What came first - the mortgagee's power of sale, or the owner's alleged sale?
May 16, 2023The Supreme Court of New South Wales has just handed down its decision dealing with the competing claims of a contract and a caveat - for a residential property at Bradman Road, Menai.
ProLend Solutions No. 123 Pty Ltd v Karout [2023] NSWSC 490 (8 May 2023)
The proceedings were commenced by ProLend Solutions No. 123 Pty Ltd - the holder of a 2nd mortgage registered on the subject property, and a party to a contract for the sale of the property by way of exercise of its power of sale as a mortgagee. The loan and mortgage were dated January 2022, and the contract for sale was exchanged in March 2023.
A caveat was subsequently lodged in April 2023 by Mr Karout, who claims an interest in the land pursuant to an alleged contract for sale of the property between him and Mr Chahoud, the owner of the property, and the guarantor to the loan which was secured by the property's title.
When the mortgagee's solicitors asked Mr Karout's solicitors for a copy of the alleged contract, a one line email was sent in reply, attaching a contract which was allegedly exchanged on 12 July 2022 with a completion date of 30 July 2022, some 2-3 weeks later. Almost 9 months later, it still had not completed.
The Court questioned the genuineness of the contract, particularly noting that despite a completion date of 30 July 2022, the contract still had not settled. Also, notice of the alleged sale had not been given to either ProLend Solutions (as the 2nd mortgagee on title) nor to ANZ (as the 1st mortgagee on title) of the impending sale, so that the necessary discharges could be prepared for settlement. Nor was there any evidence of a deposit being paid.
Accordingly, the Court ordered for the caveat to be withdrawn pursuant to section 74MA, which thereby enabled the mortgagee's sale contract to proceed to completion.
Interestingly, the mortgagee claimed, and the Court awarded, costs in favour of the mortgagee on an indemnity basis - that is, the entirety of the legal costs incurred by the mortgagee in commencing the proceedings.
Contact the Shire Legal team if you have any questions.
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