Sood v Christianos

[2008] NSWSC 1087

CITATION:	Sood v Christianos [2008] NSWSC 1087
HEARING DATE(S):	4, 5, 16, 18 September 2008
JURISDICTION:	Equity Division Duty List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	19 September 2008
DECISION:	Plaintiff authorised to sell the property the subject of the application under Court supervision in accordance with draft Contract.
CATCHWORDS:	REAL PROPERTY – MORTGAGES – where memorandum grants power of attorney to mortgagee to sell – whether contractual power of sale - REAL PROPERTY – MORTGAGES – EQUITABLE MORTGAGES – power of sale – where relevant land subject to a registered first mortgage, two unregistered mortgages and an unregistered charge – whether equitable mortgage contains implied power of sale – power of sale pursuant to (NSW) Conveyancing Act 1919, s 109 – where mortgagee holds mortgage in registrable form – whether judicial sale is standard remedy for equitable charge or remedy of last resort – whether mortgagee should register mortgage and exercise power of sale pursuant to (NSW) Real Property Act 1900, s 58, rather than seeking judicial sale - REAL PROPERTY – MORTGAGES – EQUITABLE MORTGAGES – power of sale – manner of sale – where second mortgagee in possession of draft contract of sale with a purchase price sufficient to discharge the first mortgage totally and the second mortgage partially – whether sale should be by auction – considerations relevant to value – which party should have conduct of the sale
LEGISLATION CITED:	(NSW) Conveyancing Act 1919, ss 109, 111 (NSW) Real Property Act 1900, s 58
CATEGORY:	Principal judgment
CASES CITED:	King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441 Mango Media Pty Ltd v Mertes [2006] NSWSC 1460 Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 Matthews v Goodday (1861) 31 LJ Ch 282 New Beach Apartments Pty Ltd v Epic Hotels Pty Ltd [2007] NSWSC 474 Palk v Mortgage Services Funding plc [1993] Ch 330 Yarrangah Pty Ltd v National Australia Bank Ltd [1999] NSWSC 97; (1999) 9 BPR 17,601
TEXTS CITED:	Irwin et al, Parker's Practice in Equity (New South Wales), 2nd ed (1949) Lawbook Co Sykes and Walker, The Law of Securities, 5th ed, (1993) Lawbook Co
PARTIES:	Margaret Sood (plaintiff) Maria Christianos (first defendant) Kaji Australia Pty Ltd (second defendant) Robert Nunzio Sciacca (third defendant) Adelaide Bank Ltd (fourth defendant)
FILE NUMBER(S):	SC 4333/08
COUNSEL:	Mr R W Tregenza (plaintiff) Mr V F Kerr (first defendant) Submitting Appearance (second defendant) Mr S J Pearlman (sol) (fourth defendant)
SOLICITORS:	Licardy, Harris & Co (plaintiff) Phillip A Biber (first defendant) Dobes and Andrews (second defendant) MacGillivrays Solicitors (fourth defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

BRERETON J

Friday, 19 September 2008

4333/08 Margaret Sood v Maria Christianos & 3 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: The first defendant Maria Christianos is the registered proprietor of land at 13 Langford Road, Dural, in the State of New South Wales, being land comprising Folio Identifier 7/XXXXX X, subject to a registered first mortgage to the fourth defendant Adelaide Bank Ltd (“Adelaide Bank”) securing a debt of about $1,175,000, an unregistered second mortgage to the plaintiff Margaret Sood securing about $327,000, an unregistered third mortgage to the second defendant Kaji Australia Pty Ltd (“Kaji Australia”) securing a sum of about $208,000, and an unregistered fourth charge to the third defendant Robert Nunzio Sciacca. The three unregistered mortgagees have each lodged a caveat in respect of their interests. By Summons filed on 21 August 2008, but subsequently twice amended, Ms Sood seeks orders for judicial sale of the land, and in particular authorising a sale at a price of $1,470,000 on terms of a draft Contract for Sale between her as vendor and Page Property Developments Pty Ltd as purchaser.

2 At first, Adelaide Bank was not joined as a defendant, although it had informally indicated its consent to the proposed sale. For reasons previously given [see Sood v Christianos [2008] NSWSC 1018], I held that as first mortgagee it was a necessary party, and that a sale other than subject to its mortgage could not be ordered without its formal consent. Subsequently, Adelaide Bank was joined, and after initially adopting an equivocal position, neither consenting to nor opposing the relief sought, ultimately indicated its consent to the orders sought, subject to some minor and non-controversial amendments. Kaji Australia now submits to such orders as the Court may make save as to costs. Mr Sciacca has been served and does not appear, but has indicated in a letter to Ms Sood's solicitors that he does not oppose the orders sought. Ms Christianos, however, opposes the relief sought.

3 In essence Mr Tregenza, for Ms Sood, submits that a sale at the price of $1.47 million with a settlement period of nine weeks represents a sum certain with an identifiable completion date and good prospects of completion, against a risk that that sale may be lost, and that on a forced sale as little as $1,375,000 may be realised, with the whole of that risk substantially being borne by Ms Sood for reasons to which I shall come. Against that, Mr Kerr, for Ms Christianos, submits that there is no reason why the Court should give its imprimatur to a sale by the mortgagee when the mortgagor disputes that it is the best price that could be obtained, and when the mortgagee could proceed by “more conventional means” such as by registering its mortgage and exercising its power of sale out of Court under (NSW) Real Property Act 1900, s 58.

4 Before turning to the issues, it is appropriate to record some further factual background. So far as the evidence discloses, the first mortgage to Adelaide Bank is presently in order and not in default. There is valuation evidence before the Court, to which it will be necessary to return in greater detail: on behalf of Ms Sood, from Mr Farley and Ms Whealing, to the effect that the current market value of the property is $1.45 million, but on a forced sale only $1,375,000; on behalf of Ms Christianos, from Mr Chenowith, to the effect the current market value is $1.6 million (he does not offer a forced sale value).

5 It seems that the property was first listed for sale in or about September 2007, initially at the request of Ms Christianos at a price of $1.7 million through an agent Ms Lau, then with Century 21, who has since moved to McGrath Real Estate, and who has retained the conduct of the sale subsequently on behalf of Ms Sood. Until about February 2008, while the property was listed at $1.7 million, the agent received about 30 inquiries, and there were about 14 inspections. The only offer forthcoming was on or about 15 February 2008 by Mr and Mrs Beach, who offered $1.7 million, but subject to a 24 week settlement and access in the meantime to commence construction works. Although Ms Sood appears initially to have been inclined to accept that offer, it was not assented to by Ms Christianos, and it involved certain elements of risk (in the event that the first mortgage fell into default during the settlement period while, in the meantime, the purchasers might have entered into occupation and commenced building works). Subsequently, having moved to McGrath Real Estate, Ms Lau listed the property and promoted it through McGrath with a programme of publicity commencing on 23 June 2008 and intended to continue for up to eight weeks.

6 Page Property Developments expressed interest very early in that campaign, initially offering $1.3 million, which offer was subsequently increased as a result of negotiation with the agent to $1.35 million, then $1.4 million, then $1.45 million, and ultimately the $1.47 million that is contained in the draft contract. On 8 July 2008, a Sales Advice Notice was issued confirming a sale to Page Property Developments at $1.47 million. Page signed the draft contract and drew a cheque for the 10 per cent deposit.

7 Although earlier in the year there was some suggestion that Ms Christianos might redeem Ms Sood’s mortgage, there does not appear to be any present suggestion of any ability or intention to redeem.

8 Ms Sood's mortgage is unregistered, but in registrable form. Being unregistered, the statutory power of sale under Real Property Act, s 58, is not available to Ms Sood as things presently stand.

9 By clause 18.1 in the memorandum incorporated in the mortgage, Ms Christianos, as mortgagor, irrevocably appointed Ms Sood, as mortgagee, to be her attorney, with full power to:

… in [the Mortgagor’s] name or on [the Mortgagor’s behalf] immediately on or at any time after any default as aforesaid and without giving any person firm company or statutory authority any notice whatsoever to execute sign seal and/or deliver all assurances deeds instruments (including but without limiting the generality of the foregoing transfers and assignments) and/or do all acts and things whatsoever which the Mortgagor could or ought execute sign seal and/or deliver and/or do and particularly without limiting the generality of the foregoing:
(a) to sell the whole or any part or parts of the mortgaged premises (including any one or more of the lots contained in any Strata plan registered in respect of the mortgaged premises) upon such terms and conditions as the Mortgagee shall in its absolute discretion think fit and in its name or in the name of the Mortgagor; and/or …

10 There was some discussion as to whether this amounted to a contractual power of sale. As suggested in Sykes and Walker, The Law of Securities, 5th ed (1993), Lawbook Co, 318, it appears that a power of sale can be given contractually by placing the document under seal and giving a power of attorney, which is what has occurred in this case. Elsewhere (at 160), Sykes says that if the mortgage instrument contains a power of attorney to convey there is no difficulty. Particularly as the power of attorney is conditioned on default, I think it is right to see clause 18.1(a) as conferring a contractual power of sale on the mortgagee. In any event, even in the absence of an express contractual provision, an implied power of sale will be found in an equitable mortgage. As Campbell J held in King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441, [55]-[65], the Court has jurisdiction to order a sale at the suit of an unregistered mortgagee of Real Property Act land by way of specific performance of a contractual power of sale where there is one, but also as the standard remedy of an equitable chargee [King Investment Solutions, [80]-[81]; Mango Media Pty Ltd v Mertes [2006] NSWSC 1460, [30]-[31]].

11 As well as the contractual power of sale under clause 18.1(a), a power of sale is given to an unregistered mortgagee by (NSW) Conveyancing Act 1919, s 109, subject to compliance with s 111, but that power does not authorise the sale of a prior mortgagee's interest – such as, in this case, the interest of Adelaide Bank.

12 Accordingly, it would seem that in the present circumstances, Ms Sood might have the following options. First, exercise of a contractual power of sale pursuant to the power of attorney conferred by clause 18.1(a) of the mortgage memorandum. This would require the co-operation of Adelaide Bank, although there is no reason to think that that co-operation would be withheld. It would probably also require registration of the instrument, if reliance was to be placed on it as a power of attorney giving power to deal with land. It would still require obtaining production of the Certificate of Title in order to effect any conveyance.

13 Secondly, registering her mortgage so as to obtain the rights of statutory sale out of court under Real Property Act, s 58. To achieve this would require obtaining production of the Certificate of Title from the first mortgagee, Adelaide Bank, and procuring the withdrawal of the caveats which presently affect the title. Again, there is no particular reason to think that this would be difficult, but there are a number of potential obstacles.

14 Thirdly, judicial sale on either of the bases to which I have referred.

15 Ms Christianos submits that a judicial sale should be declined as a matter of discretion where Ms Sood, as mortgagee, can, by becoming registered, acquire a statutory power of sale out of Court and achieve the end she desires without recourse to the Court, and that in those circumstances it is undesirable that the Court should give its imprimatur to a sale, let alone to a particular sale. This submission really requires consideration of two different propositions. The first is whether it is appropriate to order a judicial sale simpliciter; the second involves consideration of whether it is appropriate to approve the particular proposed sale, which overlaps with the other submissions made on behalf of Ms Christianos, to which I shall come.

16 As to the first, judicial sale is the standard remedy of an equitable chargee. Upon default, an equitable chargee is entitled as of right to an order for sale; this is not regarded as a matter of discretion. Sykes and Walker say as much (at 198): "The chargee on default has the right to apply to the court for an order for sale. Such order is of right and not regarded as a matter of discretion". In this field, where it is a remedy of an equitable chargee, judicial sale is not a remedy of last resort but the standard remedy, as I have previously observed in Mango Media Pty Ltd v Mertes [2006] NSWSC 1460, [31]. Young J did not say anything to the contrary in Yarrangah Pty Ltd v National Australia Bank Ltd [1999] NSWSC 97; (1999) 9 BPR 17,601, which – like other cases which advert to the extraordinary nature of the remedy of judicial sale – arose in circumstances where the applicant for the order for sale has been the mortgagor, seeking to compel a sale against the wishes of one or more of the mortgagees [see also New Beach Apartments Pty Ltd v Epic Hotels Pty Ltd [2007] NSWSC 474; Palk v Mortgage Services Funding plc [1993] Ch 330].

17 If Ms Sood's mortgage were not in registrable form, her only remedy would be judicial sale, and it could not then be suggested that that remedy should be declined on the basis that she should take steps to get registered. It is not possible to see why the circumstance that she has taken the additional precaution of obtaining a registrable instrument should operate to her detriment in this respect. The availability of an alternative course of obtaining registration and exercising an out of court remedy – involving, as it does, the potential for delaying complications –is not a reason for declining a remedy to which she is prima facie entitled.

18 Further support for this view is derived from the judgment of Kindersley VC in Matthews v Goodday (1861) 31 LJ Ch 282. In that case, the mortgagor had agreed in a written memorandum to deposit with the mortgagee, as an equitable security for repayment of £500 and interest, the lease of certain premises, which were thereby charged with that amount; and the mortgagor further agreed to execute a valid legal mortgage of the premises with the usual powers and covenants when called upon to do so. The Vice Chancellor held that the mortgagee had a right in equity to enforce a sale, and was not compelled first to take a legal mortgage. That is closely analogous to the present circumstances.

19 That conclusion does not necessarily involve that the Court would give its imprimatur to the particular proposed sale. Having decided that it is appropriate to grant relief by way of judicial sale, the Court must next consider the manner of sale and the directions to be made in connection therewith. In essence, Ms Christianos proposes that she should be afforded an opportunity to find a purchaser at a higher price and given the conduct of the sale, or that the sale should be by public auction; Ms Sood, on the other hand, seeks approval for the proposed sale to Page Property Developments.

20 Ordinarily, a judicial sale is by auction, in order to ensure that the market is fully tested and the best price obtained, but it is clear that the Court may authorise sale by private treaty, and may retrospectively authorise a pre-existing sale under an existing contract [Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361, 381; New Beach Apartments Pty Ltd v Epic Hotels Pty Ltd, [27]]. In Parker's Practice in Equity (New South Wales), 2nd ed (1949) Lawbook Co, it is said (at 283):

Sale by the Court. – On the appointment for directions under a decree or order necessitating a sale by the Court the Master ordinarily directs that the sale shall be by public auction, although he may in a proper case … approve of a sale by private contract either before or after the property has been put up for sale by public auction, or may direct that it be offered for sale by public tender to the highest bidder: Daniell’s Ch. Pr. (5th Ed.), 1152, 1184.

Subsequently, it is said (at 286; references omitted):

B. Sale by Private Contract – Unless the decree or order has ordered a sale by public auction only, the Master may allow the property to be sold by private contract, either before or after it has been put up for sale by public auction, where it is in the interests of the parties to do so: Daniell’s Ch. Pr. (5th Ed.) 1153, 1184.
Generally, where this course is proposed to be followed, the purchaser enters into a contract with the party having the conduct of the sale or some other party to the proceedings or his agent, which is expressed to be subject to the approval of the Master. The contract should contain all proper terms, including a provision for the payment of the purchase money into court. Where particulars and conditions of sale by public auction have been settled, such of them as are appropriate to the private contract may be embodied therein by reference or otherwise. An appointment is taken out for the approval of the contract, and notice thereof given to all parties entitled to attend the proceedings. The evidence must show by reference to title, survey, value, etc., that the terms of the contract are proper to be accepted and that the price is the full value. See notes to R. 275, post , and above under the heading ‘Value and Reserve’. …

21 The subsequent note referred to is as follows (at 288; references omitted):

Sale by private contract - in any case where the order authorises a sale either by public auction or by private contract, the evidence on an application for the Master’s approval of a sale by private contract should show that the price, terms of payment, and conditions of sale are proper in the particular circumstances. The evidence should show that the price is the best that can be reasonably obtained and that it is not less than the value of the property. To prove the former it should appear that the market has been properly canvassed either by first having submitted the property at public auction or by canvassing all likely buyers and inviting tenders, and in each case by advertising the property for sale. If the property is not offered at auction, the reason why should be stated. A similar procedure is applicable ( mutatus mutandis ) in cases where the sale if by private contract in the first instance. …

22 Where the Court authorises or requires a sale by auction it will fix a reserve in order to ensure that those with priority interests will be protected. Typically, this will involve setting a reserve above the total of principal interest and costs due to the mortgagee or the prior mortgagee as the case may be [King Investment Solutions, [105]].

23 Ordinarily, the Court gives conduct of the sale to the party with the greatest interest in maximising the sale price. When the security is insufficient, then conduct will typically be given to the mortgagee, because the mortgagee has an interest in maximising its recovery; conduct of the sale may be given to the mortgagor where the security will be adequate, because the mortgagee then has little or no interest in maximising the selling price [King Investment Solutions, [122]]. However, care needs to be taken in applying the authorities in this field, because, again, many of them involve circumstances in which the mortgagee has been the applicant for an order for judicial sale against the resistance of one or more mortgagees. This is not such a case.

24 It will be apparent, from the amounts secured by the various securities, that the first mortgage securing about $1,175,000 will be satisfied in full under the proposed contract to Page Property Developments, and also if the property were sold for either the lower or the higher valuation. Ms Sood's second mortgage of $327,000 would require a selling price of in excess of $1,502,000 to be fully satisfied, that would not be attained under the proposed sale to Page Property Developments, nor were the property sold at the value suggested by the plaintiff's valuers, although it would be achieved at the value suggested by Ms Christianos' valuers. Kaji Australia’s third mortgage securing $208,000 would only be satisfied to any extent if in excess of $1.5 million was recovered; to be fully satisfied, a price of $1.76 million would be required. Even at the highest suggested value of $1.6 million, it would be satisfied only in part.

25 The significance of all this is that it does not appear that on any likely scenario could Ms Christianos, as mortgagor, recover anything from the sale; indeed, the fourth secured creditor, Mr Sciacca, would not, on any likely scenario, recover anything – although that is not to say that Ms Christianos has no interest: of course, she has a significant interest in maximising the price, so as to reduce her residual indebtedness.

26 I need now to consider the valuation evidence. None of the valuers has been cross-examined, and I criticise no one for that, but in those circumstances I have to do the best I can with the competing valuations. Both valuers considered a number of comparable sales for the purpose of reaching their conclusions. Both agreed that the properties in Wyoming Road – 3 and 9 Wyoming Road, which sold at $1.875 million and $1.85 million respectively – were superior properties. Except insofar as they describe something beyond the upper end of the range here, they are therefore of limited relevance. 8 Davey Road, Dural sold on 5 June 2008 for $1,575,000. Mr Farley and Ms Whealing considered it, relative to the subject, "a more marketable property", with superior land "with an older style cottage". However, there is evidence that the cottage was demolished shortly after the acquisition, and the significance of the improvements when compared to the unimproved status of the subject is therefore reduced. If 8 Davey Road is superior to the subject property, it is, in my view, only slightly so. So far as concerns 9 Langford Road, which sold on 4 March 2008 – for $1.63 million according to Mr Chenowith, and for $1.65 million according to Mr Farley or Ms Whealing – once again, although sold with a well-maintained residence, the improvements were demolished to permit the erection of a new home on the site. In those circumstances, I think the proper course is to reduce but not entirely remove the impact of the improvements on the overall value of that property. That is because the vendor would still have expected some recognition in the price for those improvements, albeit that the purchaser might not have been inclined to pay full value for it. On that basis, it seems to me that when such an allowance is made, the adjusted value of that sale for comparison purposes is somewhere between $1.5 and $1.55 million.

27 The plaintiff's valuers referred to a sale of 4 Langford Road, Dural in July 2005 for $1,375,000. It is much older than the other sales, being three years old as opposed to being in the last few months as are all the other sales, and only one-third of the land – as distinct from about one half of the subject – is cleared. The plaintiff's valuers also referred to a sale at 27 Quarry Road, Dural in May 2008 for $1.65 million. They considered it to be a superior property to the subject, bearing in mind that it had a house, albeit of older style, on superior land in a similar well regarded location. However, they appear to have overlooked that the land was only 1.62 hectares as opposed to the subject and the other comparables of 2.0 or slightly in excess of 2.0 hectares. When allowance is made for the different land size, the adjusted value of 27 Quarry Road, for comparison purposes, would be in the order of $1.9 million at least.

28 Based on that analysis, and having regard in particular to 8 Davey Road and to 9 Langford Road, I conclude that the market value of the subject property is in the order of $1.55 million. However, that is based on comparable sales which have been ordinary market sales, some of them with long periods on the market. Mr Farley and Ms Whealing discounted their current market value of $1.45 million to $1.375 million for a forced sale, and it was not suggested that that was inappropriate.

29 It is necessary to bear in mind that a judicial sale will be very much a forced sale, and what I have ultimately to consider is the prospects that on such a sale a price better than $1.47 million would be achieved. In New Beach Apartments v Epic Hotels, White J said, in considering whether a particular sale should be authorised, at [26]:

No-one can know with certainty what course will produce the best price. The key factors, in my view, are, first, that the expert opinion is to the effect that a forced sale, through the eighth defendant exercising its power of sale as mortgagee, is likely to produce a substantially lower price of up to 20 per cent less than the current price. Such expert opinion is more reliable than the personal views either of the parties or of the judge. Secondly, because the price achieved is at the upper end of the valuers’ assessments of current market value, the potential for realising a higher price is significantly less than the risk of achieving a substantially lower price through a forced sale. Thirdly, interest on the first mortgage continues to run. At the non-default rate, interest runs at about $73,000 per month. At the default rate of 14 per cent, interest would be running at about $100,000 per month. Any higher price achieved through a more extensive marketing campaign is likely to be offset by the increased debt to the first mortgagee.

30 Having said that, his Honour, nonetheless, afforded the opposing second mortgagees the opportunity of backing their judgment that a higher price could be achieved by having the opportunity themselves, if they wished to exercise it, to acquire the property at the price agreed in the proposed contract.

31 The contract price $1.47 million represents a discount only of $80,000 from the value I have found at $1.55 million. Proportionately, that is a slightly lesser discount than Ms Whealing and Mr Farley applied, and their application of that discount was not the subject of contradiction or criticism. In those circumstances, it seems to me very doubtful that a price better than $1.47 million would be obtained on a forced sale.

32 There are additional considerations. The property has been on the market, albeit with interruptions, for a long time since about September 2007, in the course of which only two offers have been elicited. While it is true that one of those offers was at a price of $1.7 million, it included terms which would reduce its value – although not nearly as low as $1.47 million – on account of the extended settlement period. More telling is the circumstance that an effort was made to resurrect this offer, but Mr and Mrs Beach indicated that they would be prepared now to pay only $1.0 million on a shorter settlement. The present offer of $1.47 million was not the first offer of Page Property Developments, but was achieved as a result of negotiation over several days from an initial proposal of $1.3 million.

33 There is some force in Mr Kerr's submission that the offer was elicited quite early in the proposed eight week campaign, and it is conceivable that other offers might emerge if the campaign continued. On the other hand, there have been many months since September 2007 for some other offer to emerge, and none apparently has.

34 While it is true that there is no evidence that Page Property Developments will not wait for an auction if that course is directed, there is also no evidence that they will wait. It is plain enough that they were prepared to wait for some time while what was described as “legal issues with the registered proprietor” were resolved. Whether they will be prepared to wait while the matter is submitted to an auction campaign, and to bid with competing vendors at an auction, is simply not known. What is even less clear is whether they would have to bid as high as $1.47 million at an auction, if there were no significant competition. It may well be that, if forced to go to auction, they might pick up the property for less than they are currently prepared to pay.

35 Given the lack of interest on the part of potential purchasers over a period approaching nearly a year, the improbability of a price of $1.47 million being exceeded at a forced auction, the additional costs which will be incurred by submitting the property to public auction, the terms of the contractual power granted to the mortgagee under clause 18.1(a) – including the grant to the mortgagee of "absolute discretion" as the terms and conditions of sale, the higher priority which the Court will afford in these circumstances to the right of the mortgagee over that of the mortgagor, and the circumstance that while the mortgagor plainly retains an interest in seeing that the best price is secured, the greatest risk is borne by Ms Sood, whose mortgage is likely to be satisfied only in part in any event, it is in my judgment appropriate to authorise the sale to Page Property Developments.

36 In those circumstances, it is not really necessary to consider the question of a reserve price. If the contract with Page Property Developments does not proceed, a reserve price can be fixed on a subsequent application. Similarly, it is not necessary to consider in any further detail to whom the conduct of the sale should be given, but as I have indicated in this case, the security being prima facie insufficient to satisfy the second mortgagee, the second mortgagee has the greatest interest in getting the best price for the property.

37 My orders are:

1. Order that the land described in the Schedule be sold subject to the supervision of the Court.

2. Appoint the plaintiff to have the conduct of the sale including to enter into a contract for sale of land and to execute a transfer in her own name.

3. Direct that the plaintiff may sell the land at a price of $1.47 million to Page Property Developments Pty Ltd on the terms and conditions contained in the draft contract for sale of land comprised in the exhibit 8 to the affidavit of Ms Sood of 21 August 2008.

4. Direct that in the event that the contract for sale between the plaintiff and Page Property Developments Pty Ltd is not entered into or is rescinded or otherwise terminated, then the land be submitted for sale by public auction at a reserve price to be fixed by the Court.

5. Direct that the plaintiff pay and apply the proceeds of sale in the following order and priority: first, to Adelaide Bank Ltd to the extent necessary to discharge the amount secured by its mortgage; secondly, to the plaintiff to the extent necessary to discharge the amount secured by her mortgage; thirdly, to the second defendant to the extent necessary to discharge the amount secured by its mortgage; fourthly, to the third defendant to the extent necessary to discharge the amount secured by his charge; and fifthly, to the first defendant to the extent that there is any surplus.

6. Order that the second defendant withdraw Caveat number AC170670 within 7 days.

7. Order that the third defendant withdraw Caveat number AD854479 within 7 days.

8. Direct that upon completion of the sale the plaintiff file and serve on each of the other parties an affidavit of its solicitor setting out with particularity an account of the receipt and application of the proceeds of the sale.

9. Reserve liberty to all parties to apply on 2 days notice in the event of any difficulty or other matter arising in connection with the implementation of the sale.

10. Order that the plaintiff pay the costs of the second, third and fourth defendants, such costs to be limited to the costs of a submitting appearance.

11. Order that the first defendant pay the plaintiff’s costs.

12. Direct that these orders be entered forthwith.

13. Order that the exhibits be returned.

Schedule: All that land comprised in Certificate of Title in Folio Identifier 7/XXXXX X situate at and known as 13 Langford Road, Dural, in the state of NSW.

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