11 April 2011


The administrator lodged a caveat for his fees. The lender wanted it removed so he could sell the property. The lender offered the administrator $20,000 to go away but it was refused.

The law is that the caveator bears the onus of showing that it has a seriously arguable case for final relief, and, that the balance of convenience favours retention over removal of the caveat. The issue is not whether the caveator has a valid caveatable interest but whether, as against competing interests, there is a serious question that the interest recorded in the caveat would be entitled to the protection of an interlocutory injunction. The question, then, is whether there is a serious question to be tried that the administrator would be entitled to an injunction to protect the interest claims, and whether the balance of convenience is in favour of granting an injunction.

The court found that the registered mortgagee has priority and there is not a serious question to be tried in relation to the administrator’s claim on the proceeds of the sale of the company property. Further, the court found the balance of convenience does not favour granting an injunction because that would prefer the interests of the unregistered chargee over the interests of a prior registered mortgagee. In any case, the court noted there is sufficient equity in the director’s home to discharge all liabilities secured against it, such that there is no basis for the administrator saying that he or the unsecured creditors of the second company are worse off if the caveat is removed.

The court ordered removal of the caveat and indemnity costs against the administrator because it was unreasonable to reject the offer made by the mortgagee.

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Matthew Bransgrove, Partner

Matthew Bransgrove has practised exclusively in the field of mortgage law and mortgage related litigation since 1998. He is author of Avoiding Mortgage Fraud in Australia (2015) Lexis Nexis. He is co-author of The Essential Guide to Mortgage Law in NSW (2008) Lexis Nexis and its successor The Essential Guide to Mortgage Law in Australia (2013) Lexis Nexis.

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