REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS
The plaintiffs applied under s 191(d) of the Real Property Act 1886 (SA) for an order directing the Registrar-General to remove a caveat lodged by the defendants on the title to a property of which the defendants are the registered proprietors.
Whether an interlocutory application could be a "summons" for the purposes of s 191(d) - whether plaintiffs had a duty broader than a duty to act in good faith in the exercise of their mortgagees' power of sale - whether a breach of that duty may give rise to a caveatable interest - whether the defendants raised a serious question to be tried - whether the balance of convenience favoured the continuation of the caveat.
Held: the caveat should be removed - applications under s 191(d) should be determined in a manner similar to applications for interlocutory injunctions - the plaintiffs' interlocutory application constitutes an appropriate "summons" for the purposes of s 191(d) - application determined on the basis that the duty of a mortgagee exercising a power of sale is no greater than a duty to act in good faith - a claim that the exercise of a mortagee's power of sale is wrongful is capable of giving rise to a caveatable interest (Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd (1994) 1 VR 672 not followed) - defendants have not established a serious question to be tried as such caveatable interest as they have is of little or no value - even if the defendants caveatable interest was of some value, the balance of convenience does not favour the continuance of the caveat.
[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.
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AGLC
Stone v Leonardis [2011] SASC 153
Case
[2011] SASC 153
Decision Date
CaseChat Overview and Summary
In the matter of Stone v Leonardis, the plaintiffs sought the removal of a caveat entered by the defendants which was preventing the plaintiffs from settling on a contract of sale into which they had entered as mortgagees exercising the power of sale. The case was heard in the Supreme Court of South Australia. The central legal issue was whether the balance of convenience favoured the plaintiffs in having the caveat removed, so as to allow them to proceed with the sale of the property in accordance with the contract. The court had to consider the circumstances surrounding the loan agreement, the failure of the defendants to make repayments, the valuations of the property, and the efforts made by the plaintiffs to sell the property. The court also had to consider the defendants' assertion of a potential purchaser willing to pay a significantly higher price than the plaintiffs had achieved.
The court found that the balance of convenience did indeed favour the plaintiffs. The court noted that the defendants had defaulted on the loan agreement and had not made any repayments since. The court also considered the valuations of the property, which had decreased over time, indicating a potential decrease in the market value. The court rejected the defendants' claim of a potential higher sale price, finding that there was no evidence to support this claim. The court concluded that the plaintiffs had acted reasonably in attempting to sell the property and that the balance of convenience favoured the removal of the caveat to allow the sale to proceed. The court ordered the removal of the caveat, allowing the plaintiffs to proceed with the sale of the property.
Orders
Orders of the court
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Background
Background to the litigation
The defendants’ caveat is preventing the plaintiffs’ settling on a contract of sale into which they have entered as mortgagees exercising the power of sale. Because of that circumstance, the Court was asked to deal with the application urgently.Background The plaintiffs and the defendants entered into a written loan agreement on 28 January 2010 under which the plaintiffs agreed to advance to the defendants $800,000 secured by registered first mortgage over their home at Highbury. The loan was for a period of six months. The defendants did not make the required repayment on 28 July 2010, and have not since made any payments at all. On 18 November 2010, a Master made an order granting the plaintiffs possession of the property. Subsequently, the defendants sought a stay of that order and, when that was refused, commenced an appeal against the refusal. They discontinued that appeal on 18 March 2011. The plaintiffs then moved to exercise the power of sale. They appointed Brock Harcourts, a real estate firm, as the agent to market and sell the property. The plaintiffs agreed to allow the defendants to remain in occupation during the sale process, upon the defendants’ agreement to cooperate in that process and, in particular, to facilitate inspections by prospective purchasers. After a period of advertising and open inspections, an auction (the First Auction) was scheduled for 27 May 2011. In the meantime, the plaintiffs obtained a valuation of the property from Mr Zwaans, a valuer employed by Valcorp Australia Pty Ltd. Mr Zwaans valued the property, apparently as at 2 May 2011, at $890,000 (range $850,000-$950,000). On 5 May 2011 Mr Zwaans valued the property on a forced sale basis at $800,000. Both values were a reduction from the value of $1,150,000 given by a different valuer, Mr Centofanti, on 14 January 2010 at the plaintiffs’ request when they were considering making the loan. On 12 May 2011, Knight Frank Valuations (SA) (Mr Hill) made a valuation of the property, apparently at the request of the ANZ Bank. Mr Hill valued the property at $950,000. The First Auction did not proceed. The plaintiffs’ solicitor has deposed that this was because there were no potential purchasers present. Thereafter, and against the defendants’ opposition, the property was presented for sale as a “mortgagee sale”. On 15 June 2010, this Court issued a warrant of possession. A second auction was held on 18 June 2011. Apart from one vendor bid, this auction attracted only one bid ($360,000) and the property was passed in. Subsequently, the property was advertised for sale at nominated prices. Mr Zwaans made a further valuation on 21 July 2011. On this occasion he valued the property at $670,000, with a forced sale value of $600,000. On or about 30 June 2011 the defendants informed the plaintiffs’ real estate agent and solicitors that they had located a potential purchaser for the property at $1,300,000. However, despite requests by the plaintiffs for details of this prospective purchaser and the delivery of an executed binding contract, this prospect did not materialise into a sale.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
WHITE J
In my opinion, in this combination of circumstances the balance of convenience points in favour of the plaintiffs.Conclusion For the reasons given above, I consider that the Court should order the removal of the caveat. Accordingly I order pursuant to s 191 of the Real Property Act 1886 that caveat No 11631083 lodged in the Lands Titles Office in respect of Memorandum of Mortgage No 11334663 and Certificate of Title 5680 Folio 742 be removed forthwith. I will hear from the parties as to any other orders.