Chana Pty Ltd, Re [1993] QSC 142

State Reporting Bureau· ·--------------------_,._,, _______ ~ _____ ,__ ... ______ t!"&L _____________ ""'"""""""'!.g·~~~Yli2&Qd£Jtij£Jj - ''~"UUIR:ti' TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in tbe C:rown. Copies thereof :must U'l!Ot be made or sold without the written authority of the Director, State Reporting Bureau.) ( SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION ( .·. / WILLIAMS J o s No 541 of 1993 IN THE MATTER OF THE REAL PROPERTY ACT 1861 AS AMENDED IN THE MATTER OF A CAVEAT LODGED BY CHANA PTY LTD ACN 010 616 083 BRISBANE .. DATE 2 0 I 0 5 I 9 3 .. JUDGMENT 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 8 -- 200593 tgc (Williams J) > "' i HIS HONOUR: In this matter I have prepared reasons for .. -. judgment which I publish. For those reasons, I order that caveat number T648305G be removed forthwith and that the respondent pay the costs of and 10 incidental to this application to be taxed. I publish my reasons. 0 30 40 50 60 JUDGMENT 2 -- 2 of 8 -- 0 (_j IN THE SUPREME COURT OF QUEENSLAND O.S. No. 541 of 1993 Before the Hon. Mr. Justice Williams CATCHWORDS: IN THE MATTER of the Real Property Act 1861 As Amended - and - IN THE MATTER of a caveat lodged by CHANA PTY LTD A.C.N.010616083 JUDGMENT - WILLIAMS J. Delivered the 20th day of May, 1993 Real property mortgagee said to order that caveat caveat application to remove - sale by be at undervalue - relevant considerations - be removed. Counsel: Applegarth for applicant Crowe for respondent Solicitors: Corrs Chambers Westgarth for applicant Gadens Ridgeway for respondent Hearing dates: 12th - 13th May 1993 -- 3 of 8 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 541 of 1993 IN THE MATTER of the Real Property Act 1861 As Amended - and - IN THE MATTER of a caveat lodged by CHANA PTY LTD A.C.N.010616083 JUDGMENT - WILLIAMS J. Delivered the 20th day of May, 1993 This is an application by a mortgagee for the removal of a caveat lodged by the registered proprietor of the land in question, namely Lot 75 on Plan C1983, which is situated at 141 Lake Street, Cairns. The respondent, Chana Pty Ltd, is the registered proprietor. On 24th December 1992 the respondent i i. ~ ". . ~ . lodged a caveat (T648305G) claiming "an or estate or interest as registered proprietor in fee simple" on the ground that "the caveator has (__) the right' to redeem the mortgage· pursuant to pending court orders." The background relationship between the parties and the '· circumstances giving rise to the exercise by the applicant- mortgagee of the power of sale are fully canvassed in the reasons for judgment of Ryan J. delivered 4th December 1992 in O.S. No. 1202 of 1992 and Action 123 of 1992 in the Cairns Registry, and the reasons for ·judgment I delivered on 15th January 1993 in O.S. No. 1369 of 1992 and Action 1963 of 1992. The respondent was a party to each of those actions. -- 4 of 8 -- 2 In consequence it is not necessary for me to set out herein details of the Deed of Settlement of 10th April 1992, and the cir.cumstances in which the mortgagee is entitled to exercise powe.r of sale. The mortgagee, by its agent, .entered into a contract to sell the ·subject. land on. 21st November 1992 to Harue Pty Ltd for $850,000. Originally that contract was due for completion on 3rd December 1992. The respondent ~hallenged the validity of that contract and that was one of the matters decided by Q Ryan J. on 4th December 1992; he upheld the entitlement of the mortgagee to enter into that contract. i .. ' Ryan J. also ordered the removal of a caveat which at that time was registered with respect to the subject land. After the order for removal of that caveat, the present respondent lodged a further caveat over the land at 141 Lake Street. That caveat was lodged on 4th December, 1992 and the .. ,,;! \; 0 mortgagee sought to have an application for its removal Q brought before Ryan J. on 7th December, but the solici·tors for the respondent informed Ryan J. on that morning that a withdrawal of that caveat had been lodged. As noted above, the . caveat now under consideration was lodged on 24th December 1992. It was therefore in existence when the two matters the subj~ct of my decision on 15th January 1993 were before the Court. But the existence of this particular caveat was then· overlooked by both parties. After referring to the history of the lodging of caveats by related parties, including this respondent, I concluded: "The inference is irresistible from the history of the litigation 0 -- 5 of 8 -- 3 just set out that the mortgagors are prepared to ·use any delaying tactics, including the lodging of caveats, in an effort to delay as long as possible ·the completion of contracts of sale entered into in exercise of the mortgagee's power of sale. The mortgagors are not presently in a position to redeem but hope that if they can delay the exercise of the power of sale they may possibly be in a position to do so." It is abundantly clear that, even though by the exercise ( '.J _ of power of sale· the outstanding debt has been reduced by approximately $8.8M, the respondent has no realistic prospect \ of redeeming by paying in excess of $1M. The debt referred to (_) in the Deed of Settlement was $1 OM, and there has now been added to it costs in excess of $100,000. On that basis there is still something in excess of-$1 .3M outstanding. Pursuant to s. 39 ( 2) of the Real Property Act 1867 the caveat in question is a non-lapsing one; it is deemed to have (_j been lodged with consent. It should also be noted that the lJ contract of sale of 21st November 1992 has been extended to 28th May 1993. On the hearing of the application to remove the caveat, the respondent raised a different argument to that on which the caveat was originally founded. It was submitted that the sales of the properties referred to as Cascade Gardens and Jimmy's on the Esplanade by the mortgagee pursuant to the Deed of Settlement were at a substantial undervalue, and that the mortgagors were entitled to have that deficiency brought into account in determining the amount payment of which was necessary in order to redeem the subject mortgage and those -- 6 of 8 -- 4 over other properties not.yet sold. The contention was that Cascade Gardens was sold for ~4M when_ its . market value was $5. 5M, and that Jimmy 1 s. on the ·Esplanade was sold for $1. 5M when its market value was $1. 9M. On that basis it was said that $1. 9M should be added .to the $8. BM referred to above; that. meant there was no money outstanding pursuant to the Deed of ?ettlement and -in consequence the mortgagee was not entit~ed to exercise power of sale over the subject land. The applicant-mortgagee placed material before the Court () on this application showing that it relied on detailed valuations of the lands in question justifying the sale prices '1 ! and t}:lere is no prima facie evidence of "bad faith" on the part of the mortgagee in exercising the power of sale. If the allegations are cor~ect that Cascade Gardens and Jimmy 1 s on the Esplanade were sold at an undervalue, that I_ ,j would give the mortgagors in question the right to sue for damages against the mortgagee. But that would not, in my opinion, give the respondent here a basis for f!laintaining the caveat. ! 1 Of more relevance to .the present application was the submission by counsel for the respondent that the proposed '; j sale to Harue Pty Ltd was at an undervalue. That argument was based on a valuation. by Pomering of 141 Lake Street at $1M. However, the applicant mortgagee relied on a valuation by G. Coonan of $675,000. I am satisfied that prima facie it was reasonable for th~ applicant mortgagee to act on the valuation of.Coonan. As I pointed out in my,earlier judgment delivered . . ~ . . . on .15th January 1993, for the mortgagor to succeed it must 0 0 0 -- 7 of 8 -- 5 discharge the onus of showing either that there was a serious question to be tried that the contract may be set aside on the ground that the power of sale was exercised in bad faith, or that otherwise there was a serious question to be tried as to the voidability of the sale. I there referred in some detail· to McKean v. Maloney (1988) 1 Qd.R. 628, Forsyth v. Blundell (1973) 129 C.L.R. 477, McKean's Caveat (1988) 1 Qd.R. 524 and Re Jorss' Caveat (1982) Qd.R. 458; there is no need for me to ( repeat now what I then said. On the whole of the evidence I am of the view that there is nothing to establish a serious question to be tried as to alleged bad faith on the part of the mortgagee in entering into the subject contract for $850,000. It was also submitted by the respondent that it· was relevant to the balance of convenience that the subject property is the residence of some members of the Conti fa~ily, ( ) including those who are the directors of the caveator, a·nd that a lessee from the caveator, Ansalon Pty Ltd, carries on ( ' \__ _ _) business from the premises and employs P.F. Conti, a director of the caveator, as manager. If members of the Conti family still reside in the subject premises, then they are doing so in contravention of the order of Ryan J. of 4th December 1992. So far as the business is concerned, the sale to Harue Pty Ltd will be subject to any valid lease to Ansalon Pty Ltd. It therefore follows that there is nothing in either of those points which is of relevance for present purposes. I would therefore order that Caveat No. T648305G be removed forthwith and that the respondent pay the costs of and incidental to this applicatdon to be taxed. -- 8 of 8 --