Supreme Court New South Wales

• Medium Neutral Citation: Michael v Michael [2012] NSWSC 1216
• Hearing dates: 05/10/2012
• Decision date: 05 October 2012
• Jurisdiction: Equity Division
• Before: Lindsay J

Decision

1. Joinder of Arab Bank Australia Ltd

2. Declaration that registered mortgage takes priority over subsequently lodged caveat

3. Order for Withdrawal of Caveat

• Catchwords: PROCEDURE - miscellaneous procedural matters - other matters - joinder of parties; REAL PROPERTY - torrens title - caveats against dealings - priority of registered mortgage over subsequently lodged caveat - withdrawal of caveat
• Legislation Cited: Real Property Act 1900 (NSW)
• Cases Cited: Bethian Pty Ltd v Green (1977) 3 Fam LR 11, 579; Morling v Morling (1992) 16 Fam LR 161
• Category: Principal judgment
• Parties: Arab Bank of Australia Ltd (Applicant); C Michael (Plaintiff); JC Michael (Defendant)
• Representation: Plaintiff in person; Ms K Carter, Solicitor, of Gadens Solicitors (Applicant)
• File Number(s): 2011 / 219320

Judgment - EX TEMPORE

1 Before the Court today, on a referral from the duty judge, is a notice of motion filed on 14 September 2012, by Arab Bank Australia Limited, the mortgagee named in Registered Mortgage AB 351899, over land known as xx xxxxxx xxxxxxxx, Glossodia, New South Wales, being Lot 157 in Deposited Plan 214751, and being the whole of the land contained in folio identifier 157/214751.

2 The bank, as I shall describe the applicant on the motion, seeks an order that it be joined as a party in the proceedings, and then relief designed: first, to establish, by a declaration, that its mortgage has priority over any interest claimed by the plaintiff in a caveat, numbered AD 94054, lodged against the title of the land; and, secondly, to obtain an order that the caveat "lapse immediately". I take the second of these claims for relief to be a claim for an order under s 74MA of the Real Property Act 1900 (NSW) that the caveat be withdrawn.

3 The principal proceedings were commenced by a summons filed 6 July 2011. The plaintiff is the former wife, she tells me, of the defendant. Those parties (the plaintiff and the defendant) are apparently engaged in litigation in the Family Court of Australia designed to declare or adjust their respective rights to property.

4 The relief claimed in the summons is as follows:

"1. That caveat (AD 94054) as to the share of [the defendant] in [the land], be extended until such time as a decision is made by the Family Court of Australia as to the division of property between [the plaintiff and the defendant] or until such time as the parties mutually agree to lift the caveat.

2. In the event that a decision is made by the Family Court as to the division of property, the caveat shall be extended for a further twenty-eight days to preserve both parties [sic] rights of appeal."

5 The caveat claims an "estate or interest in the land" said to be "equitable interest. Family Law Property Proceeding". The "facts" stated in the caveat in support of that claim of an estate or interest go no further than the following: "Family Law Property Proceedings file number: SYC 1313/07".

6 On the face of the caveat, and in the absence of any orders of the Family Court affecting the land, the plaintiff has no caveatable interest in the land: Bethian Pty Ltd v Green (1977) 3 Fam LR 11, 579; Morling v Morling (1992) 16 Fam LR 161.

7 The plaintiff has today informed the Court that the Family Court has not made any order in her favour affecting the land.

8 Before me today, the bank is represented by a solicitor, Ms K Carter, in the employ of the solicitors for the bank. The plaintiff appears in person.

9 Evidence adduced in support of the bank's motion establishes that the defendant has been served with notice of the motion through the agency of two firms of solicitors. There has been no appearance today by the defendant, either before the duty judge or before me.

10 On the face of the title, it is plain that the bank has a registered interest which must have priority over such, if any, estate or interest that the plaintiff might have in the land. The land is subject to the Torrens Title provisions of the Real Property Act. The mortgage is a registered interest. Any entitlement the plaintiff might have to, or in respect of, the land is unregistered. The mortgage was registered before the caveat was lodged against the title to the land and, in the absence of any challenge to its validity, or any attack on the bona fides or conduct of the bank, it must prevail over any unregistered entitlement of the plaintiff: Real Property Act ss 41, 42, 43.

11 There is no evidence before me that suggests that the bank is a party to the Family Court proceedings, or that it has been served with any claim for relief affecting it, the validity of its mortgage, or the land generally.

12 Ms Carter informs me of her instructions that the bank is not a party to the Family Court proceedings, and has not been the subject of any claim for relief in them.

13 The practical problem for the bank appears to be that, although it has exercised a power of sale under its mortgage, by an exchange of contracts that took place on 20 September 2012, the Registrar General has foreshadowed a potential difficulty with the registration of any transfer in favour of the purchaser from the bank notwithstanding the terms of s 59 of the Real Property Act.

14 Section 59 is in the following terms:

"59 The Registrar-General shall, for the purpose of a sale authorised by section 58, register a transfer executed by a mortgagee, chargee or covenant chargee in the approved form and, upon that registration, the estate or interest of the mortgagor, charger or covenant charger in the land comprised in the transfer shall pass to and be vested in the transferee, freed and discharged from all liability on account of the mortgage, charge or covenant charge, or of any mortgage, charge or covenant charge registered subsequent thereto."

15 The Registrar General, I have been informed by Ms Carter, has indicated an unwillingness to register any such transfer unless he has the benefit of an order effecting a lapsing of the plaintiff's caveat.

16 There is no evidence before the Court bearing directly upon the Registrar General's stated position.

17 However, upon an examination of the folio identifier relating to the land, the caveat and orders of the Court noted on the title to the land in relation to the caveat, it becomes apparent that the Registrar General could reasonably apprehend the existence of problems referable to the caveat unless orders have been obtained from this court to effect a lapsing of the caveat. I say that because of the terms of orders that were made by this court, evidently by or with the consent of the plaintiff and the defendant, on two occasions.

18 The title includes entries, both subordinate to the entry relating to the caveat, numbered respectively AG 404581 and AH 120190. The first of those dealings relates to an extension of the caveat, in the face of a lapsing notice, that was granted by this court on 8 July 2011 in the following terms:

"[Order] that the defendant, by his solicitor, notify the Registrar General in writing by Tuesday 12.7.11, that caveat AD 94054 must not lapse pursuant to lapsing notice AG 2900446 pending further order of the Supreme Court of New South Wales or the Family Court of Australia, or otherwise, by consent of the caveator."

19 That order was apparently, in the fullness of time, supplemented by another order, apparently made with or by the consent of the plaintiff and the defendant, on 18 July 2012. The second order (notification of which to the Registrar General appears on the title to the land in dealing AH 120190) provided for the caveat to be extended until 13 February 2013.

20 I infer from this history of the proceedings, and the various entries on the title to the land, that, notwithstanding that the bank has a registered first mortgage that ranks ahead of the plaintiff's caveat, the Registrar General is concerned not to act in defiance or disregard of the orders respectively made on 8 July 2011 and 18 July 2012.

21 The evidence before the Court establishes that, having exercised its power of sale, the bank anticipates that completion of the contract it has entered into for the sale of the land will be completed on 1 November 2012. That is, at least, the date upon which completion is due.

22 This court is not in a position to speculate about what, if any, rights the plaintiff might have against the defendant in the Family Court or, indeed, whether she could possibly have any entitlement to relief against the bank in that Court.

23 On the evidence that has been adduced before me, the course that should, and I believe must, be adopted, is to permit the bank to be joined as a defendant in the proceedings; to grant it the substance of the relief it seeks; and to enable the plaintiff to have a short opportunity to approach the Family Court for relief against the bank, should she be advised to take that course.

24 I am not to be taken as suggesting that the plaintiff has any entitlements at all against the bank or in respect of the land the subject of these proceedings.

25 In the circumstances, I propose to make the following orders and notation:

(1) Order that Arab Bank Australia Limited, ACN 002 950 745, be joined as a defendant in the proceedings.

(2) Order that the bank be designated as the second defendant in the proceedings.

(3) Order that paras 2 to 5 of the bank's notice of motion filed 14 September 2012 stand as a cross-claim in the proceedings.

(4) Order that, to the extent necessary, rules of the Court be dispensed with so as to permit paras 2 to 5 of the notice of motion to be heard and dealt with today.

(5) Declare that the second defendant's interest as first registered mortgagee of the land contained in folio identifier 157/214751, known as xx xxxxxx xxxxxxxx, Glossodia, New South Wales, has priority over the estate or interest purportedly claimed by the plaintiff in caveat AD 94054.

(6) Order that the plaintiff withdraw caveat AD 94054 no later than 12 October 2012.

(7) Note that, if the plaintiff does not withdraw the caveat within the time limited by para 6, the caveat will attract the operation of s 74MA(3) of the Real Property Act 1900 which provides for the caveat to lapse upon lodgement of a copy of these orders with the Registrar General.

(8) Order that the orders made by this court on 8 July 2011, (purporting to direct the Registrar General not to act on the basis that the caveat may lapse) and 18 July 2012 be varied by expressing them to be "subject to any order of this Court", with the intent that nothing in those orders, or either of them, is to be taken as limiting the operation of these orders according to their terms.

(9) Order that the summons filed on 6 July 2011 be dismissed.

(10) Order that the order for dismissal of the summons be stayed up to and including 9 November 2012.

(11) Reserve to the plaintiff and the first defendant (Mr JC Michael) an opportunity by motion (filed on notice, one to the other, and on notice to the second defendant) to have the order for dismissal of the summons stayed beyond the nominated date with a view to preserving such, if any, rights and obligations the plaintiff and the defendant may have notwithstanding the order made, on the application of the second defendant, for the plaintiff's caveat to be withdrawn.

(12) Reserve all questions of costs as between the plaintiff and the first defendant.

(13) Order that the plaintiff pay the costs of the second defendant in respect of the second defendant's notice of motion filed 14 September 2012.

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Decision last updated: 08 October 2012