In this case a mortgage included a provision which made the lodging of a caveat over the security a breach of the loan. In the event of a default the mortgage had an acceleration clause. Both the borrower and the guarantors, in different cases, resisted the lender’s claim on the grounds that the caveats which were lodged were lodged by persons not having a caveatable interest. The lender made an application for summary judgement.
The clause in question read:
The Borrower shall at the option of the Lender be immediately in default upon the occurrence of any of the following events of default if a caveat or other encumbrance is registered against the Security Property without the Lender’s consent.
In previous proceedings Justice Austin had decided against the borrower on this very issue finding:
It seems to me plain beyond argument, from the language of the clause, that it is the very lodgement or ‘registration’ of the caveat that gives rise to the default, regardless of whether the caveat might be open to removal or other challenge. That construction is hardly surprising, since a commercial lender is likely to be more concerned about the fact that there is a caveat on the title to the secured property than that the caveat might at some future time, perhaps after litigation, be removed. To the extent that Perpetual relies upon lodgement of the caveats as a default entitling it to require payment of all advances and interest, I cannot see that there is any substantial basis for disputing its claim.
After considering Justice Austin’s reasoning Justice Johnson’s found he agreed with it. He also found that even if he did not the guarantors would still fail because Austin’s decision gaves rise to an issue estoppel. The doctrine of issue estoppel applies to second set of proceedings, if in the earlier proceedings:
(a) the same question has been decided,
(b) the judicial decision which is said to create the estoppel was final, and
(c) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised, or their privies.