Telsa Nominees v Bingi [2005] NSWSC 1323

A caveat was lodged on the guarantor’s property by the lender after the borrower had defaulted on the loan. The guarantor issued a lapsing notice and then withdrew it, then issued a new lapsing notice. The lender approached the court and sought an order extending the caveat (so that it would not lapse). However, the lender failed to serve the guarantor.

Under the Real Property Act the court cannot hear an application for an order extending a caveat unless it has made an order dispensing with service, or unless it is satisfied that all interested parties have been served with copies of the application before the hearing. The lender’s barrister asked that the court make an order dispensing with service. He argued that the fact a previous lapsing notice had been withdrawn and that subsequent correspondence between the parties failed to identify the grounds under which the guarantor claims to be entitled to issue a lapsing notice, combined with their “strong prima facie case” were sufficient grounds to make the order. The judge refused saying:

I do not think that that is a sufficient reason for dispensing with service. The defendant is entitled to be heard. It may be that there are grounds, which are not immediately apparent, why it may be said that the plaintiff either does not have a caveatable interest or, in any event, that it ought not be permitted to retain the caveat.

Thus the caveat was not extended. However, the judge gave effective relief to the lender by allowing the lender to lodge a fresh caveat in identical terms on the condition it be withdrawn on the date the matter next came before the court unless the court at that time varied the order.

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