Equititrust v Manttan [2010] NSWCA 95

The lender protected an equitable mortgage with caveats. The borrower sold the properties and lodged lapsing notices. Before the Duty Judge, Justice Gzell, the lender argued that if it was given time it could obtain valuation evidence that would show that the property was being sold at under value. The lender argued that unless there was some urgency the court should not deny it the chance to prove its position. The borrower’s counsel alluded, from the bar table, to there being some urgency in the sale. The lender’s counsel objected to any weight being given to this. Justice Gzell retorted that he could take evidence from the bar table on an urgent application if it was for the purpose of maintaining the status quo. He then made the order upsetting the status quo (allowing the caveat to lapse).

The lender sought leave to appeal before Justice Hodgson. The lender argued that Justice Gzell ought not to have relied upon evidence from the bar table in upsetting the status quo. Justice Hodgson held:

There is some force in Mr Young’s submission about the lack of evidence about urgency concerning completion of this particular sale. There was material put to the primary judge from the bar table suggesting such urgency, and the primary judge took the view that he could appropriately act on that. In my opinion there is an element of discretion in a judge hearing an urgent application of this kind to act on information that may not be supported by proper evidence, and I am not prepared to hold in the circumstances that the primary judge was necessarily wrong in having regard to what he was told from the bar table.

His Honour then found another basis upon which to reject th Lender’s application, namely that when the caveat was challenged proceedings were not immediately commenced by the lender:

I note also that applicant has not yet itself commenced proceedings to seek enforcement of the equitable interest it claims. It is true, as put by Mr Young, that this could have been a condition of allowing the caveats to remain on the title, and such a condition would undoubtedly have been complied with; but in my view a person seeking to maintain a caveat should, when that caveat is challenged, act quite promptly in itself commencing appropriate proceedings to enforce the interest alleged in the caveat.

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