Lee v Song [2005] NSWSC 698

New South Wales Supreme Court

CITATION : Lee v Song [2005] NSWSC 698

HEARING DATE(S) : 12 July 2005

JUDGMENT DATE : 12 July 2005

JURISDICTION : Equity

JUDGMENT OF : Campbell J

DECISION : Caveat extended

CATCHWORDS : CONVEYANCING - LAND TITLES UNDER THE TORRENS SYSTEM - caveats against dealings - whether caveat to be extended when registered proprietor alleges extension would be futile because caveators would get nothing from the sale

Dong Hoon Lee - First Plaintiff Mal Da Lee - Second Plaintiff PARTIES : Sophia Lee - Third Plaintiff Soon Ae Lee - Fourth Plaintiff Hwa Sik Song - Defendant

FILE NUMBER(S) : SC 3893/05

G Smith, solicitor - Plaintiffs COUNSEL : G Pickering, solicitor - Defendant

Greg Smith - Plaintiffs SOLICITORS : Garry Pickering - Defendant

LOWER COURT JURISDICTION :

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

CAMPBELL J

TUESDAY 12 JULY 2005

3893/05 DONG HOON LEE & ORS v HWA SIK SONG JUDGMENT – Ex Tempore 1 HIS HONOUR: This is an application to extend a caveat. The caveat is one which claims that the caveators have a charge over the land. The evidence of that charge is a deed of debt, which expressly acknowledges a debt in a specified amount and agrees to the imposing of a charge over the land. In those circumstances, there is at the least a serious question to be tried concerning the existence of interest claimed by the caveat. 2 The principle that is applied to decide whether a caveat should be extended is the same as that which applies when an interlocutory injunction is sought. In other words, the person seeking the extension of the caveat bears the onus of showing that there is a serious question to be tried and that the balance of convenience favours the extension of the caveat. 3 In the present case the property in question is one which was purchased for $865,000 in May 2003. The evidence includes some real estate agents' sales agency agreements relating to the property, which estimate prices in the range of $1.5m to $1.6m as at 22 October 2003; $880,000 to $1m as at 22 October 2004; and $730,000 to $830,000 as at 19 October 2004 (or it might be 1 March 2005 – the document bears both dates). The estimates in those last two sales agency agreements do not seem very consistent one with the other but that is what the documents say. 4 The property was submitted to auction on 7 June 2005, at which it realised $700,000. There is evidence from the real estate agent involved in that sale that in his view the price of $700,000 represents the current market value of the property. He states that a price drop of the magnitude that has been experienced by this property, from $865,000 to $700,000 over the period of around two years, is not unusual in the current Sydney market. 5 The plaintiffs had a caveat on the property from January 2004. Thus, it pre-dates the contract for sale and, indeed, a copy of the caveat is included in the contract for sale. The caveators were not notified of the intention of the defendant to sell the property. They found out about the sale only after a lapsing notice was served. It is only today, at court, that their solicitor has been shown a copy of the contract for sale. 6 The property is subject to a first mortgage to St George Bank ("the Bank"), under which an amount of the order of $707,000 plus legal costs is secured. As at 11 July 2005 the Bank estimated the total debt owed to it as a little under $713,000. Correspondence tendered between the solicitors for the registered proprietor and the solicitors for the Bank show that the Bank is prepared to discharge this mortgage if, and only if, it receives the entire sum which is owed to it. 7 I am told from the bar table that arrangements are underway for the mortgagor to raise the shortfall between the net proceeds of sale and the first mortgage debt, but there is no actual evidence that that is so. I am also told from the bar table that there is no other money available to the registered proprietor. 8 The existence of the present caveat is not the only difficulty facing the sale, there is another caveat as well. 9 Mr Pickering, for the registered proprietor, puts that it would be completely futile to extend the caveat because the caveators would get nothing from the sale. The only consequence of the extension of the caveat would, he says, be that the Bank will sell as a mortgagee sale and, he submits, probably for less than the present sale price. 10 Mr Smith, for the caveators, submits that the desirable course is for the Bank to sell. At least in that way there will be a sale process concerning the propriety of which the caveators have some confidence. Nothing is known, at present, about the purchaser beyond his name and nothing is known about the adequacy of the publicity before the auction, beyond that the selling agent says he considers it was appropriate (with no detail as to why). There is, I should say, no evidence about the sale beyond these matters – the sale price being well below the purchase price two years ago, and the failure of the registered proprietors to provide information about the sale – which would create any basis for concluding that there might be any impropriety in the present sale. The real estate agent (who does not appear to be a registered valuer) has deposed to its sale price being current market value. 11 In all circumstances, I am persuaded that the balance of convenience favours the extension of the caveat. The mortgagors, by not informing the caveators of the sale, and by, only today, giving information which enables even the most rudimentary assessment of the appropriateness of the sale to be done, has put the plaintiffs into a situation where they had no alternative but to approach the court. I place weight on the plaintiff's desire to have confidence that the sale is proper. It is in any event not clear that the present contract will settle, when there is no evidence that the Bank is likely to be paid out in full, or that the other caveat is likely to be removed. 12 I note the undertaking of Mr Smith to cause the summons in the present matter to be amended within seven days to extend its claims to a claim to enforce the charge upon which the plaintiffs rely. 13 Upon the plaintiffs, by their solicitor, giving to the court the usual undertaking as to damages, I extend the operation of caveat AA383146 until further order of the court so far as the interest claimed by Dong Hoon Lee, Mal Dah Lee, Sophia Lee and Soon Ae Lee is concerned. 14 I direct the plaintiffs to file and serve any extra evidence upon which they rely by 19 July 2005. 15 I appoint Friday 22 July 2005 before the registrar for further directions in the summons. These orders may be entered forthwith. I will mark the following letters: letter of 10 June 2005 from Kemp Strang to Mr Pickering; letter of 20 June 2005 Mr Pickering to Kemp Strang and letter of 20 June 2005 Kemp Strang to Mr Pickering as Exhibit 2. The contract for sale is Exhibit 1. The exhibits may be returned. **********