Phillips v Southage [2014] VSCA 17

Two brothers were the joint executors of the estate of their mother. Amongst the assets of her estate when she died were adjoining terrace houses in Fitzroy. Provision was made in her will leaving one terrace house to each son for life or until their respective sons turned 25, and then to their sons.

Notwithstanding the provisions of the will the brothers as executors signed a transfer transferring one of the terrace houses to his trustee company which then mortgaged the property.

The loan defaulted and the lender obtained judgment for possession of the house. Judgments were granted ordering the brothers and sons to remove their caveats from the title, refusing an injunction and ordering the brother in question to vacate.

The brother then sought a stay of the various orders pending his appeals including an application for special leave to the High Court and an order that the settlement monies be paid into court and that he be given leave to apply for damages against the lender.

The court refused a stay for the following reasons:

  1. The application for special leave or any appeal would not be rendered nugatory because a stay was refused.
  2. The court found no reasonable prospect of special leave being granted.
  3. There was no material before the court to justify a conclusion that costs paid under an order subsequently set aside would not be recoverable.
  4. The borrower was not likely to be bankrupted before an appeal could be heard and determined.
  5. A stay will, in itself, be disadvantageous to the lender as it will preclude recovery of costs to which it is presently entitled.

The court also refused the application to have the sale proceeds paid into court, noting a shortfall on the secured debt:

It is clear that Mr Phillips and his brother intended to transfer the property to Beijing Garden as trustee of the family trust, and that they did so. It is clear that Beijing Garden intended to mortgage the property, and that it did so. In this State, registered titles are indefeasible. Nothing deposed to by Mr Phillips, or asserted by him, could impugn the mortgagees’ rights under their registered mortgages. Mr Phillips seems to be unwilling or unable to confront the most critical fact – that it was he and his brother who transferred the property out of his mother’s estate.

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