Balanced Securities Ltd v Jones [2007] NSWSC 698

New South Wales Supreme Court

CITATION : Balanced Securities Ltd v Jones [2007] NSWSC 698

HEARING DATE(S) : 27 June 2007

JUDGMENT DATE : 27 June 2007

JURISDICTION : Equity

JUDGMENT OF : Hamilton J

DECISION : Extension of caveat refused.

CATCHWORDS : CONVEYANCING [187] - Land titles under the Torrens system - Caveats against dealings - Lapse, removal and withdrawal - Generally - Extension - Application for - Discretion of Court - Balance of convenience - Whether damages adequate remedy.

CASES CITED : Commonwealth Bank of Australia v Garon Pty Ltd [1999] WASC 170

PARTIES : Balanced Securities Limited (P) Richard Mark Jones (D)

FILE NUMBER(S) : SC 3202/07

COUNSEL : P C Silver (P) P Folino-Gallo (D)

SOLICITORS : Home Wilkinson Lowry (P) DTA Lawyers (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

WEDNESDAY, 27 JUNE 2007

3202/07 BALANCED SECURITIES LIMITED v RICHARD MARK JONES JUDGMENT 1 HIS HONOUR: These are in effect proceedings for an order extending the operation of a caveat. The caveat has by consent been extended until further order, but on the basis that, when the matter next came before the Court, it should be treated as if it were an application by the plaintiff for extension of the caveat rather than an application by the defendant for an order that the caveat be withdrawn, although that is the order that will now have to be made to give effect to a refusal of the further operation of the caveat. 2 The existence of a caveatable interest is conceded in this case. The argument has turned on the balance of convenience and the arguments each way have been strenuously and succinctly put by Mr Silver, of counsel for the plaintiff and Mr Folino-Gallo, of counsel for the defendant. The decision is near the line and is not an entirely easy one. 3 The circumstances of the case are that an agreement was made for the provision of security for a loan of $11 million over development property at Hervey Bay in Queensland (which I shall call the "principal property"). Security was given not only over the principal property but over three other properties of participants in the development venture ("the collateral properties") to secure the borrowing. 4 The borrowing did not proceed, but the agreement provided that, if it did not, the application fee and other fees would remain payable and would be secured under the mortgages over the four properties. When I speak of "mortgages", none of the mortgages is in the form of a registered mortgage, but is in the form of an unregistered equitable mortgage. 5 The defendant has perhaps foolishly and inappropriately entered into a contract for the sale of his property, which is one of the collateral properties, and the purchase of another property. For the purchase of this property, he relies upon proceeds from the sale of his collateral property. But in one sense the existence of his contract for purchase does not put him under any serious relevant inconvenience, in that that contract is conditional upon the sale of his collateral property. 6 I should note that it is said that he will deny any liability for the outstanding debt by reference to a defence of non est factum in relation to his execution of the relevant contractual document. Nonetheless, as things stand, it was not prudent for him to enter into the sale in the face of this outstanding liability, even if contested. 7 The main ground on which he contends that the balance of convenience is in his favour is that he will be in breach of his contract to sell his collateral property if the caveat is maintained. He says that even without looking to the other collateral properties, the position of the plaintiff is adequately secured because there is an equity of some $1,234,000 in the principal property, against which there is now potential liability only of some $214,000 in respect of the fees that remain payable. 8 Mr Silver has argued resolutely that, nonetheless, his client should not be deprived of the proprietary interest he has that is protected by the caveat and this before the determination of the substantive issues between the parties. He has referred me to Western Australian authority, including Commonwealth Bank of Australia v Garon Pty Ltd [1999] WASC 170, where Miller J refused to order the removal of a caveat in the face of a variety of considerations, including the consideration that the caveator held other adequate security. However, that decision cannot govern the situation in this case. 9 Mr Silver submitted that it was not the balance of convenience overall that should be taken into account but only the balance of convenience in relation to this one particular caveat and the interest underlying it. But I do not accept that the considerations this Court may take into account on the balance of convenience in an application of the present sort are so narrowly confined. 10 Mr Silver, however, has emphasised that the plaintiff bargained for, and the present defendant acquiesced and participated in, the giving of a suite of securities for the liability that was to be incurred; and that, even if the equity available under the whole suite of securities greatly exceeds the debt, then the caveator is entitled to continue to hold the whole suite and to decide in due course against which of the securities comprised in this suite it should seek to enforce its rights, if and when established. 11 The force of this submission in the present case is greatly reduced by the fact that the suite of securities was required and given in the face of a potential liability of more than $11 million, whereas the liability which it is now required to secure is no more than about $214,000. 12 Whilst there is a good deal of force in what Mr Silver said in point of principle, this is a case where, in view of the failure of the principal borrowing to materialise, the equity available to secure a liability of $214,000 is now more than a million dollars looking to the principal property only. The plaintiff has in addition the benefit of whatever equity there may be in the other two collateral properties. 13 In all the circumstances, it seems to me that the balance of convenience militates against the extension of the caveat. Whilst this may mean that the proprietary interest is lost to the plaintiff, it will not deprive the plaintiff of its right to recover the relevant sum from the defendant in these proceedings personally. In all the circumstances, I have come to the view that the appropriate order is for the withdrawal of the caveat. 14 Discussion as to costs has taken place before me. Mr Silver has opposed an order for costs against the plaintiff. However, it seems to me that the plaintiff ought be ordered to pay the defendant's costs of the motion relating to the caveat.