The borrower defaulted on a mortgage and was served with two invalid s57 (2)(b) notices by the lender. Despite the invalid notices, the lender obtained a writ of possession in undefended proceedings.
Prior to selling the properties, the borrower put the lender on notice that their invalid notices would be challenged if the lender sold the properties. The borrower registered a caveat over the property disputing the legitimacy of the lenders notice. Despite being aware of the caveat, the lender proceeded with the properties sale.
The lender sought court orders to remove the caveat arguing that the borrower’s failure to challenge the notice prior to sale, encouraged their reasonable belief that the notice would not be challenged.
In rejecting the lenders motion, the court found that they were sufficiently aware that the notice was invalid prior to selling the property.
This decision means the lender is contractually obliged to sell the property but not in a position to settle until it issues fresh notices and they expire. Arguably, the lender will need to rescind the contract with the buyer and re-enter the contractor once it has a valid power of sale. If the buyer is not cooperative, things could get nasty for the lender.
Click here to read the full judgment.