Manttan v Equititrust [2010] NSWSC 534

This case concerned the interpretation of interlocutory orders made by Justice Gzell on 23 April 2010, in these terms:

1 Pursuant to s 74MA of the Real Property Act, caveat number AE 618082X, be withdrawn from the title of folio number 50/SP70527 and 65/SP70527 known as unit 50, 95 Annandale Street, Annandale and unit 65, 95 Annandale Street, Annandale for the purpose of completing the contract for sale of land entered on 24 November 2009.

2 The net proceeds of the sale referred to in paragraph one of these orders, after the payment of all reasonable costs of sale and payment to the first mortgagee, be paid into the Supreme Court of New South Wales.

The lender refused to provide a withdrawal of caveat, arguing that it was not obliged to do so until the borrower paid the surplus of the sale proceeds into Court as ordered.

The lender argued that the orders were interdependent. Acting Justice Biscoe agreed that and that as a result there was no question of the lender being in contempt of Court by disobeying the order to withdraw the caveat. The obligations under the orders were to be discharged concurrently.

The question of whether an agent’s commission of 12.5% was within the “reasonable costs of sale” was not decided as it was settled between the parties that any surplus in excess of agents commission of 3% would be paid into Court.

The next question was whether the orders required the deposit to be paid into Court. Acting Justice Biscoe stated:

…on the ordinary meaning of the words “the net proceeds of the sale” in order 2, the deposit has to be taken into account. The starting point is that the deposit forms part of the gross proceeds of sale. Net proceeds of sale are ordinarily determined by deducting from the gross proceeds the costs of sale and the amount to be paid to any mortgagee.

The borrower argued words “net proceeds of the sale” as used in the orders had a different meaning when read in the context of the contract of sale which provided in clause 8: “The deposit is hereby released to the Vendor”. Acting Justice Biscoe found that the terms of the contract for sale could in no way influence the interpretation of the words used in Justice Gzell’s orders. A special condition in the contract that provided for the release of the deposit to the vendor could not be taken into account when interpreting the orders as there was no evidence that the lender or Justice Gzell knew about the special condition when the orders were made. There was also no evidence before Justice Gzell that the sale would have been unable to proceed unless the deposit was excluded from the sale proceeds. As a result the orders required the net proceeds of the sale to include the deposit.

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