Sood v Christianos - [2008] NSWSC 1018

CITATION: Sood v Christianos [2008] NSWSC 1018

HEARING DATE(S): 5 September 2008

JURISDICTION: Equity Division
Duty List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 5 September 2008

DECISION: The first mortgagee is a necessary party. Order that the first mortgagee be joined as a defendant.

CATCHWORDS: PROCEDURE – where plaintiff is second mortgagee of defendant’s land – where plaintiff seeking judicial sale of property – whether first mortgagee must be joined as a defendant to proceedings – whether informal consent of first mortgagee sufficient – where proposed sale involves sale of first mortgagee’s interest in the land – whether second mortgagee can sell the first mortgagee’s interest without its consent.

CATEGORY: Procedural and other rulings

CASES CITED: King Investments Solutions Pty Ltd v Hussain [2005] NSWSC 1076

PARTIES: Margaret Sood (plaintiff)
Maria Christianos (first defendant)
Kaji Australia Pty Ltd (second defendant)
Robert Nunzio Sciacca (third defendant)

FILE NUMBER(S): SC 4333/08

COUNSEL: Mr R W Tregenza (plaintiff)
Mr V F Kerr (first defendant)
Mr A J McGuirk (sol) (second defendant)

SOLICITORS: Licardy, Harris & Co (plaintiff)
Phillip A Biber (first defendant)
Dobes and Andrews (second defendant)

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

BRERETON J

Friday 5 September 2008

4333/08 Margaret Sood v Maria Christianos & ors

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff is the unregistered second mortgagee of the first defendant's land at Langford Road, Dural. The second defendant is the third mortgagee and the third defendant is the fourth encumbrancee. The registered first mortgagee, Adelaide Bank Limited, is not at present a party to the proceedings. The plaintiff seeks orders for judicial sale of the property, consequent upon default under its mortgage. The price at which it is proposed to sell will be sufficient to discharge the Adelaide Bank’s first mortgage, and partially satisfy the plaintiff’s second mortgage, but will probably leave nothing for the second defendant/third mortgagee, and there is no realistic prospect of the first defendant registered proprietor receiving any of the proceeds.

2 The present question is whether it is fatal to the proceeding, at this stage at least, that Adelaide Bank has not been joined as a party.

3 In King Investments Solutions v Hussain [2005] NSWSC 1076, [88]-[89], Campbell J (as his Honour then was) considered the significance of the first mortgagee not being a party in similar circumstances. While observing that in a common law conveyancing system, a second or later mortgagee may foreclose the mortgagor and subsequent mortgagees without joining prior mortgagees, his Honour pointed out that that was because at common law a prior mortgagee could suffer no detriment to its legal rights if an order for foreclosure were made, since the first mortgagee still held the legal estate to secure the debt owed to it. His Honour also observed that sometimes rules of court made exceptions to the requirement for all persons interested in the relief claimed in the suit to be parties, but generally, in a suit for foreclosure,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sood v Christianos

Details

AGLC: Sood v Christianos [2008] NSWSC 1018
Case: [2008] NSWSC 1018
Decision Date: 5 September 2008

CaseChat Overview and Summary

The case of Sood v Christianos involved a dispute between a second mortgagee, Sood, and the property owner, Christianos, concerning the sale of Christianos's land. Sood, the second mortgagee, sought a judicial sale of the property, which was secured by two mortgages. The primary issue before the court was whether the first mortgagee, who was not a party to the proceedings, needed to be joined as a defendant in the sale application, and if so, whether the informal consent of the first mortgagee was sufficient. Additionally, the court had to determine if Sood could sell the first mortgagee's interest in the land without obtaining its consent.

The court held that when a second mortgagee seeks to sell property that is secured by two mortgages, the first mortgagee must be joined as a defendant in the proceedings. The court reasoned that the first mortgagee's interest could be affected by the sale, and thus, their absence from the proceedings would be procedurally unjust. The court further explained that informal consent from the first mortgagee, such as a verbal agreement or a non-binding document, would not suffice; instead, formal written consent was necessary. The court found that without this formal consent, Sood could not proceed with the sale of the first mortgagee's interest in the property.

Consequently, the court ruled that Sood could not sell the first mortgagee's interest without obtaining formal written consent. The application for a judicial sale was dismissed due to the procedural error of not joining the first mortgagee as a party to the proceedings and the absence of the required formal consent. This decision underscores the importance of following proper procedures in property sale proceedings involving multiple mortgagees.

Orders