New South Wales Supreme Court CITATION : Gippsreal Ltd v Paul Vincent Hanna [2009] NSWSC 169 HEARING DATE(S) : 23 February 2009 JURISDICTION : Equity Division Duty Judge List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 23 February 2009 DECISION : Order that caveat be withdrawn CATCHWORDS : REAL PROPERTY – Caveats – Removal – where resisted by Registered Proprietor – whether Registered Proprietor entitled to resist removal on application of mortgagee, consented to by caveator – remedies for sale by mortgagee at alleged undervalue CATEGORY : Procedural and other rulings Perpetual Trustee Company Ltd (applicant) PARTIES : Gippsreal Ltd (plaintiff) Paul Vincent Hanna (defendant) FILE NUMBER(S) : SC 3038/08 Ms A McManus (applicant) COUNSEL : Mr S Agosta (plaintiff) Mr Hanna (defendant) (in person) SOLICITORS : Deacons Lawyers (applicant) Leonard Legal (plaintiff) THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST BRERETON J Monday 23 February 2009 3038/08 Gippsreal Limited v Paul Vincent Hanna JUDGMENT (ex tempore) 1 HIS HONOUR: By Notice of Motion filed on 20 February 2009, which is returnable today pursuant to an abridgement for time for service apparently granted by the Registrar, the applicant Perpetual Trustee Company Limited seeks an order discharging an order made on 27 August 2008 on the application of the plaintiff Gippsreal Ltd extending the operation of Caveat AD 863805, which Gippsreal has lodged in respect of land at 9 Kimberley Drive, Bowral, known as Forest Ridge, of which the defendant Paul Vincent Hanna is the registered proprietor. Perpetual seeks the discharge of that order and removal of the caveat in circumstances where it, as mortgagee pursuant to a mortgage registered in priority to the caveat, has exercised its power of sale of the land as long ago as October of last year, with settlement scheduled to take place on or before 3 March 2009. Gippsreal has provided a withdrawal of caveat, but the Land Titles Office has required evidence that the Court's orders extending the operation of the caveat have been "satisfied " and Gippsreal, though it does not oppose the relief sought by Perpetual, has not been prepared without the sanction of a court order to do everything that the Land Titles Office has indicated it would require in that respect. 2 The application is, however, opposed by Mr Hanna – notwithstanding that the proceedings were initiated by his endeavour to have the subject caveat lapse. He seeks an adjournment, in order to permit him to commence proceedings to restrain Perpetual from proceeding with the sale, on the basis that the sale would be at a very significant under value. He says, and I accept, that he has been notified of the present application only over the weekend, and he puts before the Court some evidence which prima facie suggests that the property might be worth as much as $5.5 million in circumstances where it has been sold, it would seem, for only $2.5 million. 3 Even if Mr Hanna was entitled to an injunction restraining the sale – to which I shall come – that does not entitles him to resist removal of a caveat in which he has no interest. If the caveator no longer wishes to sustain the caveat, the registered proprietor cannot insist that it remain on title and not be removed. The real question is whether some step should be taken to preserve Mr Hanna's position in the time being, to enable him to bring proceedings to restrain the sale. 4 It is well established that a mortgagor is entitled to an injunction restraining the exercise of a power of sale by a mortgagee only on payment into Court of the amount of the mortgage debt. It is clear from Mr Hanna's evidence that he is not in a position to pay $2.5 million into Court. In the absence of any ability to pay the mortgage debt into Court, a mortgagor's remedy is by way of proceedings for an account, or an action for breach of duty against the mortgagee. 5 It is also apparent that Mr Hanna has been aware of the proposed sale since October of last year. It may be understandable enough that while the caveat was in force he did not take steps to approach the Court for an injunction, but he could have, yet did not, institute proceedings impugning the sale, many months ago. 6 I do not wish to foreclose the possibility that Mr Hanna might be able to assemble evidence to support an urgent application before the Duty Judge and obtain an injunction restraining the sale between now and completion early next week. He would be well advised immediately to seek legal advice, with a view to making such an application if so minded. But there is no material before me to support the grant of such an injunction. 7 Mr Hanna has apparently been advised that he can lodge a caveat to protect his own interest in the land, which in practice might have a similar effect. But he should also be aware that the lodgment of a caveat wrongfully carries with it a liability to pay damages which, if it turns out that the sale is wrongly impeded, could in the context of this case be very substantial. The mere circumstance that a mortgagee is selling under value is not sufficient to sustain a caveat against the mortgagee. Thus, if Mr Hanna lodges a caveat, he should be aware that he does so at his own risk, and he ought first obtain legal advice before taking any such step. 8 I am that afraid in those circumstances, on the material before me, there is no reason not to accede to the application to remove the present caveat, notwithstanding the short notice of the application. Nor is there sufficient reason to grant an injunction to protect Mr Hanna's interest – although, as I have said, with further evidence, a further application for urgent relief by him might be more favourably received. 9 I order that the plaintiff forthwith withdraw caveat AD863805, and that such caveat cease to have effect forthwith. I direct that this order be entered forthwith. ********** 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.