Rasyid v Conrad [2010] NSWSC 134

In this case a borrower sold his Rose Bay property for $1.5 million without first checking the payout figure on the mortgage, which was greater than the purchase price. One week before the contract was due to complete the borrower’s solicitor wrote to the purchaser’s solicitor explaining the problem and requesting an increase in the purchase price. The purchasers refused the request and insisted on the completion of the sale at the original price. When nothing more was heard from the borrower the purchaser issued a notice to complete and then, ultimately, commenced proceedings for specific performance.

Surprisingly, the court ordered specific performance. With respect, this was probably an incorrect decision. Specific performance is an equitable remedy and as such is subject to the maxims of Equity. One of the maxims is that Equity will not make an idle gesture. Ordering specific performance against the borrower where the payout figure for the mortgage exceeds the amount of the purchase price is an idle gesture. The borrower cannot be jailed for contempt of the order because the borrower does not hold the Certificate of Title or the discharge of mortgage necessary to comply with the order. It goes without saying that the order cannot effect the property rights of the lender.

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