Supreme Court New South Wales

• Medium Neutral Citation: Bank of Queensland v Hoerman [2011] NSWSC 73
• Hearing dates: 22 February 2011
• Decision date: 22 February 2011
• Before: Gzell J

Decision

Under the Real Property Act 1900, s 74MA(2)(a) first defendant ordered to withdraw caveat and until registration of the transfer of the land under the contracts for sale or further order, the Registrar-General not accept for lodgement and remove or not record in the Register any caveat lodged in respect of the property on or after 14 February 2011 otherwise than with the leave of the court.

• Catchwords: CONVEYANCING - Land Titles under the Torrens System - Caveats against Dealings - mortgagee sale frustrated by series of caveats lodged one after the other on lapsing of prior caveat - interest claimed that land was in the principality of Snake Hill that had seceded from Australia was not subject to the jurisdiction of the court
• Legislation Cited: Lew v Bluescope Distribution Pty Ltd [2010] NSWSC 794; Real Property Regulations 2003; 92
• Cases Cited: Lew v Bluescope Distribution Pty Ltd [2010] NSWSC 794; Urban Traders Pty Ltd v Proceris Pty Ltd [2005] NSWSC 11
• Category: Procedural and other rulings
• Parties: Bank of Queensland Limited (Plaintiff); Karl Hoermann (First Defendant); Registrar General of New South Wales (Second Defendant); Paula Jensen (aka Princess Paula of the Principality of Snake Hill (Third Defendant)
• Representation: Counsel: D Barnett (Plaintiff); Solicitors: Dibbs Barker Lawyers (Plaintiff)
• File Number(s): 2011/44879

EX TEMPORE Judgment

1 I have before me an amended summons to deal with caveats that have been lodged on the land that I will describe in a moment. The hearing of the amended summons is opposed by the third defendant.

2 The bases of the opposition are her claims that there was a secession of the principality of Snake Hill from New South Wales which was accepted by the Governor General and the amended summons is outside the jurisdiction of this court and as it is a matter of international law it must be referred to the High Court of Australia or the International Court of Justice. I do not agree with those submissions.

3 The amended summons was taken out with respect to caveats lodged on land in New South Wales and is within the jurisdiction of this court. The plaintiff is the mortgagee in possession of residential premises at 11 Melaleuca Close, Castle Hill.

4 The first defendant, Karl Hoermann, lodged a caveat with respect to the property on or before 8 February 2011. The second defendant is the Registrar-General of New South Wales who has entered a submitting appearance. The third defendant, as I have mentioned, is Ms Paula Jensen, otherwise known as Princess Paula of the Principality of Snake Hill.

5 The registered proprietors of the property and mortgagors under the mortgage are the third defendant, Ms Helena Jensen and Mr Paul Jensen. Each has been served in accordance with orders made by Bergin CJ in Eq on 10 February 2011. The matter is related to other proceedings for possession and yet other proceedings for an extension of caveat.

6 On or about 10 June 2005 the bank as mortgagee and the Jensens' as mortgagors entered into a mortgage over the property.

7 On or about 22 January 2009 the bank commenced the possession proceedings because of default under the mortgage and sought judgment in the amount of $869,902.58 plus interest and costs. The Jensens' were the defendants in those proceedings.

8 On 21 July 2009 Hoeben J ordered that a defence filed in the possession proceedings be struck out. The defence relied primarily on the allegation that the property was part of the independent territory of the principality of Snake Hill and was not subject to the jurisdiction of this court. A motion for default judgment was filed that day.

9 On 29 September 2009 default judgment was entered ordering the Jensens' to give possession of the property and pay $919,774.68 together with costs.

10 On or about 3 December 2009 the bank obtained possession of the premises.

11 On or about 15 January 2010, Ms Paula Jensen filed a notice of motion seeking orders that, relevantly, the default judgment be set aside or enforcement of it be stayed. The primary ground for that relief was the status of the principality of Snake Hill.

12 On 13 May 2010, Davies J heard and dismissed the notice of motion.

13 On 18 June 2010, Ms Paula Jensen sought an injunction and/or stay of the orders of Hoeben and Davies JJ pending an appeal. On that day Bergin CJ in Eq heard the application and refused to make the orders sought.

14 On 19 June 2010, in exercise of its power of sale, the bank entered into a contract for sale of the property to Jennifer and Nigel Hancock.

15 Settlement of that sale contract was initially scheduled to take place on 19 July 2010 but was prevented by a caveat lodged by the principality of Snake Hill on or about 24 December 2009.

16 On 7 July 2010 the bank served a lapsing notice in respect of that first caveat. That caveat was allowed to lapse.

17 In the period from June 2010 to February 2011 further caveats have been lodged by different persons one after the other and in circumstances where each caveat was lodged in very close proximity to the expiry of the period for lapse of the preceding caveat. Two subsequent attempts at settlement of the contract for sale on 30 September 2010 and 13 December 2010 did not proceed due to the presence of one of the caveats.

18 The details of the dates on which those caveats were lodged and the interest in the land claimed by the caveator are as follows:

24 December 2009, first caveat lodged noting the interest as the principality of Snake Hill.

17 June 2010 second caveat lodged by Lydia Williams, caveatable interest a secession contract and a private lease dated 27 December 2006 with the principality of Snake Hill.

24 September 2010 third caveat lodged, caveator Faye Combe stating she was the Ambassador to Australia for the principality of Snake Hill, the premises formed the embassy and she held commercial leases of a part of the premises.

9 November 2010, fourth caveat lodged, by Carmelo Vescio, caveatable interest a commercial lease of part of the property of 14 January 2007.

9 December 2010, fifth caveat lodged by Allan Schambri, caveatable interest as per commercial lease with annexure of 26 February 2009 with the Jensens'.

8 February 2011 sixth caveat lodged by the first defendant, caveatable interest commercial lease between the first defendant and the third defendant. No date for that lease was given.

19 Two further caveats were lodged by the third defendant on 16 February 2011, the contents of which were not before the court.

20 On 10 November 2010, Ms Combe applied to this court ex parte for orders extending the third caveat. That application was heard by White J. His Honour refused to make the orders and instead listed the matter before the Registrar for directions.

21 Since about 2 November 2010, the purchasers have been in occupation of the property pursuant to a licence.

22 The purchasers have informed the bank that their finance approval expires in early March 2011.

23 On or about 31 January 2011, Ms Paula Jensen served on the bank an unfiled application for leave to appeal to the Court of Appeal from the decision of Davies J.

24 A document said to be an order of the court was admitted in evidence. It contains a picture of the seal of the Supreme Court of New South Wales. It includes an order that orders 1 to 7 inclusive made by McDougall J on 18 May 2010 be stayed pending the hearing and determination of the appeal or until further order. That order was said to have been made in proceedings 2009/00292316, proceedings brought by Paula Jensen against the Bank of Queensland. The orders are said to have been made on 22 November 2010.

25 Mr Barnett who appears for the plaintiff bank said he was present on that occasion and does not recall any such orders having been made. The file in those proceedings has been searched and no orders of McDougall J of 18 May 2010 are contained in it. In any event, the stay, if it was made, was of orders made by McDougall J in other proceedings. There is no stay contrary to the submission of Ms Jensen of the proceedings in the matter before me.

26 Whether a court should order a caveat to be removed depends on whether an interlocutory injunction would be granted to protect the interest claimed in the caveat. In the recent judgment of Pembroke J in Lew v Bluescope Distribution Pty Ltd [2010] NSWSC 794 at [5] his Honour has collected the authorities on that point.

27 That being so, the first question is whether there is a serious question to be tried that the interest claimed in the caveats prevails as against the registered interest of the bank as mortgagee under the mortgage.

28 Each of the first to fifth caveats have lapsed. The sixth caveat and the two caveats lodged by Paula Jensen remain alive. The sixth caveat claimed an unregistered lease interest derived from the Jensens subsequent to the interest of the bank under the mortgage. Furthermore, that caveat does not comply with clauses 7 and 8 and schedules 3 and 4 of the Real Property Regulations 2003.

29 In addition, judgment in the possession proceedings was for $920,000 odd and the sale price under the sale contract is for $590,500 such that there is no prospect that there will be any net proceeds available to the Jensens.

30 Given that there is no serious question it is not necessary to address the balance of convenience. The court should make the orders sought in paragraph 5(c) of the amended summons that pursuant to the Real Property Act, s 74MA2(a) the first defendant withdraw the sixth caveat by 22 February 2011 and if not withdrawn by that time the bank should be able to effect withdrawal of the caveat in accordance with s 74MA(3).

31 The first defendant, notwithstanding a medical report that he was too ill to attend the court, arrived at 11.15 am. He was asked if he had anything to say in opposition to the bank's amended summons. He had nothing relevant to say and I continued with the judgment.

32 In case the balance of convenience is relevant, each of the second to sixth caveats claims an unregistered lease interest derived from the Jensens and is purportedly consented to by the Jensens. In each case other than the sixth caveat the alleged lease post-dates the date of the mortgage. In the case of the sixth caveat, no date is recorded.

33 The bank submits that the timing of the lodgement of the second to sixth caveats and the nature of the interest claimed demonstrates that the caveats are being lodged for the purpose of frustrating the completion of the sale contract and not in aid of any interest that could possibly prevail against the registered interest of the bank. I agree with that submission.

34 There are no orders of the court preventing the exercise by the bank of its power of sale. Indeed the court has refused to make such orders on two occasions on the application of Ms Paula Jensen.

35 Ms Jensen has lodged an application for leave to appeal to the Court of Appeal from the decision of Davies J. However, the application for leave to appeal does not operate as a stay or an injunction.

36 The bank has exercised its power of sale by entering into the sale of contract with the purchasers on 19 June 2010. The interests of both the bank and the purchasers are being frustrated by the pattern of lodging of caveats against the property as set out earlier in this judgment. Those interests will be further prejudiced if completion does not occur prior to early March 2011, owing to the expiry of the purchasers' financial approval.

37 If a lapsing notice were to be served in respect of the sixth caveat the bank has submitted that it has no confidence that a seventh caveat would not be lodged by another person on expiry of the period for lapse of the sixth caveat in accordance with the previous pattern of conduct. As I have already mentioned a seventh and eighth caveat have been lodged by Ms Paula Jensen.

38 An injunction may be granted to restrain a person from lodging further caveats ( Urban Traders Pty Ltd v Proceris Pty Ltd [2005] NSWSC 1192). Given the established pattern of the caveats being lodged by different persons, it is not appropriate to restrain a named person from lodging any further caveat. Rather it is appropriate to order that the second defendant, the Registrar-General, not accept for lodgement any further caveat and not record the details of such caveat on the register and to remove any such caveat from the register.

39 I make orders in terms of paragraph 5(c), paragraph 5(d) and paragraph 7 of the amended summons.

I certify that this page and the 10 preceding

pages are a true copy herein of the reasons for

judgment of the Honourable Justice Gzell

Ms Rosh Mohammed Date: 23 February 2011

Associate to the

Honourable Justice Gzell

Decision last updated: 24 February 2011