This was an application to extend the operation of a caveat lodged by the second mortgagee. The property had been sold on a contract which, if completed, would allow a first mortgage to be repaid, almost in full, but with no remainder for the second mortgage.
The judge neatly summarised the applicable law:
In the ordinary course, and assuming there is equity in the charged land, only in exceptional circumstances would extension of the caveat be refused. Where a prima facie case is established by the caveator, the balance of convenience is likely to favour protection of his or her interest in land.
Where there is no equity available in the land after payment of a prior mortgage to satisfy the security, operates in defeasance of that rule and reverses the usual balance of convenience.
The judge then turned to decide whether there was any equity available for the second mortgagee:
First, and primarily, the best guide to the market value of the property is the value obtained at the recent auction. Some tentative criticisms of the marketing campaign which preceded the auction, but those criticisms were not supported by any evidence.
The failure of the valuer to explain how he fixed a substantially higher valuation than the price obtained at the auction seriously undermines the weight of his report.
Based on this price he perceived no equity for the second mortgagee and refused to extend the caveat.