New South Wales Supreme Court CITATION : Lyon v State Government Employees Credit Union [1999] NSWSC 463 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2091/99 HEARING DATE(S) : 22/04/99 JUDGMENT DATE : 22 April 1999 PARTIES : Carla Hope Lyon (P) State Government Employees Credit Union (D) JUDGMENT OF : Santow J COUNSEL : M M Hilbery (P) ex parte SOLICITORS : Mee Ling (P) CATCHWORDS : CAVEAT — Application for extension of caveat where caveator had not carried on farming operations on the property since 1995 and Defendant had (or purported to) exercised its power of sale — Alleged improper dealing. ACTS CITED : Farm Debt Mediation Act 1994 (NSW) Real Property Act s74F(2) DECISION : There is no basis for the caveat. There is simply no improper dealing by the mortgagee in favour of the entirely innocent purchaser. Lyon.22apr99 — 18 May, 1999: Carla Hope Lyon v State Government Employees Credit Union 3 IN THE SUPREME COURT OF NEW SOUTH WALES IN EQUITY SANTOW J No. 2091/99 CARLA HOPE LYON Plaintiff STATE GOVERNMENT EMPLOYEES CREDIT UNION Defendant JUDGMENT— Ex Tempore 22 April 1999 1 HIS HONOUR: This is an application by the registered proprietor of rural land for extension of a caveat. The circumstances are that the applicant was a farmer who carried on some form of farming operation upon the property until 1995. She was then severely injured and has been living in South Australia where she has not had any occupation though she has qualified to enrol in a farming degree or diploma at Flinders University in South Australia. 2 The property was subject to a mortgage in favour of the defendant. The defendant has in fact exercised power of sale - the plaintiff would say purported to do so - and has sold the property - the plaintiff would say purported to sell the property - to a third party who has, according to Counsel, and somewhat surprisingly, completed the purchase. There is however a caveat lodged by the plaintiff which prevents registration of the transfer to this third party. The plaintiff's contention is that she has a caveatable interest and is entitled under s74F(2) of the Real Property Act to lodge and maintain a caveat, on the basis that she "fears an improper dealing with the estate.. ". 3 The essential basis for the contention that this is an improper dealing is that the Farm Debt Mediation Act 1994 (NSW) has not been complied with in that the defendant lender has failed to give the necessary notice preparatory to engaging in a farming mediation as required by that Act. 4 The short answer to that contention is this. For that Act to apply, there has to be a "farm debt", and there has to be a "farm mortgage". The latter in turn requires a "farming operation ", carried on by a "farmer"; each of those terms are defined by the Act. There has been since 1995, no farming operation carried on on the property. There is no cattle stock grazing, and no crops. The property has not been managed even on a care and maintenance basis during the plaintiffs enforced absence. What is argued is that the plaintiff had her capital invested in what had been a farm in 1995; through circumstances outside her control, she had not carried on any farming operations but that these were in effect still to be treated as sufficiently carried on merely from the continued investment of her capital in what had once been a farming property. However the problem with that contention, which I am satisfied is insuperable, is that there was no mere brief suspension of a farming operation, but a cessation that occurred in 1995, and continues to this day. There investment of capital cannot suffice. To describe it as a "suspension" is thus not strictly accurate. There is simply no farming operation extant, though no doubt it could be resumed. The length of time which has passed since operations ceased with occupation in 1995, means that this is no mere suspension of an active farming operation capable of being viewed as somehow continuing, albeit passively. 5 In those circumstances, even if the Plaintiff could overcome the other formidable barriers based on balance of convenience in the way of extending a caveat such as the position of the purchaser who presumably acquired without notice of any basis for setting aside the contract, with the further fact that the plaintiff failed to put herself in a position to receive any notice from the lender/ mortgagee, such that she delayed in taking any action until now, the threshold difficulty remains that the Farm Debt Mediation Act simply does not apply in the present circumstances. 6 Thus, there is no basis for the caveat, more particularly a caveat that depends on the apprehension of an improper dealing. There is simply no improper dealing by the mortgagee in favour of the entirely innocent purchaser. ********** Last Modified: 05/19/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.