete all documentation required by the building certifier.

   [105] Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT41, 450.

9. Ms Tilli does not state that Property Development has paid for any of these estimated costs.  It is apparent from the Heads of Agreement entered into with the Barrington Vendors and Barrington Family Holdings Pty Ltd in October 2019 that there was in place development approval, consultant reports and a hotel management agreement at the time Property Development acquired the land.  It is also apparent from the drawings lodged by Property Development on or about 3 April 2020 that the architectural drawings submitted with the application for the variation of the development approval were not drawn by Scanlan Architects but by another architecture firm, Mark Aronson Architecture.[106]

   [106] See copies of architectural drawings submitted to JDAP on 3 April 2020; Affidavit of Angela Tilli sworn on 14 February 2023, Attachment AT13, 109 ‑ 136.

10. The plaintiffs point out that damages are not regarded as an adequate remedy in lieu of specific performance in most sale of land cases, and that is so, even where the purchaser is a developer who entered into the contract for the purchase of the land for subdivision and resale.[107]

    [107] Mould v Canale [2017] VSC 793 [139] ‑ [142].

11. However, the plaintiffs' claims for relief do not raise or relate to a claim for specific performance.  Notwithstanding this point, the plaintiffs argue that the same principle applies to a registered proprietor's claim to restrain a mortgagee sale on grounds of impropriety.  In support of this submission, the plaintiffs refer to the decision of Lush J in Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd.[108]  However, the reasons of Lush J in this matter do not support this proposition.  His Honour makes no specific finding in his reasons that damages would not be an adequate remedy.  Even if his Honour's reasons could be construed in favour of this point, it is contrary to established authority.

    [108] Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309, 319.

12. In circumstances where there is no challenge that a defendant to an application for injunctive relief to restrain a sale would be unable to satisfy an award of damages or equitable compensation in the event that it was determined at trial that the mortgagee sale should be set aside, an applicant would not be left without remedy.[109]

    [109] See for example Rowe v National Australian Bank Ltd [2019] WASCA 140; (2019) 56 WAR 1 [134] (Murphy JA & Sofronoff AJA); Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62 [47].

13. In CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd, Le Miere J relevantly observed where a mortgagor in default under a mortgage was seeking an interim injunction to restrain the mortgagee from completing a sale to a purchaser:[110]

    [I]f the injunction is refused and the Contract proceeds to completion, CME Properties will not be left without a remedy should Prime Capital have exercised the power of sale improperly.  Where it is shown that the mortgagee failed to act in good faith and the property was sold for less than its value, it will be assumed in the accounting as between the mortgagor and the mortgagee that the property was sold for the amount that the property would have realised if the sale had been properly conducted:  Pendlebury v Colonial Mutual Life Assurance Society Ltd (676).  Alternatively, CME Properties may be able to recover the difference in value from Prime Capital as damages or equitable compensation.

9.2 The balance of convenience does not favour the grant of an injunction

[110] CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231 [35].

1. The reasons why the balance of convenience does not favour the continuation of an injunction so as to prohibit the registration of the mortgagee sale transfers on the titles to the Land are as follows.

2. First, the Mortgagee in possession is not bound to wait for the mortgagor to be in a position to redeem.[111]

   [111] See Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676, 701 (Issacs J); see also Upton v Tasmanian Perpetual Trustees Ltd [2007] FCAFC 57; (2007) 158 FCR 118 [27] (Kiefel & Besanko JJ) [86(p)] (Graham J).

3. The plaintiffs have not acted promptly in seeking injunctive relief.  In the circumstances where the property in question was vacant land that was suitable for development for a number of uses and was sold to a purchaser whereby it would be known to the plaintiffs that purchaser may be taking their own steps towards development and would be likely to expend funds on the development, the plaintiffs should not have waited for the Mortgagee to take steps to have the caveat removed from the titles to the Land.  This factor weighs against the plaintiffs and is a factor in favour of the defendants, particularly Major Blue.

4. The plaintiffs would have been in a position to bring an application for injunctive relief to the court when Property Development lodged the caveat on 6 September 2022 when they first had notice of the mortgagee sale, or at least by on or about 16 December 2022 when Property Development secured an offer for finance from Qld Capital for a loan of $2,766,668.

5. Nor did Property Development or the other plaintiffs inform the Mortgagee that Property Development having secured alternative finance, would be in a position to redeem the mortgage.

6. Failing to do nothing further to advance their claims in court for five months after they became aware of the mortgagee sale before bringing an application for injunctive relief has resulted in not insignificant consequences for at least Major Blue who has paid the purchase price to the Mortgagee, stamp duty to the State Commissioner of Taxation, and a portion of rates on the Land for the current financial year.

7. Second, I am not satisfied that the plaintiffs have established any proper reason as to why the general rule in Inglis should not be applied.  The plaintiffs have not indicated that they would be willing to or are in a position to at least tender the price paid by Major Blue for the Land into court.  As set out in [141] of these reasons, the failure to do so is a powerful factor that militates against the grant of injunctive relief.

8. Third, leaving aside the fact that no payment into court is offered, there is no evidence before the court as to the assets and liabilities of any of the plaintiffs to enable the court to make any assessment as to the worth, if any, of the undertaking as to damages given to the court.

9. Major Blue purchased both the Land and the adjoining land at 153 Great Eastern Highway with the intention of developing all of that land for self‑catered apartments, restaurants and shops.  Major Blue sought the inclusion of special conditions in the separate contracts of sale for both the Land and 153 Great Eastern Highway to the effect that the purchase of the Land would only proceed if both contracts proceeded to settlement.[112]  However, the Mortgagee did not agree to the inclusion of such a provision.  Consequently, the special conditions were not included in the contracts for sale.[113]

   [112] Affidavit of Roopan Singh sworn on 5 March 2023, Attachment RS11, 110; Attachment RS13, 147, 152 ‑ 153 and 176, 181 ‑ 182.

   [113] ts 78 ‑ 79.

10. If an injunction were to continue until trial, and the plaintiffs are unsuccessful in obtaining a decree in equity setting aside the mortgagee sale, Major Blue will be delayed in dealing with the Land in any way.  It has no security in place from the plaintiffs for the considerable losses it might suffer.

11. Further, even if the plaintiffs are successful at trial Major Blue will be left with 153 Great Eastern Highway, which it purchased on the basis that it would be developed together with the Land.  It is to be noted that leaving aside the interlocutory orders that are pleaded in the Statement of Claim that seek to restrain Major Blue from lodging any transfer of land form with the Registrar, which relief is now not open because the transfers had been lodged prior to the plaintiffs filing their writ, the plaintiffs plead no cause of action or relief against Major Blue.

12. For these reasons, the inconvenience or injury which the plaintiffs are likely to suffer if the continuation of an injunction until trial is refused is clearly outweighed by the injury which Major Blue would suffer if an injunction is continued until trial.

13. Fourth, as set out above, even though the injunction will not be continued, the plaintiffs are not left without remedy, they are entitled to pursue their claim in damages, compensation and for an account.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SO

Associate to the Judge

27 MARCH 2023