Star Financial Group v Quintano [2007] NSWSC 1113

New South Wales Supreme Court

CITATION : Star Financial Group v Quintano [2007] NSWSC 1113

HEARING DATE(S) : 28 September 2007

JUDGMENT DATE : 2 October 2007

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : Application for extension of caveat dismissed.

CATCHWORDS : REAL PROPERTY - Torrens System - application for extension of caveat - caveator claims equitable interest pursuant to a finance broking agreement - agreement authorises broker to lodge caveat to protect interest in payment of fee, even where loan is not procured - no equitable interest where, on construction of agreement, no fee payable

LEGISLATION CITED : Real Property Act 1900 (NSW) s 74L

CASES CITED : Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870 Troncone v Aliperti (unreported, Court of Appeal of New South Wales, 20 April 1994, BC 9402483

PARTIES : Star Financial Group (Aust) Pty Ltd (P) Luke Robert Quintano (D)

FILE NUMBER(S) : SC 4751/07

COUNSEL : C Carroll (P) No appearance (D)

SOLICITORS : WKA Legal Pty Ltd (P)

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

AUSTIN J

TUESDAY 2 OCTOBER 2007

4751/07 STAR FINANCIAL GROUP V LUKE QUINTANO JUDGMENT (Ex tempore; revised 3 October 2007) 1 HIS HONOUR: This is an application for extension of a caveat. I made orders for abridgement of service last week and pursuant to those orders the application was served on the registered proprietor, Mr Quintano, and there is no appearance on his behalf today. Consequently the matter has proceeded on the basis that the plaintiff would obtain the order for extension of the caveat if it satisfied the requirements for doing so, including the requirement that the caveator demonstrates a serious question to be tried. That criterion was described recently by Palmer J, in Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870, at [10] as a matter concerning mixed questions of fact and law, the issue being whether the evidence put forward by the plaintiff in order to support the existence of a caveatable interest meets the interlocutory threshold. 2 I emphasise for present purposes that the Court must consider the evidence put forward on behalf of the plaintiff and not merely any question of construction that may arise out of a document upon which the plaintiff relies for the establishment of a caveatable interest. 3 In the present case the plaintiff is a finance broker who relies on a document entitled "Confirmation of Finance Agreement" dated 14 June 2007. I must say this document is very badly drafted. Sometimes the proposed borrowers are referred to as "I/we" and sometimes as "you" and there are other examples of poor drafting. I do not for the purposes of my present judgment hold any of that against the plaintiffs, but I do think this document needs to be carefully considered by competent lawyers before it is used again. 4 The fourth dot point on the second page of the document is in the following terms: "Furthermore, you acknowledge that the fee will be treated as a loan to you by way of mortgage on the land security and you consent to Star Financial Group (Aus) Pty Ltd to lodge a caveat on the land security to protect their interest [sic]." That is the source of the claim to a caveatable interest. 5 There have been decisions on similar clauses, including Troncone v Aliperti (unreported, Court of Appeal of New South Wales, 20 April 1994, BC 9402483), which confirm that this kind of clause is inherently capable of giving rise to a caveatable interest, but in the present case the caveatable interest will only arise if the plaintiff is entitled to a fee. 6 The entitlement to a fee is set out earlier in the document in the following provision, which is the fifth dot point on the first page: "Our fee will be payable only in the event and at the time that the Broker obtains a loan approval in accordance with the above and irrespective of: 1. Whether I/we take up the loan or not; 2. Whether the loan is ultimately accepted on different terms and/or terms and conditions and/or for a different amount than the original amount agreed between us; 3. The fact that the valuation obtained in respect of my/our security proves to be unsatisfactory to the lender or is for a lesser amount than the current valuation of $ _____" 7 I note that the current valuation figure has not been filled in. 8 As a matter of construction, that clause establishes that the fee is payable only in the event that the plaintiff obtains a "loan approval" in accordance with certain conditions set out above. One of those conditions is that the minimum loan amount be $300,000 and another is that the interest rate in respect of the loan not be greater than 10 percent per annum. 9 The effect of the clause is that if a "loan approval" is obtained satisfying those conditions, the fee is payable even if, inter alia, the loan is ultimately accepted on different terms and conditions and for a different amount. 10 One therefore looks in the evidence for a "loan approval". The evidence includes an application lodgment form (Annexure B to Mr Albadar's affidavit) and an "indicative offer" letter dated 23 June 2007 (Annexure C). Counsel for the plaintiff, rightly, did not submit that the indicative offer letter constituted a loan approval. 11 Then there is an acceptance of advice of proposed loan advance (Annexure D), evidently a form of "acceptance" of the indicative offer. This is followed by a document headed "Application for Finance-Offer of Loan" dated 26 June 2007 (Annexure E1). 12 Counsel for the plaintiff tendered some evidence today on the basis of which he invited me to infer that this document was subsequently accepted by the defendant. I do not make any finding on that matter but I am prepared to assume for the purposes of considering the case for a caveatable interest that there was a subsequent acceptance signed by the plaintiff. 13 The effect of all of this is that there was an offer of loan on 26 June. This offer of loan is not expressed to be merely indicative. In my opinion, it constitutes a "loan approval" for the purposes of the agreement. The maximum amount of credit identified in the document is $276,000, that is, an amount less than the $300,000 to which the Confirmation of Finance Agreement refers. The annual percentage rate is 9.69 percent per annum variable. It is unnecessary for me to decide for present purposes whether a variable rate of interest under 10 percent satisfies the fourth dot point on the first page of the agreement, which refers to an interest rate not greater than 10 percent. 14 Clearly however the minimum amount is less than the amount stipulated for the loan approval if the broker's fee is to become payable. Counsel submitted that there were various other charges and the figure of $276,000 is net of those charges, but it does not seem to me that this explains a discrepancy of $24,000. 15 In terms of the Confirmation of Finance Agreement, the result is that, the fee being payable only in the event that the broker obtained a loan approval of $300,000, there was no fee payable in the present case. The fact that the $276,000 loan approval was ultimately accepted (if it is so) does not alter this conclusion because the agreement expressly provides that the fee will be payable if there is a loan approval and then an acceptance for a lesser amount but it does not say that the fee is payable if the loan approval is for a lesser amount, which is subsequently accepted. 16 Given therefore that there is no fee payable in the circumstances presented in this case, as a matter of construction of the Confirmation of Finance Agreement, there can be no caveatable interest to secure the payment of that fee. Consequently the plaintiff fails to meet the threshold of a serious question to be tried and the application is to be dismissed. 17 Since there was no appearance on behalf of the defendant there will be no order for costs. **********