Supreme Court New South Wales Medium Neutral Citation: Condon v Mehajer [2018] NSWSC 1637 Hearing dates: 26/10/2018 Date of orders: 26 October 2018 Decision date: 26 October 2018 Jurisdiction: Equity Before: McDougall J Decision: Order that the caveat the subject of the application be withdrawn. Catchwords: REAL PROPERTY – application to remove caveat – where caveat bad in law – where caveat lodged at the eleventh hour – where caveator is incarcerated – whether order should be made dispensing with service – whether caveat should be withdrawn – where no prejudice because net proceeds of sale to be held in trust pending further order – no question of principle. Legislation Cited: Real Property Act 1900 (NSW) Category: Procedural and other rulings Parties: Schon Gregory Condon in his capacity as Trustee of the Bankrupt Estate of Aysha Amelia Learmonth (First Plaintiff) Gavin David Kind in his capacity as Trustee of the Bankrupt Estate of Aysha Amelia Learmonth (Second Plaintiff) Salim Mehajer (First Defendant) Paul Weston in his capacity as Trustee of the Bankrupt Estate of Salim Mehajer (Second Defendant) Representation: Solicitors: M Wirth / Henry William Lawyers (Plaintiffs) File Number(s): 2018/328950 Judgment (ex tempore – revised 26 october 2018) 1. HIS HONOUR: The plaintiffs are the trustees of the bankrupt estate of Aysha Amelia Learmonth, formerly known as Aysha Amelia Mehajer. The first defendant is Mr Salim Mehajer, the former husband of Ms Learmonth. The second defendant is the trustee of the bankrupt estate of Mr Mehajer. 2. Ms Learmonth commenced proceedings against Mr Mehajer in the Family Court of Australia. On 30 April 2018, that Court made orders providing for the sale of a property at Lidcombe registered in the name of Ms Learmonth. The orders contemplated that the property should be sold, and that after payment of the costs of sale and of the debt secured by a mortgage on the property, the balance should be held in a solicitor's controlled moneys account pending the further order of the Family Court. 3. The plaintiffs caused the Lidcombe property to be sold at auction on 8 September 2018. The sale price was substantially - approximately 50 percent - more than a valuation that they had obtained. The purchasers have now given the plaintiffs a notice to complete. That notice requires completion by 3pm today. 4. In the ordinary way, the matter could proceed to completion. The proceeds of sale could be dealt with in accordance with the orders of the Family Court. However, that "ordinary way" has been blocked. 5. Mr Mehajer, who currently resides in the Correctional Centre at Cooma, wrote to the plaintiffs' solicitors two days ago. His letter asserted that a company of which he purports to be the representative, known as Mehajer Vision Pty Ltd, has an equitable interest in the property. 6. Yesterday, Mr Mehajer followed up on that letter by lodging a caveat which, he asserts, protects the "equitable interest" of Mehajer Vision. The plaintiffs come to Court urgently to seek an order under s 74MA of the Real Property Act 1900 (NSW) that the caveat be withdrawn. Obviously enough, unless such an order is made, the settlement cannot proceed. The purchasers would be entitled either to rescind or to claim damages for breach of contract. It is undesirable that the trustees should be exposed to those risks. 7. Section 74MA(2) requires the Court to be satisfied that the application has been served, in this case, on Mr Mehajer, unless the Court has made an order dispensing with service. It is obviously impractical to serve Mr Mehajer in Cooma before 3pm. Accordingly, it will be necessary for me to make an order dispensing with service if (and before) I am to make an order for the withdrawal of the caveat. 8. In the particular circumstances of this case, I am satisfied that it is appropriate to make an order dispensing with service. There are essentially two reasons for that. The first is that it is impossible to discern from Mr Mehajer's letter what is the precise nature of the interest that Mehajer Vision has. The second is that the caveat is defective in form. Those two reasons are interrelated. 9. As I have said, the caveator is Mr Mehajer himself. However, it seems from the letter, the "equitable interest" that the caveat claims to protect is not his interest. It is an interest of someone else. The caveat does not make clear why it is that Mr Mehajer has any right to protect that interest on behalf of the asserted beneficiary. 10. Even if one reads the caveat together with the letter (and I am by no means certain that this is the proper way to approach the problem), that difficulty is not assuaged. 11. The caveat is hopelessly defective because the estate or interest claimed is no more than an "equitable interest". Those words are capable of catching a wide variety of interests, ranging from an equitable interest under a contract for sale or an equitable interest under a trust, to lesser equitable interests such as an equitable charge. There are numerous decisions of this Court which have held that the mere description "equitable interest" is bad in law. 12. Although the caveat identifies an "instrument" that is said to give rise to the instrument, and facts in support, the matters that are set out give no clue whatsoever as to how an equitable interest could arise. The facts refer to a construction project management contract. It may be - I do not know - that under that contract, the person carrying out the construction work had some sort of charge over the land on which the work was done. If that were the case then the interest could be one as an equitable chargee pursuant to the contract. But as the document is expressed, one is simply left to guess. 13. The other matter that I take into account, in concluding that the Court should dispense with service, is that the caveat was lodged very late, and in particular circumstances that effectively make it impossible for the matter to proceed regularly, upon notice to the caveator Mr Mehajer. 14. For those reasons I am satisfied that it is appropriate, for the purposes of s 74MA(2) of the Real Property Act, to proceed to make an order dispensing with service. 15. Again for the reasons I have given, I am satisfied that it is appropriate to order that the caveat be withdrawn. 16. In addition, I think that an order for withdrawal is justified because the net proceeds of sale, after paying out of the undoubted priority interest of the first mortgagee, are to be held in trust. If it is correct to say, as Mr Mehajer asserts, that Mehajer Vision has some interest in the property, that interest would be transmuted to an interest in the fund. There is no suggestion that the trust fund will be paid out without giving Mehajer Vision whatever opportunity it seeks to press its claim. 17. Accordingly, as it seems to me, there can be no fundamental injustice to Mehajer Vision in making the orders sought. 18. I make an order in accordance with prayer 2 of the summons filed in Court today. I direct that the order be entered forthwith. I will hear the parties on costs. [Parties addressed.] 1. I make no order as to costs. 2. I direct the plaintiffs' solicitor to provide Mr Mehajer as soon as possible with a copy of my revised reasons for judgment and of the orders made today. ********** 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. Decision last updated: 30 October 2018