A property developer built 300 apartments and townhouses. It appointed a real estate agent to sell them. After a large number of the apartments were sold, the lender appointed a receiver. The receiver sought to complete the sales introduced by the real estate agent without paying commission.
The real estate agent thwarted the settlements by lodging caveats on the apartments it had sold. The real estate agent claimed an equitable interest in the apartments pursuant to a charging clause in the agency agreement. The judge found the agency agreement granted a valid unregistered equitable charge.
The question for the court was whether the real estate agent’s equitable charge served any useful purpose. If it did not, then there would be no justification for the maintenance of the caveats on the title to the land. This is because it is settled law that if a charge protected by a caveat is worthless because a registered mortgage (with priority) is worth more than the value of the land, then the caveats must be withdrawn.
The real estate agent raised an obscure argument based on the appointment of the lender’s trustee to suggest it had no priority. This was rejected and as such the real estate agent was obliged to remove the caveats.