NAB v Pasupati [2011] NSWSC 540

NAB sought possession of the matrimonial home jointly owned by a husband and wife following default on their mortgage and the wife sought an order for the appointment of trustees for its sale pursuant to section 66G of the Conveyancing Act 1919 to stop the liability to NAB increasing. Caveats have been lodged against the property in relation to various claims, including (1) a misappropriation claim by the husband’s former employee; (2) recovery of debt claims in relation to two unpaid solicitors bills. Family Court proceedings between the couple were stayed by consent until the conclusion of the employer’s claim against the husband.

The Law

The law in relation to section 66G applications is uncontroversial. An order will normally be made as the right to the order is regarded as an ‘incident of ownership’, where the co-owner holds at least 50%. The court has a discretion as to whether or not to make the order but the grounds for refusal are very limited and general unfairness or hardship does not qualify. The grounds must be sufficient to raise some estoppel or serious injustice. There is power to grant a stay in order to prevent an abuse of process but the court is not obligated to do so simply because there are Family Court proceedings on foot.

The Defence

The husband opposed the application on two grounds:

  1. that it amounted to an abuse of process on the ground that the wife had not sought to overturn the consent orders of the Family Court which permitted the husband’s other actions to be resolved first before the Family Court proceedings commenced;
  2. the property had the potential to increase substantially in value if the renovation works were completed. Renovation works were in abeyance pending the outcome of a claim by the husband against the builder in the Consumer Trade and Tenancy Tribunal.

Court’s Findings

The court rejected the argument as to abuse of process noting that the Family Court order did not prevent the parties from lawfully disposing of the property. No evidence had been put by the husband as to the status of the other litigation or when they were likely to be finalised and hence there is no likelihood that the Family Court proceedings will be resumed let alone resolved in the foreseeable future. The court found no serious injustice and no utility in granting a stay. There is no equity in the home.

The court rejected the argument as to the potential increase in value of the property because there was no evidence before the court that funds could be raised to complete the work, given the husband is unemployed and involved in expensive litigation on a number of fronts and there is no evidence as to the worth of his shares in his employer’s company or whether he would be able to sell them to raise sufficient capital. Further, the likely increase in value is based on too many assumptions. Meanwhile the liability to NAB increases.

The court ordered trustee be appointed for the sale of the home.

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