The court had previously made an order in this matter that a previous owner of a security property provide a withdrawal of caveat to the bank. This was in circumstances where the bank had taken possession of the security property after the borrower defaulted on his mortgage, but the previous owner (who had sold the property to the borrower) had lodged a caveat due to an outstanding portion of the sale price.
The previous owner had initially not come to court when the judge decided the matter and ordered the withdrawal of caveat be provided. He explained this was because he believed he could appear by phone link and had not thought he needed to do anything to organize that. He was now asking the court to set aside the orders it had made on that day.
The previous owner argued that his interest in the property should have priority over the bank’s mortgage debt; that he had not been adequately informed about the bank’s intention to take possession and auction the property; and that although there were terms of settlement that indicated the bank would be paid out its debt signed on his behalf, he had not authorised his legal representative to sign them.
The Judge did not accept these arguments, noting that there was no evidence of any of these contentions and, in fact, the previous owner had written to the bank about making sure prospective purchasers knew about his interest in the property.
The judge found that there was not any basis for the sale to be delayed or for the withdrawal of caveat to be withheld, and therefore it was not appropriate to set aside the orders the court had previously made.
The judge confirmed that the normal legal position is that a first registered mortgage without notice of someone’s interest in a property is not affected by that interest. His Honour confirmed also that the previous owner was protected in that his claim was maintained against the borrower for the outstanding purchase price. The withdrawal of caveat would only be lodged after settlement, when it was handed over in return for balance of sale proceeds (and any surplus funds paid into court to be divided).