Heggies Bulkhaul v Shirlaw [2004] NSWSC 805

This was a notice of motion seeking a declaration that the Plaintiff was entitled to have the Plaintiff’s Lease registered in priority to the mortgage between Global Minerals Australia Pty Limited as borrower and Ostabridge Pty Ltd (in Liquidation) (Receiver and Manager Appointed) and Kevin Richard Shirlaw as lenders.

Two issues were in contention. One of them was whether the lease which Heggies obtained from Global had priority over the mortgage which Ostabridge obtained from Global. The other was whether a mortgage which Heggies obtained from Global had priority over the mortgage which Ostabridge obtained from Global. The active parties to the litigation accepted that the second of these questions must go to trial. The point of the present application was for the plaintiff to obtain summary relief in relation to the first of the applications.

In a situation where both the Heggies lease and the Ostabridge mortgage were unregistered, neither interest had the effect of an interest in law under the provisions of the Real Property Act 1900. Each of them was an equitable interest. There was no allegation in any pleading that the priority situation was complicated in any way by the provisions of s 43A of the Real Property Act 1900.

Thus the priority question boiled down to a simple matter of which interest was first in time. It was undisputable that the lease interest of Heggies was first in time.

The first defendant sought to argue that the Statement of Claim plead a priority which dated only from the time of creation of the new lease which was given by Global to Heggies. Undoubtedly that new lease, in the form of a registrable document, had come into existence only after the Ostabridge mortgage.

Furthermore the new lease, being the current embodiment of the right to a lease which Heggies had, was appropriately made the subject of the orders concerning priority of the lease which Heggies sought in the proceedings. However, the priority to which that new lease was entitled was itself dependent upon the time that the agreement to lease, which it gave effect to, was entered. From the time of that agreement for lease there was an equitable interest because there was a specifically performable agreement for lease: Walsh v Lonsdale (1882) 21 Ch D 9.

That equitable interest, arising at it did on 20 September 1999, was earlier in time than the equitable interest of Ostabridge’s mortgage. No postponing conduct was pleaded which could, if made out, reverse the prima facie priority which was accorded to the first equitable interest in time.

Held, in the circumstances, on the undisputed facts, Heggies was bound to win at any trial of the priority competition between its lease and Ostabridge’s mortgage. That meant it was appropriate for Heggies to be granted the summary relief which it sought.

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