Rose v Gippsreal Ltd
[2011] VSCA 153
•26 May 2011
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2011 0009
| JACQUELINE ELLEN ROSE | Applicant |
| v | |
| GIPPSREAL LTD | First Respondent |
| - and - | |
| REGISTRAR OF TITLES | Second Respondent |
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| JUDGES | REDLICH and MANDIE JJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 22 March 2011 |
| DATE OF JUDGMENT | 26 May 2011 |
| MEDIUM NEUTRAL CITATION | [2011] VSCA 153 |
| JUDGMENT APPEALED FROM | Rose v Gippsreal Ltd , Unreported, Supreme Court of Victoria, Macaulay J, 16 December 2010 |
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PRACTICE & PROCEDURE – Application for injunction restraining registration of transfer of land pending determination of appeal – Whether real questions to be tried – Whether prospect of success – Whether balance of convenience favours grant of injunction – Application dismissed.
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| Appearances: | Counsel | Solicitors |
| The Applicant appeared in person | ||
| For the First Respondent | Mr J L Evans | Oakleys Legal |
| No appearance for the Second Respondent |
REDLICH JA:
MANDIE JA:
By way of summons filed 17 March 2011, the applicant, Ms Jacqueline Rose, sought an injunction to restrain the registration of a transfer of a block of vacant rural land of which she is the registered proprietor, pending the hearing of her appeal. The transfer was executed by the first respondent, Gippsreal Ltd (‘Gippsreal’), as mortgagee of the land, and was provided by it to a Mr Morrison, as purchaser of the land, at settlement of a contract of sale dated 11 January 2011. At the conclusion of the hearing on 22 March the application was dismissed as the applicant failed to demonstrate a sufficient likelihood of her succeeding on the appeal so as to justify the preservation of the status quo pending the hearing of the appeal. These are our reasons for our decision.
In December 2010 Macaulay J, sitting in the Practice Court, dismissed an application by the applicant for interlocutory and final relief, in which she sought declarations that Gippsreal was not entitled to exercise its power of sale over the land as mortgagee, and an injunction to restrain it from exercising that power. On 13 January 2011 the applicant served Gippsreal with a notice of appeal against the orders made by Macaulay J, but it was not until the filing of the present application on 17 March 2011 that she sought injunctive relief pending the determination of her appeal. She does not seek injunctive relief against Gippsreal as it has fully exercised its rights as mortgagee. Instead, she seeks to enjoin the second respondent, Registrar of Titles, from registering the transfer of the land to Mr Morrison. It is not in issue that registration of the transfer may deprive the applicant, permanently, of any interest which she has in the land, by operation of s 77(4) of the Transfer of Land Act 1958 (Vic).
The circumstances giving rise to these proceedings may be briefly set out. On 14 September 2007 Gippsreal advanced $155,000 to the applicant. By way of security for that advance, the applicant granted Gippsreal a first registered mortgage over the land. The mortgage was registered for an initial term of two years. On about 13 January 2010 the senior lending manager and senior default manager employed by Gippsreal approved an extension to the mortgage and subsequently on 28 June 2010 the applicant executed extension documents and the mortgage was extended. The variation of mortgage was registered by Gippsreal.
It was an express term of the mortgage that the applicant complete construction of a dwelling on the land to frame stage by 1 October 2010.
On 22 October 2010 the lending manager of Gippsreal wrote to the applicant requesting evidence that the construction of the dwelling was now at frame stage on the land. The applicant responded by informing Gippsreal in writing to the following effect:
My plans for the use of this land have not yet been finalised. Even though your second contract included your request for me to begin building, I believe that this is not relevant to the loan. Could you please inform me how it is relevant, ie how Gippsreal would stand to be inconvenienced if at the end of this current two year loan that you have requested me to sign up for, that my planning permit has not yet been utilised?
As a result of the applicant’s failure to comply with that term the senior default manager issued a default notice to her. Following issuing of that notice the applicant, in a further written communication to Gippsreal, said:
I was going to put a relocatable house on the land at Mardan but had a last minute change of plan and took it somewhere else. I can arrange for it to be moved to Mardan – everything is in place and it can be done as soon as the house relocator is contacted – I have sent him an email telling him of the situation and am awaiting his reply. He may not be able to move it for a few days – I don’t know – I’m currently waiting for him to continue to work on the house as he was to put it on stumps either this week or next – whenever he turned up.
The applicant failed to comply with the requirements of the default notice, and on 22 November 2010 Gippsreal caused a notice pursuant to s 76 of the Transfer of Land Act to be served upon her. The applicant then failed to comply with the s 76 notice within the stipulated seven day period, and Gippsreal listed the land for sale by way of a mortgagee’s auction to be held on 17 December 2010. The applicant then filed an originating motion and summons in the Practice Court seeking a declaration that the s 76 notice was not authorised and was invalid. Macaulay J dismissed those proceedings on 16 December 2010, finding that the applicant was in default under the mortgage and that the s 76 notice was a notice served pursuant to the Act. In refusing the application for an injunction, his Honour found that there was no serious question to be tried as to Gippsreal’s right to exercise its statutory power of sale, and that there was no proper basis upon which it should be restrained from auctioning the secured land.
By notice of appeal dated 13 January 2011 the applicant appealed Macaulay J’s decision but, as mentioned above, did not seek to restrain Gippsreal from proceeding with the sale of the land pending the determination of her appeal. On or about 27 January 2011 the applicant moved the Registrar of Titles to lodge a Notice of Action on the title to the secured land, on the basis that she had filed the notice of appeal. On 28 January 2011 the senior default manager for Gippsreal conducted a search of title to the land and discovered the Notice of Action. After an exchange of correspondence, Gippsreal’s solicitors requested the removal of the notice but the Registrar of Titles declined to do so. On the hearing of an application by Gippsreal, Almond J, on 18 February 2011 ordered that the Notice of Action be removed. In the course of his reasons for decision, Almond J observed that the applicant was on notice of the pending settlement of the sale of the land, and that she would need to apply for a stay of execution of the judgment of Macaulay J to have any prospect of restraining the Registrar from registering the transfer. Settlement of the land was rescheduled to 23 February 2011.
On 22 February the applicant lodged a caveat on the title, claiming an equitable interest in fee simple on the grounds of her alleged right ‘as a registered proprietor to restrain the sale by the mortgagee made by fraud or improper purposes’ until the determination of the present appeal. On 1 March 2011 Gippsreal issued proceedings in the Supreme Court seeking an order that the caveat be removed. Emerton J made an order to that effect on 10 March 2011, on the ground that the applicant’s equity to have an improper sale of a mortgaged property set aside was no more than a mere equity and was not an estate or interest in land such as to support a caveat under s 89 of the Transfer of Land Act. It was noted that the applicant would be given seven days’ notice of the lodgement of any transfer with the Registrar of Titles and would have an opportunity to apply to the Court of Appeal for an injunction before any transfer was registered. Hence the present application.
One relevant matter to the grant of such an injunction is whether it is shown that there are real questions to be tried. This raises, in the case of an appeal, whether the applicant has shown some prospect of ultimate success. The grounds of appeal in the applicant’s notice of appeal dated 13 January 2011 were that:
1.The judge erred in stating that I was not prevented in remedying the default by any conduct on the part of Gippsreal. This is not true. The actions of [the first respondent] were obstructional and prevented me from remedying the default. The judge failed to consider factual causation in that but for:
(a)[the first respondent’s] erroneous stating of the expiry date of the default notice, thus depriving me of an extra four days, and
(b)but for [the first respondent] then compelling me to spend my time in responding to his false assumptions, based on the false belief he gave me that I only had two days in which to remedy the default, and not six days, and based on the belief that he may allow my relocatable house, and
(c)but for [the first respondent] forbidding me to remedy the default, in writing, I was denied the opportunity to remedy the default, by arranging to relocate the house, either with my house relocator or the fifty-six other house relocators in Victoria listed on the internet.
2.The judge erred in a factual finding, the effect of which should have extended the expiry date by one day, thus making it four and not three extra days that I should have had to remedy the default.
3.The judge made two other errors detrimental to my credibility, in need of clarification.
The applicant did not demonstrate that any of these grounds had any prospect of success at all. She could not contend, and did not contend, that the judge was wrong in concluding that she was in default under the mortgage and had failed to remedy that default. It is apparent that ground 1 above was not argued before the primary judge and as it involves contentious factual matters it is extremely unlikely that the applicant would obtain leave to raise it on appeal. In any event, from what the applicant told us in argument, the ground would not appear to have any substance.
The time for compliance with the default notice had long expired hence the applicant’s default was incapable of remedy. The initial default under the mortgage had arisen because the applicant, without notice to Gippsreal and in breach of the terms of the mortgage, had sought and obtained amendments to her planning permit for relocation of a house onto the land instead of constructing a house on the land. When Gippsreal raised its legitimate concerns regarding the placement of the relocatable house on the land and sought information from the applicant to satisfy those concerns, material produced during the course of argument on the appeal indicates that the applicant refused to cooperate at all with Gippsreal.
In addition, it was argued in substance both below and on this application that Gippsreal had acted unconscionably. It is strongly arguable that the contrary is in fact the case, because of the failure of the applicant to inform Gippsreal of her having obtained an amended planning permit, or of her intention to put a relocatable home on the land at the time when she obtained the varied mortgage. It would thus seem that she permitted the mortgagee to proceed with the amended mortgage and special condition five contained therein on the basis of the existence of the original planning permit and in ignorance of her intention that if she was to do anything it would only be to relocate a house on the land. Prima facie, it was no answer to say that the valuer should have picked up these discrepancies, as the applicant contended.
Further, letters were produced at the hearing showing that, notwithstanding that the applicant was in default under the mortgage and the default was incapable of being remedied, Gippsreal was prepared to allow the applicant to place the relocatable house on the property, provided that she first satisfied certain conditions, namely that she provided it with sufficient details about the state and value of the relocatable house, allowed it to be inspected by a valuer, and showed that she had the funds to complete the house to Certificate of Occupancy stage. However, the applicant does not appear to have taken up this proposal from Gippsreal to resolve the matter, but instead chose to proceed with application before Macaulay J.
Despite being afforded an ample opportunity to do so, the applicant was unable to point to any conduct on behalf of Gippsreal which was unconscionable or such as to affect its conscience. In our opinion, so far as could be ascertained on the application, the applicant had little or no prospect of success in the appeal.
The next question that arose was the ‘balance of convenience’. On the one hand, the Court was entitled to take into account the unique and special value of the land to the applicant. On the other hand, there were serious matters of prejudice flowing from the grant of an injunction that must be taken into account. The mortgagee’s sale has already been settled and the purchaser has paid the purchase money. The rights of the innocent purchaser, who has paid the purchase money in full, must be given considerable weight. Whether or not that purchaser was aware of the pending appeal, he was entitled to proceed on the basis that the injunction had been refused, and indeed the contract of sale had been signed prior to the notice of appeal being filed. The delay of the applicant in making this application had put the purchaser in that position. Further, there was an obvious potentiality of damage to that purchaser as well as the potential liability of Gippsreal to that purchaser should the registration of the transfer be delayed. Another important matter to be weighed in the balance against the granting of the injunction was that the applicant remains able to claim any damages against Gippsreal as mortgagee, as Gippsreal itself acknowledged, if she can establish that the mortgagee is liable either by virtue of a failure to comply with the terms of the mortgage (an issue on this appeal) or by virtue of failing to sell the land in good faith (an issue that does not arise on this appeal but that might be taken up should the applicant wish to do so in a separate proceeding).
Looking at the matter as a whole, the balance of convenience was strongly against interfering with the sale process at this very late stage.
The application here is analogous to an application for a stay of execution on a judgment, with the additional problem that the status quo has changed in reliance on the judgment. As a general rule, special or exceptional circumstances need to be made out and they have not been made out.
We concluded that it was contrary to the interests of justice to grant the application and it was therefore dismissed.
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